DWP estimates 900,000 former benefit claimants will be worse off when managed migration begins this month

The Department for Work and Pensions (DWP) will restart the ‘managed migration’ process of moving up to 2.6 million claimants of inherited benefits to Universal Credit (UC) from Monday 9 May.

Only 500 people will initially transfer to Universal Credit through the managed migration process, but this is expected to increase over the next few months in order for the DWP to reach its completion deadline by the end of 2024.

People with older style benefits include:

  • 1.2 million on Employment and Income Support Allowance (ESA)
  • 1 million on tax credits for workers and tax credits for children
  • 100,000 on income-based jobseeker’s allowance (JSA) and housing allowance
  • 200,000 on income support

The DWP will begin writing to former benefit claimants from this month letting them know they will be switching to Universal Credit and explaining how the process will work.

The letters are called “Migration Notices” and will notify people that their inherited benefits are ending and they have three months to apply for Universal Credit.

Anyone leaving legacy benefits will have their Universal Credit entitlement assessed against their current claims, with top-up payments – called “transitional protection” – provided to eligible claimants whose entitlement would have been reduced due to the change to ensure that they benefit from the same level of assistance as on an old system.

The DWP said these will continue unless their circumstances change.

A dedicated helpline will be listed on the migration notice applicants receive to help people apply for Universal Credit, and guidance is also available on the Understanding Universal Credit website, here.

Migration process from legacy benefits to Universal Credit

People can migrate to Universal Credit in three ways, outlined in the DWP’s ‘Universal Credit Endgame Implementation Strategy 2022-24’ – you can read it in full on the GOV.UK website, here.

These are:

  • Natural migration – a change of situation triggers a move
  • Voluntary migration – applicants choose to move
  • Managed migration – DWP triggered

The DWP explains: “Of the 2.6 million households remaining on inherited benefits in April 2022, if they chose to claim UC today, we estimate that approximately 1.4 million (55%) would have a higher entitlement to UC, 300,000 would see no change and about 900,000 households (35%) would have a lower entitlement.

The DWP also estimates that of the 900,000 households that would be essentially worse off by switching to Universal Credit, around 600,000 would receive transitional protection through the managed migration process, while others will “leave benefits, migrate naturally before the DWP asks them to move or receive a transitional payment for severe disability”.

You can read the full guide to managed migration from DWP to Universal Credit on the GOV.UK website, here.

Which groups should be better or worse off with Universal Credit?

The DWP believes that ESA claimants who are part of the support group but do not receive the Severe Disability Payment are better off with Universal Credit.

Households that get the ESA and receive the Severe Disability Premium and Enhanced Disability Premium are expected to be worse off.

You can find more details on which groups may receive a higher or lower entitlement on Universal Credit here.

The DWP’s estimates of who will receive higher or lower entitlements or who will see no change in the amount of benefits they receive are summarized below.

Higher entitlement after the move to Universal Credit

  • ESA applicants: 600,000
  • Applicants for tax credits (work and child): 700,000
  • Total including other inherited benefits: 1.4 million

Fees reduced after the move to Universal Credit

  • ESA applicants: 500,000
  • Claimants of tax credits (work and child): 300,000
  • Total including other inherited benefits: 900,000

No changes after switching to Universal Credit

  • ESA applicants: 100,000
  • Income support: 100,000
  • Total including other inherited benefits: 300,000

Transient protection

The DWP said around 400,000 ESA claimants and 100,000 tax credit claimants will receive transitional protection, meaning they should see no reduction in their benefits when they transfer.

However, the value of this protection will erode each year because, with the exception of the childcare element, any annual increase in universal credit will be deducted from the transitional protection.

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