PUC0010

Written evidence submitted by Z2K (Zacchaeus 2000 Trust)

1. Z2K is an anti-poverty charity. We provide specialist advice, support, and representation to people facing social security and housing difficulties, and use the insights from this work to campaign for change nationally.

2. Many of our clients are still in receipt of legacy benefits, particularly Employment and Support Allowance (ESA), and so the rollout of ‘managed migration’ is of particular interest to us.

Managed migration

3. The Department for Work and Pensions (DWP) is moving claimants of legacy benefits on to Universal Credit. Under current plans, Tax Credit, Income Support, Jobseeker’s Allowance, and Housing Benefit-only claimants will be moved by the end of the 2024/25 financial year, and ESA claimants who do not also claim Tax Credit will be moved by the end of 2028/29.

4. The approach DWP has taken is flawed in two key ways. Firstly, it places the onus on the claimant to make an application to Universal Credit, rather than on DWP – which means the claimant, not DWP, bears the risk. This is inappropriate and comes with significant risk to claimants.

5. DWP has taken the decision to migrate claimants to Universal Credit, and it should bear the responsibility for doing so. We recognise that there are particular challenges around Tax Credits, where there is no capital limit and so DWP does not have all the information needed to calculate a Universal Credit award. For other benefits, however, it should be possible to transfer these claims more automatically. We are concerned that DWP is using the challenges involved with Tax Credits to discount the possibility of moving claimants of other benefits to Universal Credit without requiring a new application and is therefore discounting an opportunity to take steps to mitigate risks for non-Tax Credit benefits.

6. The second, related flaw is the consequences of someone not claiming. If a claimant does not make a claim within the specified timescale or any extension granted, they could have their benefit claim stopped altogether. This is not an idle threat. Statistics published by the Department show that 30,000 claims under managed migration were stopped without a successful claim to Universal Credit having been made – a fifth of all claims with a known outcome sent a migration notice by the end of 2023[1].

7. Z2K submitted a Freedom of Information request to understand more about these ended claims[2]. This revealed that of those claims that have now ended without a Universal Credit claim having been started, the average previous Tax Credit award was £4,300 a year. That is a large amount of money for anyone to forego. Claimants may also have missed out on passported benefits and Cost of Living Payments.

8. DWP has stated that the lack of complaints to HMRC from these claimants demonstrates that these are conscious decisions taken by Tax Credit claimants, and therefore this is not of particular concern. This an inadequate response for a number of reasons.

9. Firstly and most importantly, DWP should not be relaxed by people not claiming the support that Parliament has decided they should be entitled to. This should be of concern to the Department at any point, and particularly in the context of deepening poverty and growing destitution[3] - but its  actions, including its approach to Managed Migration and the lack of data publications on non-uptake of Universal Credit[4], suggest that it is not a focus for the Department at present.

10. Secondly, even if these claimants were aware that not making a claim would lead to the end of any financial support, this might not have been a fully-informed decision. Someone might not, for example, realise that there is a 12-month disregard of assets, or they might not realise their earnings were high enough to avoid in-work conditionality, and choose not to claim in order to avoid that perceived burden.

11. A further Freedom of Information request from Child Poverty Action Group (CPAG) revealed that DWP hasn’t conducted any analysis into the reasons for Tax Credit claimants not applying for Universal Credit[5]. This is unacceptable complacency.

12. In the coming months, DWP will be rolling out managed migration to claimants of other benefits, for whom these may be their primary or sole source of income. Clearly, any cessation of these benefits will have a devastating impact on claimants. If claimants do make a claim, but only after their deadline, they are unlikely to have the award fully backdated, and they could also lose out on any Transitional Protection they would otherwise have been entitled to, meaning a sudden drop in their ongoing income.

13. We expect and hope that lower proportions of claimants of subsistence benefits (JSA, ESA, Income Support and Housing Benefit) will not respond to their Migration Notice and have their benefits stopped. For these claimants, however, focusing on the proportion risks missing the huge individual impact of ending someone’s subsistence benefits. These benefits are the last line of defence against destitution and serious risks to health.

14. We recognise that DWP is working on identifying ‘pain points’ in the journey to reduce the number of claimants whose legacy award stops without a Universal Credit claim being made. This is welcome, and we consider that the work being done will reduce the risks of serious harm, but ultimately it is trying to fix a problem of DWP’s own making.

15. Underpinning DWP’s approach is a belief that (perhaps with some prompting) claimants will act in their best interests, rather than risking having their benefits stopped altogether. In reality, however, there are many reasons why people might not act rationally – they do not always do what they ‘should’, even if repeatedly prompted. This is an inevitable , and so the question becomes “What happens if someone does not do what they ‘should’?”. In this case, the answer is that someone’s subsistence benefits will be cut off entirely, which is highly risky and entirely disproportionate.

16. Once someone does claim Universal Credit, they will by default receive Universal Credit in DWP’s preferred manner (a single monthly household payment, with Housing Costs Element going to the claimant). This is primarily for DWP’s administrative convenience, which again places the risk of adapting to these payment structures and schedules on the claimant. While claimants can request an Alternative Payment Arrangement, the , and it may take until a problem has occurred for this need to be identified.

17. The policy rationale for this payment schedule is that it better reflects the world of work and so eases the transition, but this is flawed as many low-income jobs do not pay monthly. And particularly for claimants receiving Work-Related Activity Group or Support Group ESA, who are not currently able to work, there is no coherent rationale for this.

Recommendations

18. DWP should:
1. Guarantee that no-one’s subsistence benefits will be stopped simply because they have not responded to a request to make a new claim to Universal Credit.
2. Explore the possibility of more automatically moving claimants to Universal Credit, and consider this benefit by benefit.
3. Continue with legacy benefit payment structures and schedules by default, unless a claimant actively opts out.

March 2024