Universal Credit Managed Migration: What does it mean for local authorities, advice agencies and housing providers?

Managed migration is the process of moving claims from legacy benefits such as tax credits over to Universal Credit. For many people this will be easy, for some it won’t. For all, it will be a change. With a 2025 deadline, the DWP is escalating its migration rollout, this blog explores how local authorities, advice agencies and housing providers can support households through managed migration, as well as the impact managed migration may have on other services.

For working age people living on low incomes, Universal Credit provides financial support and a structured, national approach to a complex legacy benefit system. It promotes one benefit, one agency, and one payment as a means to simplify social security. For more than five million households, the switch to Universal Credit means they now receive monthly payments, have access to employment support, and can access their online profile 24 hours a day.

However, 2.3 million households are yet to make the transition to Universal Credit and between 2023 and 2025, the DWP is delivering a rolling programme of managed migration, starting with single households receiving tax credits.

On paper, managed migration is straightforward: end one benefit, start another. The reality is a complex series of interactions between benefit applications, processing, unstable income, uncertainty, and the interplay between income and outgoings for all households, especially those living on low incomes.

• For local authorities and advice agencies operating at the front lines of the cost of living crisis, managed migration presents a risk to families who are just about managing, and to households already struggling to stay afloat
• For housing providers, any interruption in income has the potential to increase arrears, reduce essential spending, and threaten health, with the impact being felt acutely by children and young people
• And while it may be called a managed migration, each legacy claimant household will need to make a new claim to Universal Credit

36% of the pilot cohort called to find out more

So what can we expect to see? Letters!

The DWP, along with HMRC for people receiving tax credits, will notify households in your area that they are entering the managed migration programme, that their existing benefits will stop, and that they need to make a claim for Universal Credit. First to arrive will be a ‘get ready’ leaflet, followed by a managed migration notification letter.

Managed migration pilots, or Discovery phases, in Bolton and Medway in 2022 found that 36% of the pilot cohort’s first response to their migration notification letter was to pick up the phone and call the DWP to find out more.

Despite being well advertised, we can expect to see increased contact with:

• DWP call centres
• Local authorities when the interaction between Universal Credit and Council Tax Support becomes critical to preventing additional hardship
• Housing providers when rent arrears are threatened through migration and beyond

Once managed migration has begun, households have three months in which to claim Universal Credit before their legacy benefit is stopped.

Missing this deadline means potentially missing out on the transitional protections that have been put in place to support migration. Missing the deadline also means new claimants would have a five to six week waiting period for their first Universal Credit payment. This potentially increases the risks to debt, welfare, and increased strain on local authority services.

150,000 households risk missing out on transitional protection

Managed migration pilots also found that 12% of households did not claim on time. Policy in Practice’s analysis reveals that if this trend continues, more than 150,000 households could miss out on both transitional protection and the chance to prevent short term debt accruing due to suspended Council Tax Support claims and missed rent payments.

While the pilot found that nine out of ten people were supported successfully to move to Universal Credit, 12% missed the crucial three month claim deadline. If this is replicated nationally more than 150,000 claimants risk missing out on support and transitional protection. This group is likely to comprise mostly tax credit recipients.

The pilot study in Bolton and Medway suggests several reasons why these claimants may not wish to move to UC. While the national rollout of managed migration is publicised widely, there are still risks:

• A lack of awareness of passported benefits or about transitional protection
• The possibility of fraudulent tax credit claims
• Changes of circumstance in the tax year, or an unwillingness to change over

In addition, the imposition of a claimant commitment or the reputation of Universal Credit may make people less likely to want to move to Universal Credit.

Three ways local authorities, advice agencies and housing providers can help managed migration

Local authorities, advice agencies and housing providers can support managed migration in three ways:

1. Understand barriers for residents
2. Use data proactively to target households both in need and at risk to maximise their income as part of the transition
3. Review Council Tax Reduction schemes

Three main barriers to a successful migration to Universal Credit exist

• A lack of sufficient individual support for claimants

Local authorities can direct residents to support services, including online support in welcome hubs or warm hubs over the winter, and engage with housing providers to assist with applications.

Using data to proactively support households through managed migration using Policy in Practice’s LIFT platform allows for targeted assistance, identifying managed migration caseloads and getting ahead of missed deadlines and disruption for Council Tax Reduction, rent collection and other local services.

Councils can use their data and the LIFT platform to identify and support households migrating to Universal Credit

• A lack of advice on applying for Council Tax Reduction during migration

The lack of publicity and call centre advice on Council Tax Reduction application alongside the UC application is inevitably leading to Council Tax arrears for some claimants moving to UC.

New claimants need to be informed of the possibility of different levels of Council Tax Reduction under UC and the possible need for application at the same time as the UC application. local authorities can get ahead of this problem by promoting Council Tax Reduction more readily to residents.

• Moving from weekly or fortnightly payments to monthly ones is disruptive

For claimants who are used to weekly or fortnightly payments the move to monthly payments will be disruptive however well it is managed.

People who are concerned about fluctuating earnings are less likely to apply for UC and this is often a significant factor in delaying application.

Any change in income, including payment scheduling, is particularly disruptive for households on low income who are unlikely to have accumulated a financial buffer that can smooth income fluctuation.

Local authorities can support residents through flexible collections, changing Direct Debit dates and supporting households through the temporary disruption to prevent minor changes from escalating to major debt.

Council Tax Support schemes and managed migration

If you’re a local authority and you’re not already thinking about it, now is the time to consider changes to Council Tax Support for 2025/6.

Should managed migration complete on schedule, by 2025/6, all but a handful of working age households claiming benefits will be on Universal Credit.

This means your Council Tax Support scheme for those working age households will need to work with, not against, Universal Credit if it is to operate efficiently, cost effectively and with as little disruption for claimants and billing teams as possible.

Now, more than 10 years since the introduction of Council Tax Support and with managed migration bringing legacy working age benefits to an imminent close, it’s time to focus on how, where, when, and why Universal Credit impacts the cost, administration, and support levels in your Council Tax Support Scheme.

If you’ve already moved to a banded scheme are those bands still working for you, or are you finding small cliff edges, or too much variation in income? Does your scheme allow for automated or shortened applications when claiming Universal Credit?

Does your scheme align with changes to Universal Credit entitlement in the last few years reducing administration? Or does your scheme still fluctuate on a penny, increasing your billing, administration costs, and contact with residents that would otherwise be prevented?

At Policy in Practice we model Council Tax Support schemes every year. We are seeing trends towards automation, understanding how UCDS data can be used to streamline Council Tax Reduction, making schemes more cost neutral through administrative savings rather than increased costs to residents.

National trends towards banded schemes are increasing, and with detailed modelling, finding administrative savings can even make schemes more generous.

Using data to support Universal Credit managed migration

Policy in Practice’s Better Off Calculator operates within the whole range of welfare support available, bringing legacy benefit policy and Universal Credit policy together.

Using the award winning Better Off Calculator, accessed by 10,000 people a year and recommended by GOV.UK, gives frontline advisors the information to better understand changes to entitlement and eligibility, and provides a comprehensive way to claim social support as part of our drive to close the £19 billion gap in unclaimed support every year.

Universal Credit managed migration represents one of the final pieces of the Universal Credit puzzle.

We’re already supporting our local authority clients to understand their managed migration caseloads, track claims moving from legacy benefits to Universal Credit and ensure gaps in Council Tax Support are reduced. We do this by providing councils with the tools they need to support low income households.

Our LIFT platform gives councils visibility over benefit caseloads as well as options to increase welfare take up.

As households move to Universal Credit, data led campaigns using LIFT are delivering much needed financial help to households who need it, including more than £13 million in East Riding of Yorkshire.

Next steps

1. Read How East Riding of Yorkshire Council grew the income of 15,700 households by nearly £13 million
2. Explore our policy and data led tools: LIFT platform, Better Off Calculator, Council Tax Support modelling
3. Join our webinar: Policy review of 2023 and what 2024 may hold