THOUSANDS of households have been deprived of nearly £5,000 a year in a major shake-up of the welfare system.
The government aims to move all two million inheritance benefit claimants onto Universal Credit by the end of March 2025 through a process known as managed migration.
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More than 171,000 people on tax relief have had their benefits stopped after they failed to switch to universal credit
The transition officially started in November 2022 after a successful pilot in July 2019.
As part of this process, households with legacy benefits, including tax credits, receive “migration notices” in the post.
These notices contain instructions on how to switch to Universal Credit as the switch is not automatic.
It is crucial for households to apply for Universal Credit within three months of receiving a migration notification.
Failure to do so may result in termination of their benefits.
Since July 2022, the Department for Work and Pensions (DWP) has sent almost 1.14 million migration notices.
However, thousands of recipients did not switch to UC.
Around 171,750 tax relief households sent migration notices between November 2022 and December 2023 have stopped receiving benefits.
That’s according to new figures from the DWP, provided to anti-poverty charity Z2K via an Access to Information request.
This means the typical household has lost around £4,960 a year, amounting to £851 million in benefits scrapped because claimants did not switch to universal credit.
A spokesman for Z2K said: “The total amount of benefits withdrawn by the DWP for people who missed the deadline to switch to universal credit has now jumped to over £850 million.
“This is particularly worrying as we are fast approaching the point where the government plans to start switching seriously ill and disabled people onto Universal Credit.
“We want the government to slow down the move to universal credit to ensure safeguards are in place so no one is left without anything to live on.
“But in the meantime, if you receive a letter telling you to claim Universal Credit, you should seek advice straight away and apply before the deadline.”
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Experts have previously warned that managed migration poses a risk to vulnerable people who face losing money.
Major charity bosses, including Mind, The Trussell Trust, Turn2Us and the Money and Mental Health Policy Institute, said in 2022 around 700,000 people with mental health problems, learning difficulties and dementia could struggle to take part in the process.
More than 20 organizations have called on the government to end managed migration to fix flaws in the system that could see those at risk fail.
A DWP spokesman said: “We are committed to ensuring that all customers get the support they need from our staff and services.
“The department has a wide range of support available to all individuals, particularly those who are vulnerable.”
What benefits end?
UNIVERSAL Credit replaces six benefits from the old welfare system, commonly called legacy benefits. They are:
- Working tax credit
- Child tax credit
- Income-based jobseeker’s allowance
- Income support
- income-related employment and maintenance allowance
- Housing benefit
If you are currently receiving any of these benefits, you may decide to switch – but you may not be better off.
You should carefully consider what moving means for your money, as you can’t go back once you’re on Universal Credit.
Using an online benefit calculator, which is free and easy to use from charities such as Turn2Us and EntitledTo, can help you compare.
You can be moved onto Universal Credit if your circumstances change, such as moving house, changing working hours or having a child.
But eventually everyone will be moved to Universal Credit as part of the managed migration process.
MANAGED MIGRATION PROGRESS
In January, the government announced the number of migration notices it plans to send in the coming financial year.
Prior to this date, the focus was on sending migration notices only to households claiming tax relief.
However, 110,000 maintenance claimants and a further 120,000 claiming tax relief with housing benefit started receiving their letters in April.
In June, more than 100,000 housing benefit claimants alone were contacted.
More than 90,000 people claiming Employment and Maintenance Allowance (ESA) along with Child Tax Credit started being asked to switch in July.
Meanwhile, 20,000 Jobseeker’s Allowance (JSA) claimants will be contacted from September.
The Sun previously reported that in August tax relief claimants who are older than the State Pension will be required to apply for either Universal Credit or Pension Credit.
It was initially planned that those claiming only income-related ESA would not be moved until 2028.
However, the DWP has outlined plans to switch these households to universal credit by the end of 2025.
From September 2024, 800,000 households started receiving letters explaining how to switch from ESA to Universal Credit.
HELP IN SEARCHING FOR UNIVERSAL CREDIT
As well as the benefits calculator, anyone switching from tax credits to universal credit can find help in a number of ways.
You can visit your local jobcentre by searching at find-your-nearest-jobcentre.dwp.gov.uk/.
There is also a free service called Search Help from the Citizens Advice Bureau:
- England: 0800 144 8 444
- Scotland: 0800 023 2581
- Wales: 08000 241 220
You can also get help online from an adviser at Civiladvice.org.uk/about-us/contact-us/contact-us/help-to-claim/.
Will I be better off with Universal Credit?
AROUND 1.4 million people on benefits will be better off after switching to universal credit, according to the government.
A further 300,000 would see no change in payments, while around 900,000 will be worse off under universal credit.
About 600,000 of them are expected to receive additional payments if they move under managed migration, so they don’t lose cash immediately.
Most of them – around 400,000 – claim Employment Support Allowance (ESA).
Around 100,000 are on tax credits, while fewer than 50,000 on other legacy benefits are expected to be affected.
Examples of those who, according to the government, may be entitled to a lower amount of Universal Credit include:
- Households receiving ESA who both the severe disability premium and the increased disability premium
- Households with a lower allowance for children with disabilities on inheritance benefits
- Self-employed households subject to the minimum income after the 12-month grace period
- Employed households who worked a certain number of hours (eg single parent working 16 hours claiming tax credits for working
- Households receiving tax relief with savings of more than £6,000 (and up to £16,000)
But if they don’t change in the future, they risk missing out on any future benefit increases and having their payments frozen.
Those who voluntarily move and are worse off will not get those top-ups and could lose their cash.
Those who miss the deadline and file later may also not receive this transitional protection.
The clock starts ticking a three-month countdown from the date of the first letter, and reminders are sent by mail and SMS.
There is a grace period of one month after this, during which any Universal Credit claim is backdated and transitional protection can still be granted.
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Source: HIS Education