Universal Credit announcements in Budget

Yesterday’s budget contained a number of measures designed to mitigate some of the most controversial aspects of Universal Credit. Here’s a quick run through of the most relevant housing and welfare announcements.

Housing costs for young people

While the government announced back in March that it intended to reintroduce the housing costs element of Universal Credit for job seeking 18 to 21 year olds, as yet no legislation has been brought forward to give effect to this change. The policy costing document, which accompanies the budget, contains a commitment to reinstate automatic entitlement to help with housing costs for this group from December 2018. This will require legislative change, both in GB and locally in Northern Ireland. Currently, people in this group will not get any help with housing costs unless they are in an exempt group or can show their work coach that it is unreasonable to expect them to live with their parents or guardians.

Increased work allowance

In April 2016, the government reduced the work allowances for Universal Credit. Yesterday, the Chancellor announced that work allowances for claimants with dependent children and for those with limited capability for work will be increased by £1,000 per annum from April 2019. While this is to be welcomed, the measure still leaves the work allowance element considerably reduced from its initial incarnation for certain claimants who are not receiving help with their housing costs.

Help with housing costs for pension credit claimants

The planned transfer of rent support from Housing Benefit to Pension Credit, which is part of the government’s commitment to replacing legacy benefits with Universal Credit, has been pushed back by three years and will now not take effect until October 2023. Until then, people in receipt of Pension Credit who require assistance with rent costs can continue to claim Housing Benefit. 

Extending implementation schedule

The budget includes funding for improved arrangements for transitioning existing benefits claimants to Universal Credit. As a consequence of these changes, the government has reviewed its Universal Credit implementation schedule, extending to December 2023 the day by which UC will be fully implemented.

Delaying migration of people in receipt of Severe Disability Premium

Existing legacy benefits claimants who are in receipt of a Severe Disability Premium will now not be migrated to Universal Credit, even if they experience a relevant change in circumstances, until such point as they can benefit from transitional protection, likely to be January 2019 at the earliest.

Run-on payments for income related benefits

In last year’s budget, the government announced a Housing Benefit run-on payment. This year, it has committed to paying a two-week run-on period for claimants of Income Support, Income Based JSA and Income Related ESA who are managed over to Universal Credit from July 2020.

Other changes – tax credits, self-employment and deductions

Other key announcements relating to welfare include:

• From July 2019 tax-credit recipients with capital in excess of £16,000 will receive transitional protection for 12 months from the point at which they are managed over to Universal Credit
• Extending the 12-month grace period before the Minimum Income Floor applies to all self-employed claimants. This will apply to those who natural migrate from September 2020 and to those who are managed over to Universal Credit from July 2019.
• Increasing the period over which advances will be recovered from 12 to 16 months
• Reducing the maximum rate at which deductions can be made from 40% to 30% of the standard allowance.