There's changes around the corner this year for families claiming Universal Credit, as the Department of Work and Pensions (DWP) starts to phase in the steps announced in Chancellor Jeremy Hunt's 'back to work' budget in March.
Tax Credit claimants will also soon be joining nearly six million people who claim Universal Credit, as the Government presses ahead with migrating those on so-called legacy benefits.
According to the latest figures, more than 289,000 people in the North East claim Universal Credit, with about one in four claiming the benefit to top up their wages. All benefits have seen a 10.1% rise this month, but there are changes due to be implemented this year which could affect your payments.
Read more: Month-by-month guide to when you can expect all of this year's cost of living payments
Here's what's in store so far:
Managed migration
The DWP has announced that families who claim Tax Credits will start to be moved over to Universal Credit, starting this month. Two million people currently claim old-style benefits like income support, but the people claiming Working and/or Child Tax Credit will be first to receive the so-called Migration Notices, as the DWP resumes its plans after a pause to cope with the pandemic. The Department has warned that that those who fail to act risk losing their current benefit entitlements.
The migration to Universal Credit follows a 'discovery phase' when certain areas were chosen to pilot the benefits switch. Claimants living in Northumberland were among the first to be moved from legacy benefits to Universal Credit, with some people living in the county who are paid Income-Related Employment and Support Allowance, Income-Based Jobseeker’s Allowance, Working Tax Credit, Child Tax Credit, Income Support and Housing Benefit being required to move to Universal Credit to retain their financial support.
Support for mortgage interest
The Government has extended the Support for Mortgage Interest (SMI) loan scheme to a further 200,000 people on Universal Credit. The SMI gives people on Universal Credit a low-interest loan to goes towards mortgage payments or loans taken out to help repair any damage to the home.
The criteria claimants need to meet in order to get SMI has also changed. From now on, those on Universal Credit will only need to be claiming the help for three months before they can use SMI. Before, claimants had to be claiming Universal Credit for nine months and be unemployed for that long too.
Changes to childcare allowance
The Chancellor's "back to work" Budget aims to encourage more than 700,000 parents on Universal Credit to get a job or raise their hours with sweeping childcare changes to help must and dads go to work. Currently, parents on Universal Credit can claim back 85% of their childcare costs – but they have to pay upfront before getting any support. It means parents may have to find more than £1,000 for a month’s nursery care in advance before getting any support.
The changes mean childcare payments will be paid upfront rather than in arrears, removing a financial barrier for parents to get back into work. The childcare allowance for claimants will also increase from £646 a month for a single child to £950, and from £1,108 for two children to £1,630, to keep pace with increased childcare costs.
Parents will also get 30 free hours a week for one and two-year-olds, expanding the existing 30 hours scheme for working parents of three and four-year-olds.
Changes to work requirements
More than 100,000 Universal Credit claimants who currently work 15 hours per week will have to step up their hours or face having their benefits cut. The lifting of the Administrative Earnings Threshold from 15 to 18 hours per week means that that anyone currently working fewer than 18 hours will have to meet with DWP job coaches to find more work or risk having their Universal Credit cut.
Strengthening Universal Credit sanctions
The Government is strengthening the application of the Universal Credit sanctions regime, including additional training for Jobcentre work coaches to ensure they are applying sanctions effectively for claimants who do not look for or take up work. The changes will also automate some of the sanctions process, including sending automated messages to claimants who fail to meet their work coach and take active steps to move into work or increase their earnings.
Work Capability Assessment scrapped
Those who claim Universal Credit benefits and have a health condition or disability that affects capability for work will no longer have to complete a Work Capability Assessment (WCA) if they are unable to work for health reasons, which can take weeks, and involves paperwork to be filled in and a WCA meeting. The WCA will be scrapped so that disabled people can try to work without fear of losing their benefits, and it will reduce the number of assessments needed to qualify for health-related benefits.
Changes to Fuel Direct Scheme
Households who pay for their energy by Fuel Direct - where the payment is taken directly out of their benefits before they receive them - may find themselves paying more than they are used to after the DWP lifted a temporary freeze on automatic requests for more money from suppliers. The DWP stopped the practice in March 2022, ahead of the Energy Price Cap rise in October, and announced at the time that the freeze to new and increased payments would last until April 2023.
The moratorium meant that energy suppliers were not permitted to apply for an increased Fuel Direct payment, even if a bill has gone up, meaning that benefit payments remained stable even if energy bills went up, although families still had to pay any extra charged by the energy company.
The change allows UK energy suppliers to start requesting new deductions from claimants and increasing the deductions they are already paying again, however the DWP says that the energy supplier must have the claimant's consent before a new deduction or an increase is made. However, if an energy supplier has tried to contact a claimant who has an existing payment arrangement in place multiple times without success, they can then notify the DWP.
Extra cost of living payments
Millions of people on benefits and Universal Credit will get a one-off £900 cost of living payment. A payment of £301 will be made directly into bank accounts between April 25 and May 17. The payments are part of a package of wider Government support announced to tackle the cost of living. It includes a further £300 payment for eligible families in autumn, and then a payment of £299 in spring 2024.
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