Plans to move 2.6million households onto Universal Credit could see people hammered by a benefit freeze.
Ministers tonight announced they will start moving people from six old-style ‘legacy’ benefits to UC on May 9 and finish in December 2024. But up to 900,000 of the 2.6m ‘legacy’ households will be worse off long-term under UC, the Department for Work and Pensions (DWP) has admitted.
They will get transition payments to ensure their income does not drop overnight. But in return their benefits will then effectively be frozen every April - possibly for years.
Read more: Newcastle's Budget Taxis offering free lifts to keep lone women safe after a night out
That is because their transition payments will “erode” away each year as UC rises with inflation, until the benefit catches up with what they’re being paid. It means some poor Brits will not get any extra cash in April 2023 - despite predictions that benefits will see a bumper boost due to soaring inflation.
Some people will also lose their transition payments - or miss out on them completely - if they have a change of circumstances. This can include a house move, a new job, a break-up or a first child. Sophie Corlett of mental health charity Mind warned the Mirror the plans “could cause hundreds of thousands of people to be worse off” while inflation soars, the Mirror reports.
She added: “Migration from disability benefits to Universal Credit represents a grave threat to many people with mental health problems.
“The consequences of cutting someone’s benefits can be fatal.”
The plans were unveiled tonight in a 20-page government document after they were held up for two years due to Covid. It revealed that while 1.4million legacy claimants (55%) are set to be better off under the new system, 900,000 (35%) would be worse off. The other 300,000 see no change.
Of those 900,000 people, 300,000 claim Tax Credits and 500,000 are sick and disabled people on the benefit ESA. Of the 900,000 people who’d be worse off, more than 600,000 are expected to get transition payments. Others will lose out due to a change of circumstances, or leave the benefits system.
Only 500 people will be moved at first - but then after “several months”, the DWP will remove a 10,000-claimant cap and ramp up “in earnest” to move everyone by the end of 2024. Legacy claimants will be sent a 'migration notice' with a three-month deadline to make a claim for Universal Credit, otherwise their benefits will be cut off.
That has alarmed mental health and poverty campaigners who believe some people will slip through the cracks. One man, Errol Graham, was found starved to death weighing only five stone in 2018 after his disability benefit was stopped.
An inquest heard the DWP sent reminders to the 57-year-old from Nottingham, but received no reply so shut off his ESA. The Social Security Advisory Committee is investigating further after warning removing the 10,000-claimant cap "creates a significant risk".
And Work and Pensions Committee chairman Stephen Timms said ex-DWP chief Amber Rudd "promised to move very cautiously on Universal Credit migration, and for good reason”. The Labour MP told the Mirror: "The department's current proposals are raising widespread concern."
DWP estimates show that once Universal Credit is fully rolled out to 7.2million people, 3.8million of them would be better off than under the old system. But 2.2million would be worse off, before transition payments are factored in.
The DWP said people who could be better off include some ESA support group claimants who weren’t getting disability premiums, people who don’t work enough hours to receive Working Tax Credit, and working households who receive both Working Tax Credit and Housing Benefit.
Those who face being worse off long-term include ESA claimants who get disability premiums, self-employed claimants after a 12-month grace period for the 'minimum income floor' expires, and Tax Credit recipients with more than £6,000 in savings.
Ministers encouraged legacy claimants to use a benefits calculator and move to UC voluntarily if they'll be better off. However, people are urged to be careful because this move will be irreversible and will not come with any transition payments.
There will be a dedicated helpline listed on the migration notice that is sent to claimants, or they can visit their local Jobcentre. A 2020 pilot of managed migration in Harrogate will not restart.
Work and Pensions Secretary Thérèse Coffey said: "Over five million people are already supported by Universal Credit.
"It is a dynamic system which adjusts as people earn more or indeed less, and simplifies our safety net for those who cannot work. Parliament voted to end the complex web of six legacy benefits in 2012, and as this work approaches its conclusion we are fully transitioning to a modern benefit, suited to the 21st century."
