Managed migration

Sambelina

Hi, I'm hoping for some clarity on what I should expect when my family are transferred from Tax credits to Universal Credit through managed migration. I understand that this could happen from July next year. I also realise that some of this may not have been clarified (or possibly even considered...) by the government yet.

I believe the government has stated that no-one will lose out when moved over to UC via managed migration, as if there is a shortfall it will be covered by transitional protection. There are two main aspects of this Im curious about. The first is Statutory Maternity Pay. We are expecting our second child in March next year. As I understand it, in our current situation on tax credits, we can discount the first £100 per week of SMP when declaring earnings. However, Universal credit does not appear to offer this SMP disregard. Can we expect it to be covered by transitional protection?

The second issue is savings - we have been diligently saving for a deposit on a house for some years now, and have managed to get just over £16000 - still nowhere near what we need. I understand that any savings over £16000 will be disregarded for the first 12 months after switching to UC. After that, I presume we will no longer be entitled to Universal credit - clear we will lose out at that point due to the transition. But does that mean then savings UP TO £16000 will be taken into account from the very beginning of our UC claim and our award reduced accordingly? If it is the case, it seems that contrary to the governments assurances, we will lose out pretty massively due to the switch... We will essentially immediately be eligible for nothing just at the point that a new baby comes along. Can anyone shed any light please?

calcotti

Sambelina wrote: »

I also realise that some of this may not have been clarified (or possibly even considered...) by the government yet.

I think that's the key bit!

https://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2018-06-07/HCWS745/

https://www.gov.uk/government/consultations/moving-claimants-to-universal-credit-from-other-working-age-benefits

The devil will be in the detail and we simply do not know that yet.

Sambelina

Ah ok, fair enough. Thanks. I wondered whether there was some detail released, or that some forum members were privvy to, that I couldn't find. It's quite scary when their assurances no-one will lose out are clearly not true, the wording of the savings section makes it pretty apparent that savings up to 16,000 will likely be taken into account from the beginning. But as you say, we'll have to wait and see.

calcotti

It seems to me that regardless of the rules incorporating the transitional protection into UC awards is going to be a huge exercise. It will of course only protect claimants at the point of transition so a change of circumstances just after transition obviously has no protection regardless of whether claimant would have been better off on old benefits.

However it's very difficult to say whether someone will be worse off or better off under UC - it does depend on circumstances.

Under UC SMP is treated as earnings so only 63% is taken into account (i.e 37% is ignored). If there is a child in the house then there will be a work allowance of £198/month (if UC includes housing costs) or £409/month (if no housing costs). The work allowance is an earnings disregard. So if SMP was the only earnings and there were no housing costs included there would be a disregard of £94/week and only 63% of the excess taken into account.

However you can't really just compare UC with Tax Credits alone, because UC replaces several benefits you have to look at the total benefit picture to get a true comparison.

Sambelina

You're right, and I realise it's not usually as simple as comparing the two. In my family's case, though, we are only eligible for tax credits, not any of the other benefits. I'm just looking to budget and plan for my family, rather than assess the general merits of UC, so it makes sense to directly compare UC with tax credits alone.

You're also right that UC contains an earning disregard of £409 a month. For comparisons sake, this is £4908 a year, compared to the £6420 disregard for tax credits. Tax credits then allow a £100 a week disregard for Maternity pay on TOP of this, then only takes into account 41% of the remaining income, compared to 63% for UC. Overall, thats a really significant difference for families in the first year of a new baby.

Luckliy for us, we hope to have earned our way out of tax credits by the time our new baby is 3 and eligible for free nursery hours. That gives us a small chance, if we happen to be towards the end of the queue for managed transition, of escaping the whole system before the transition affects us. I can only hope we get away with it and I realise others in a similar situation to us wont be so lucky.

calcotti

Good luck going forward. I think the current end date for UC migration is March 2023 (and of course it may slip before then). However there are no details yet, to the best of my knowledge, about how they are going to sequence the process.

[Deleted User]

Of course its possible we may have a change of govt between 2019 and 2023. Then who knows?

Sambelina

Well I suppose lots of things are possible, but if I start planning and budgeting based on all possibilities then Ill find it even harder to get my partner to look at my spreadsheet. I take your point though, it probably seems a bit early to start trying to factor these things in when they haven't even given out the full details yet, but a start date for the migration of July next year seems a bit close for comfort for such a major possible drop in finances. Hopefully they wont wait TOO long to give out more details...

huckster

As someone once said, "there are more unknown knowns than knowns" !

Can I suggest that if you have these detailed questions concerning managed migration, that you email your local MP's office. Ask them to request a response from DWP on the issues raised and if they fail to provide proper answers, to raise them with the DWP select committee, so they can hold Government ministers to account.

There are going to be so many issues caused by managed migration, which Government will hope to cover off as simply as possible. I very much doubt that every individual person/household will be protected from losing out within any automatic admin process. Universal credit will probably be tweaked by making changes to various elements, hoping to protect as many people are possible. Those that are worse off, will be dealt with afterwards through the normal complaints process.

In regard to the issue raised about £16000 savings amount, this is going to be a problem. At the moment, the migration process will not be an admin process solely by Government. A letter will be issued stating that a benefit is due to end and advising people to apply for Universal Credit online. The online application will state that those with savings over £16000 may not be eligible for UC. If they added any extra information about those migrating from other benefits, it will start to become confusing, leading to mistakes. People do currently apply for UC with savings over £16000, but they face months waiting for a Decision Maker to decide whether the savings can be disregarded or not. There are a large number of reasons, why people have savings over £16000 for short periods. E.g. Someone that has a new disability needing to sell a house and buy something more suitable.

Which is why I suggest you raise questions with Government now, because they will be drafting legislation at the moment, to deal with as many of the migration issues as possible.

calcotti

huckster wrote: »

Which is why I suggest you raise questions with Government now, because they will be drafting legislation at the moment, to deal with as many of the migration issues as possible.

The legislation has already been drafted and published and subject to consultation https://www.gov.uk/government/consultations/moving-claimants-to-universal-credit-from-other-working-age-benefits

What we don't know is what is going to result from the consultation.

Sambelina

Does that mean its too late to be worth raising these points with my MP?