Social Justice

One in five people see DWP benefits stopped for not switching to universal credit

This is despite the DWP admitting that up to 900,000 people on legacy benefits would be worse off under universal credit

DWP

The Department for Work and Pensions is facing calls for urgent change. Image: Mike Kemp/In Pictures via Getty Images

One in five people on legacy benefits who are invited to move to universal credit do not claim and ultimately have their benefits stopped, a new report has found. Almost all of these people are receiving tax credits.

By the end of 2024, the Department for Work and Pensions (DWP) plans to move 900,000 people receiving means-tested ‘legacy benefits’ onto the newer universal credit (UC) payment.

But the shift seems to be leaving some people behind.

By the end of December 2023, DWP had sent 346,550 migration notices. Of the 148,700 closed cases, 31,500 (21%) resulted in households having their legacy benefit stopped without moving to universal credit.

The DWP must make sure that claimants aren’t incorrectly deprived of support, warned Gareth Davies, head of the National Audit Office (NAO), which has produced the research.

“DWP is on track to move legacy benefit claimants to universal credit. But it needs to be sure people who have not switched to universal credit are receiving the benefits to which they are entitled,” he said.

Why are people not claiming universal credit?

According to the report, the “DWP does not fully understand why some people on legacy benefits do not claim universal credit.” However, preliminary studies suggest that confusion and stigma play a role.

DWP-commissioned research from 2022 suggests that there are “real and perceived barriers to claiming UC, including where people believed that the migration notice did not apply to them, that they would not be eligible for universal credit due to a recent change in circumstances, or that they would be moved automatically.”

The DWP initially assumed that, overall, 3% of households claiming legacy benefits would not move to universal credit after receiving a migration notice. The actual figure is closer to 4% – but for households claiming tax credits, the non-claim rate is over a quarter ( 26%).

“[The DWP] is reassured that the non-claim rate is not a cause for concern as it has received few complaints,” the NAO report concludes. “However, it has limited positive assurance that people are claiming the benefits they are entitled to. The stakeholders who responded to our consultation raised concerns about claimants not applying for UC when invited who may risk suffering financial hardship as a result.”

Following the 2022 research, the DWP started sending second migration reminders to people. The department expects that implementing UC to cost £900 million more, and to be completed at least six years later, than it planned in its 2018 business case. This is because the migration was paused during the pandemic.

Why is the switch from legacy benefits controversial?

The switch to universal credit has been controversial. In 2019, experts told the DWP moving people from legacy benefits onto universal credit risked letting them “fall between the cracks and suffer hardship”.

In 2022, the DWP admitted that up to 900,000 of the 2.6 million people remaining on legacy payments would be worse off under universal credit.

Anti-poverty campaigners have previously branded the move as a “stealth cut,” as fixed transition payments are eroded by inflation.

“It will leave hundreds of thousands of vulnerable disabled people who are already struggling with the current cost of living crisis even more out of pocket in future,” Marc Francis, Z2K’s policy and campaigns director, told The Big Issue in 2022..

Four legacy benefits claimants took the government to court in 2021 over the refusal to increase their payment by £20 a week in line with universal credit during the pandemic. In January last year, the High Court dismissed their case.

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