1 Department for Work and Pensions David Shaw, DWP 2 November 2011 Universal Credit UNCLASSIFIED

2 Department for Work and Pensions Overview Why Universal Credit? Scope and design Conditionality under Universal Credit Sanctions Timetable for implementation

3 Department for Work and Pensions CA only 291,600 IB/SDA/ESAC only 558,200 DLA only 446,400 IS/ESA(ir)/PC only 1,289,500 IB&CA 900 CA&DLA 15,700 IB&CA&DLA 1000 IS&IB&CA&DLA <500 IS&IB&CA <500 IS&CA 187,700 IS&CA&DLA 18,100 IS&IB&DLA 316,600 IS&DLA 439,700 IS&IB 72,000 IB&DLA 547,500 BB/WB only 90,500 JSA only 1,317,300 All other combinations <500 JSA with another benefit SOURCE: DWP Information Directorate: Work and Pensions Longitudinal Study, Aug 2010 NOTES:- IB & CA figures only include those who are in receipt of payment. IB credit only and CA beneficiaries who do not receive benefit are excluded. - ESA claims included in IB and IS caseload information The Case for Change: complexity, affordability, work-incentive Around 50% of these individuals receive housing benefit as well (913,100 on HB only) Total in receipt 5,639,000 BB/WB with another non-JSA benefit 13,500 UNCLASSIFIED

4 Department for Work and Pensions Universal Credit: Incentive to Work UNCLASSIFIED

5 Department for Work and Pensions Universal Credit: Scope Universal Credit means the following benefits will no longer be needed… Income related Jobseeker’s Allowance Income related Employment and Support Allowance Income Support (including SMI) Child Tax Credits Working Tax Credits Housing Benefit Social Fund (budgeting loan elements) But the following benefits will still be available… Disability Living Allowance (will be replaced by PIP in 2013) Contributory Benefits (although earnings rules aligned) Child Benefit Pension Credit (that will include a Housing Credit to support those who rent, the intention is it will broadly replicate Housing Benefit rules & a new additional amount for children in the Guarantee Credit) Carers Allowance Council Tax Benefit replacement UNCLASSIFIED

6 Department for Work and Pensions Universal Credit: Design Universal Credit: lone parent with two children Disregard Taper UNCLASSIFIED

7 Department for Work and Pensions The Welfare Reform Bill sets out: –four types of work-related requirement –four conditionality groups No “partners” - each adult in a household will be placed into a group according to their individual capability and circumstances. Recorded in a claimant commitment Universal Credit: Conditionality framework No work-related requirements Work-focused interviews Work preparation All work-related requirements

8 Department for Work and Pensions Universal Credit: Personalisation? Greater scope for personalisation / flexibility –Conditionality does not depend on benefit –Primary legislation enables discretion –No “always on” conditions e.g. actively seeking & available for work –No disentitlement –No need for prescriptive regulations – what can / can’t be done

9 Department for Work and Pensions Universal Credit: in-work conditionality Previously … conditional out of work benefits, unconditional in-work benefits UC removes division – when should conditionality stop? In current system at around £70 per week / £3500 per year Under Universal Credit reach of conditionality higher: –Expected hours of work * NMW –Single claimant, max is 35 hours * NMW (£210pw) –Joint claimants, max is 70 hours * NMW (£420pw) Enables use of conditionality to drive progression / support retention But no obligation to do more – considering carefully the right level and approach –Effectiveness? –What is reasonable? –Resources? –Pilots?

10 Department for Work and Pensions Universal Credit: Sanctions SanctionApplicable to:1 st failure2 nd failure3 rd failure Higher Level e.g. leaving employment voluntarily Claimants subject to all work- related requirements 3 months6 months3 years Medium Level e.g. failure to undertake all reasonable action to obtain work Claimants subject to all work- related requirements 4 weeks3 months Lower Level e.g. failure to undertake particular, specified work preparation action, failure to participate in a work-focused interview Claimants subject to all work- related requirements Claimants subject to work preparation and work-focused interview requirements Open ended until re-engagement followed by 1 week2 week4 weeks Lowest Level Failure to participate in a work- focused interview Claimants subject to work- focused interview requirements only Open ended until re-engagement

11 Department for Work and Pensions Oct ‘13 Apr ‘13 Oct ‘14Oct ‘15Oct ‘16 Oct ‘17 Test New claims from out of work customers Apr ‘14 Feb ‘11 Design & build New claims from in work customers “Natural” migrations as a result of changes of circumstances Managed migrations Legacy load JSA, ESA, IS, HB, WTC, CTC 8m 6m4.5m2.5m UC load When will we deliver Universal Credit?