Hundreds of thousands of people across the UK are expected to be hit badly by a freeze to benefits under controversial plans to shift 2.6 million households onto Universal Credit.
UK Government ministers announced on Monday night that they will begin moving claimants from six old-style 'legacy' benefits onto Universal Credit on May 9 — with plans to complete the move by December 2024.
However, as many as 900,000 households claiming the old-style benefits will be worse off in the long term, the Department for Work and Pensions (DWP) has revealed.
READ MORE — Martin Lewis calls on people to 'ditch their cash ISA' to save money
As reported by The Mirror, these claimants will receive transitional payments in order to prevent their income from suddenly plummeting.
However, their benefits will then be effectively frozen every April — potentially for years.
This is due to the fact that their transitional payments will "erode" every year as Universal Credit increases alongside inflation — until the benefit catches up with what they’re being paid.
As a result, some people will not see any additional money next April, despite predictions that benefits will get a bumper increase following soaring inflation.
Additionally, some people will also have their transition payments removed — or even miss out on them completely — if they experience a change to their circumstances such as a house move, a new job, a break-up or a first child.
Sophie Corlett of mental health charity Mind said the plans “could cause hundreds of thousands of people to be worse off” while inflation soars.
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 revealed on Monday night within a 20-page government document, after being help up for two years as a result of the pandemic.
Although approximately 1.4 million people claiming legacy benefits are expected to be better off, another 900,000 could be worse off — with a further 300,000 expected to see no change.
Of the 900,000 people, 300,000 claim Tax Credits and 500,000 are sick and disabled people on the benefit Employment and Support Allowance.
More than 600,000 are set to receive transition payments, with the others expected to lose out due to changes of circumstances or leaving the benefits system.
Although only 500 people will be transferred at first, 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.
People claiming legacy benefits will be issued a 'migration notice' which will include a three-month deadline by which they will need to claim 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.
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, 3.8 million of them would be better off than under the old system.
But 2.2 million 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, Brits 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.
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.”
