The Universal Credit is a new benefit for people of working age. It can be paid whether you are in or out of work. It will replace most of the current means-tested benefits and tax credits for people of working age. What benefits will the Universal Credit replace? Income Support income-based Jobseeker’s Allowance income-related Employment and Support Allowance Child Tax Credit Working Tax Credit, and Housing Benefit. Most other benefits will remain and can be paid alongside the Universal Credit. When will Universal Credit be introduced? Universal Credit is currently being piloted in job centres in Ashton-under-Lyne, Wigan, Warrington and Oldham. Between October 2013 and March 2014 it will also be extended to a further six pilot jobcentres in Hammersmith, Rugby, Inverness, Harrogate, Bath and Shotton. So far the pilot areas have focused on solely on claims by single job-seekers. However, it is planned that this will be extended to new claims by couples from the summer of 2014 and to new claims by families in the pilot areas from Autumn 2014. Subsequently Universal Credit will also be rolled out to other areas in the North West of England. Universal Credit is expected to replace new claims for existing benefits elsewhere in Great Britain during 2016. Most existing claimants will be moved onto Universal Credit during 2016 and 2017 although some may not be moved until 2018. The timetable in Northern Ireland will depend on the passage of the welfare reform bill. How will my Universal Credit be calculated? In calculating your Universal Credit the Department for Work and Pensions (DWP) start by working out the maximum amount of Universal Credit that you can get. This figure varies depending on your family size and other circumstances. However, because Universal Credit is means- tested, this figure is then reduced if you have other income or capital above certain amounts. Your maximum Universal Credit award is worked out by adding together whichever of the following elements apply to you: Adults – there is a standard allowance for adults depending on whether you are single or part of a couple. A lower amount is paid where both members of a couple or a single person are under 25. Children – an amount is added for each child or qualifying young person, with a slightly higher amount for the first child.
Under the tax credit system you can continue to receive payments for a looked after child who is in a residential placement solely because of their disability. However, under Universal Credit you will not be able to receive payments for a child with ‘looked after’ status. The only exception to this will be where a child is ‘looked after’ as part of a planned short break. If your child is living away from home but does not have ‘looked after’ status then payments can continue but only so long as they are not expected to be absent for more than six months. If they are likely to be away from home for longer than this payments for them will stop. If your child comes home for short stays within a six month period this should mean you can continue to get benefit for them on an ongoing basis, as each return home will start a new period of absence. Cuts to the child disability addition under Universal Credit An additional amount is into your Universal Credit calculation for each child you are responsible for who receives DLA or PIP. Under Universal Credit there will be two rates of the disability addition for a child. The higher rate will be awarded for a child who is registered blind or who gets the highest rate of DLA care component or the daily living component of PIP at the enhanced rate. This will be an extra £81.22 per week – the same amount as the equivalent disability addition paid under the existing benefits system. All other children on DLA or PIP will qualify for the lower rate of the addition. This will be £28.45 per week. Given that the equivalent additional payment under the existing benefits system is £57.89 per week, this represents a cut of £29.44 per week or just over £1,500 per year. Since the addition is paid for each disabled child, those families with two children on the lower addition could lose twice this amount. Some working families may find that other Universal Credit work incentives offset the cut in their disability addition, still leaving them better off overall. But other families will be worse off over time – particularly out of work families with a child who qualifies for the lower disability addition. Even if you are in one of the groups who is at risk of being worse off you will be transitionally protected if you are an existing claimant moved onto Universal Credit and your circumstances remain unchanged. Transitional protection If you already get other benefits or tax credits you will not get Universal Credit until either you are transferred onto the new benefit or your circumstances