Universal Credit (UC) – The Facts.

The one thing throughout the legislation, is the use of words like “regulations may make provision to” and “Regulations may make provision for…”. Basically, this means the government can change many parts of this legislation by “regulations” – ie. doesn’t have to be agreed in parliament first.


Universal Credit will replace the following benefits:

  • Income based JSA
  • Income Based ESA
  • Income Support
  • Housing Benefit
  • Council Tax Benefit
  • Child Tax Credit & Working Tax Credit
  • Crisis loans and community care grants

For benefits that will stay, see (appendix 1) below.

There will be a maximum UC you can get. At the moment the cap being suggested is £350 for single peopleand £500 for lone parents or couples. (appendix 2)

If the law is passed, the government wants to start implementation these changes in October 2013. (appendix 3)

There are capital and earnings limits (see later). When your earnings go over the UC minimum limit, the plan is to reduce benefits by 65p in every £1 you are over the limit.

Pensioners will have their housing benefit costs added to their pensions. We will all be expected to fill in our application on line, but this is being fought by a number of campaigning groups.

Universal Credit is made up of:

  • a standard allowance,
  • an amount for children or young persons,
  • an amount for housing, and
  • amounts for other particular needs or circumstances (appendix 4).

And will be for either an individual or couple

There are two set of requirements before you receive UC. These are:

(a) “Basic” which is

  • You must be between 18 & reti rement age
  • You must live in UK
  • You cannot be in education
  • And you must accept a “claimant commitment” (appendix 5)

(b) “Financial”

  • Your savings must be below a certain figure (appendix 6)
  • Your income needs to be below a certain figure – (appendix 7)

Like with the present JSA and housing benefit rules, the first part of somebody’s income is disregarded for calculating your entitlement. See point (appendix 7) below for the “suggested amounts

You can’t get UC if your claim is for less than 7 days. You also don’t get paid for the first 7 days of a claim. It is intended that existing claimants will not lose out at the point of change. There will be transitional protection in the form of additional payments.


Like JSA and other benefits there is a “Work Related Requirement” to UC. This is made up of:

  • a work-focused interview requirement
  • a work preparation requirement (appendix 8)
  • a work search requirement (appendix 9)
  • a work availability requirement

Work Search Requirement includes: all reasonable action, for the purpose of obtaining paid work (or more paid work or better-paid work)

There is no WORK RELATED REQUIREMENT, if you have limited capacity to work and work-related activity; or have “regular & substantial” caring for a “severely disabled person”, or are the “responsible carer” of a child under 1 year old. With a couple, ONLY one of you can be nominated the “responsible carer” so the other partner will have to meet all the “work related requirements”.

If you have a child under (somewhere between) 3 to 5 (as it hasn’t been decided which yet) the “responsible carer” only have to do go for a WORK FOCUSED INTERVIEW, but you don’t have to prepare, take or search for work. Lone parents with children above 3o to 5 (see above), will have to fulfil all Universal Credit requirements.

If you have “limited capacity for work” (which seems to be less strict than “limited capacity to work and work related activity) you ONLY have to go for interviews and meet the “work preparation requirement”. It looks like those who have a “limited capacity to work” will be required to be “tested” every 6 months.

There seems to be no back dating of UC, so you only get it from the date you first apply, which is different to some present benefit rules.


The government is considering a “floor of assumed income” for self employed people, which could be set at the national minimum wages. This would mean if your self employment was for 35 hours a week and the national minimum wage was £6.08, it would be assumed you were making a weekly profit of £212.80, even if you were not. If you earn more than this, the higher figure is used.


There are sanctions, as with present JSA etc if you don’t: do a “work related requirement”; take a work placement; apply for jobs you are told to; don’t take a job offered; don’t attend an interview; leave a job voluntarily or are sacked. There is a new addition that you can be sanctioned if you voluntary reduce the number of hours you work or the amount of pay you get, but if your boss asked you, you wouldn’t get sanctioned.

The sanction seems to be either (a) until you comply, or (b) up to 26 weeks.


They are getting tougher on fraud (that’s on us not bosses). They are suggesting an “administration penalty” on top of recovery of the higher of £350 or 50% of the overpayment to a limit of £2,000

Further for the 1st proven case of fraud your benefit would be stopped for 13 weeks;, the 2nd – 26 weeks; the 3rd – 3 years. Also, there is a £50 fine for “people who are negligent in maintaining their benefit claim to encourage responsibility” (my emphasis)


(1) Benefits that will stay include: contribution-based jobseeker’s allowance; contributory employment and support allowance; child benefit; carer’s allowance; bereavement allowance, bereavement payment and widowed parent’s allowance; maternity allowance; industrial injuries disablement benefit; statutory maternity/adoption/paternity pay; statutory sick pay. Maternity grants, funeral payments and cold weather payments – to be extended to people on universal credit, according to the information available.

However, there does seem some reports that say it isn’t certain Council tax will be included. The Disability Alliance are saying “Council tax benefit – The Department for Communities and Local Government has consulted on proposals to replace the current council tax benefit system in England with local support for council tax. The Welfare Reform Bill contains provisions for council tax benefit in its current form to be abolished across the whole of Great Britain..”

Contributory jobseeker’s allowance and contributory employment and support allowance will be administered through the same system as universal credit and will have the same earnings rules as for universal credit. Contributory ESA for those placed in the work related activity group is now limited to one year.

(2) This cap will be set by “average earnings” which is defined as “the average weekly earnings of a working household in Great Britian after deductions for tax and national insurance”.

There will be exceptions to the cap for:

  • households where someone gets disability living allowance (or personal independence payment);
  • those with limited capability for work-related activity;
  • war widows;
  • working families (it is likely that this must be at least 16 hours a week for lone parents or 24 hours a week for couples with children); or
  • newly unemployed if lost job through no fault of their own (exempt from cap for a limited period).

(3) When will it be introduced?

October 2013 to April 2014 New claims for out-of-work support are treated as claims for universal credit.

No new income-based jobseeker’s allowance, income related ESA, income support or housing benefit claims are accepted.
People moving from out-of-work benefits into work transfer onto UC.
April 2014 No new claims for tax credits.
April 2014 to October 2017 Existing claimants transfer to universal credit.

(4) This will include:

  • the fact that a claimant has limited capability for work;
  • the fact that a claimant has limited capability for work and work related activity;
  • the fact that a claimant has regular and substantial caring responsibilities for a severely disabled person.

There are also further “elements” of UC for people with disabilities. These are:

  • Both “normal” and “Enhanced” rates of something called a “daily living component”, and
  • Both “normal” and “Enhanced” rates of something called a “mobility component”.

(5) A claimant commitment is a record of a claimant’s responsibilities in relation to an award of universal credit, which is prepared by the Secretary of State (read benefit worker) and may be reviewed and updated as the Secretary of State thinks fit, and will include:

  • a record of the requirements that the claimant must comply with, and
  • any prescribed information, and
  • any other information the Secretary of State considers it appropriate to include.

(6) Capital rules

  • Under £6,000 (both single person or couple) you get full entitlement to Universal Credit
  • Between £6,000 & £16,000 it’s treated as extra income of £1 per week for each £250 over £6,000
  • Over £16,000 – no Universal Credit

(7) The minimum disregard currently suggested is:

  • for a single person without children: £700
  • for a couple: £1920 plus £520 for the first child and £260 for the second and third children
  • for a lone parent: £2,260 plus £520 for the first child and £260 for the second and third children
  • for single disabled people or a couple where at least one person is disabled: £2,080.

The maximum disregard currently suggested is:

  • for a single person without children: £700
  • couple: £3,000 plus £4,250 per household for a child (regardless of the number of children)
  • lone parent: £9,000 (regardless of the number of children)
  • disabled people: £7,000 per household if a recipient or either partner in a couple is disabled

(8) “Work Preparation Requirement” is a requirement that a claimant take particular action for the purpose of making it more likely that the claimant will obtain paid work (or more paid work or better-paid work and can include: attending a skills assessment; improving personal presentation; participating in training; participating in an employment programme; undertaking work experience or a work placement; developing

a business plan; any action prescribed for this purpose. In addition person with “limited capability for work” must take part in a work-focused health-related assessment, by a health care professional approved by the Secretary of State.

(9) “Work Search Requirement” can include a claimant takes:

– all reasonable action, and

– any particular action specified by the Secretary of State, for the purpose of obtaining paid work (or more paid work or better-paid work).



Welfare Reform Bill – This is the legislation introducing Universal Credit

CAB’s take on Universal Credit (8th Feb 2011)

Child Poverty Acti on Group’s fact sheet on Universal Credit

Disability Rights UK fact sheet

Department of Works & Pensions business plan 2011 -2015. Interesti ng reading if you want to know what they are thinking about hitti ng us with next, and where they are with it all http://www.dwp.gov.uk/publications/corporate-publications/dwp-business-plan-2011-2015/#srp


May 1, 2012  Tags:   Posted in: INFORMATION