Sam Royston is Head of Policy and Public Affairs at the Children’s Society, and author of “Understanding Universal Credit”, published in the Journal of Poverty and Social Justice in February 2012. Since the original publication of this article there have been a number of policy updates affecting the delivery of the new system. In this blog Sam summarises those change that particularly relate to the content of his article published in 2012. The original article is free to access until 31st October 2014.
At the time of publication, the Government intended to introduce childcare support under Universal Credit at a rate covering 70% of childcare costs. “Understanding Universal Credit” showed that this would be a much lower rate of support than some families can receive through the current system as a result of a combination of childcare support through Tax Credits, Housing Benefit, and (what was at the time of writing) Council Tax Benefit.
Since publication, the Government have sought to address this problem by providing an 85% rate of childcare support for families in receipt of Universal Credit. As a result, although some families would continue to receive less support than under the current system, any difference will be considerably less.
Since 2012, the government has also introduced plans for a new “Tax Free Childcare” scheme. Although families in receipt of Universal Credit will not be entitled to receive Tax Free Childcare, differences in the way the two systems will be administered and paid may create some complexities for those caught between the two systems. These issues are expected to be debated during the course of the “childcare payments bill” in Autumn 2014.
Free School Meals (and other passported benefits)
The successful implementation of Universal Credit continues to be threatened by the potential introduction of a benefits “cliff edge” as a result of the interaction between Universal Credit and various passported benefits – including, most significantly, Free School Meals.
Notably, the Government have still not yet made a final decision about eligibility for Free School Meals under Universal Credit, however, an “interim” solution of providing Free School Meals to all families in receipt of Universal Credit has been implemented.* In order to avoid undermining the progressive work incentive intentions of Universal Credit, it is critical that these rules remain in place following the roll out of Universal Credit.
Payment of Universal Credit
“Understanding Universal Credit” raises concerns that Universal Credit will typically be paid monthly and payments will not normally be able to be “split” between joint claimants. Increasingly concerns have also been raised about plans to pay “direct housing payments” (payments of the housing component to the tenant – rather than to the housing provider) through Universal Credit for tenants in the social rental sector – an arrangement which already exists for most tenants in the private rental sector. Concerns have been raised that these arrangements may lead to many social housing tenants to get into rental arrears.
The government has since released guidance on the circumstances under which “alternative payment arrangements” (APAs) will be considered. APAs would enable claimants to have their Universal Credit payment split, paid more frequently than monthly, or have the housing component paid to their landlord. Concerns remain that claimants will not be able to “opt in” to these arrangements for themselves, without this provision it remains a real concern that claimants unable to manage their money effectively, may not be able to get the support they need in order to do so.
Changes to the timeline for the introduction of Universal Credit
The government has significantly slowed the introduction of Universal Credit since original plans were laid out (for example, as late as the start of 2013, the DWP website stated that all new claims would be for Universal Credit from April 2014). During the initial period of the pathfinder, claims have only been able to be made by people with very specific circumstances, and in a very limited number of areas of the country. As of May 2014 only 6570 people were in receipt of Universal Credit .
Since this point, the government has begun to extend the pathfinder to additional jobcentres, and the service has opened to its first new claims from couples. From towards the end of this year, Universal Credit is expected to begin to take new claims from families with children for the first time.
It should also be noted that the Government’s decision to provide Free School Meals for all children in reception, year 1 and year 2, solves the difficulties arising from the interaction of Free School Meals and Universal Credit for this group of children.
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