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Universal Credit

Volume 642: debated on Thursday 7 June 2018

Today we publish a summary of the universal credit full business case, signed off by HM Treasury, which shows that when fully rolled out, universal credit is forecast to incentivise 200,000 more people to take employment than would have under the previous system and deliver £8 billion of benefits to the UK economy per year.

Universal credit is the biggest change of the welfare system since it was created. It is a modern, flexible, personalised benefit reflecting the rapidly changing world of work.

It has brought together the six main benefits, including tax credits, providing support in and out of work and assisting career progression. The Government have used a “test and learn” approach as it rolls out across the country.

The Government have already made a commitment that anyone who is moved to universal credit without a change of circumstance will not lose out in cash terms. Transitional protection will be provided to eligible claimants to safeguard their existing benefit entitlement until their circumstances change.

Today I am announcing four additions to these rules to ensure that universal credit supports people into work, protects vulnerable claimants and is targeted at those who need it.

First, in order to support the transition for those individuals who live alone with substantial care needs and receive the severe disability premium, we are changing the system so that these claimants will not be moved to universal credit until they qualify for transitional protection. In addition, we will provide both an ongoing payment to claimants who have already lost this premium as a consequence of moving to universal credit and an additional payment to cover the period since they moved.

Secondly, we will increase the incentives for parents to take short-term or temporary work and increase their earnings by ensuring that the award of, or increase in, support for childcare costs will not erode transitional protection.

Thirdly, we propose to re-award claimants’ transitional protection that has ceased owing to short-term increases in earnings within an assessment period, if they make a new claim to UC within three months of when they received the additional payment.

Finally, individuals with capital in excess of £16,000 are not eligible for universal credit. However, for tax credit claimants in this situation, we will now disregard any capital in excess of £16,000 for 12 months from the point at which they are moved to universal credit. Normal benefit rules apply after this time in order to strike the right balance between keeping incentives for saving and asking people to support themselves.

The process of migrating claimants on legacy benefits will begin in July 2019 as previously announced. In order to make the changes to the system it will be necessary to extend the completion of UC to March 2023. As throughout UC roll out, we will keep the exact timetable under review to do what is sensible from a delivery and fiscal perspective.

These changes will form part of the universal credit managed migration and transitional protection regulations which we intend to bring forward in the autumn.

This Government are committed to delivering a welfare system that supports claimants and is fair to taxpayers.