DWP sends letters for Universal Credit overhaul with key deadline

The Department for Work and Pensions is contacting a group of benefit claimants this month, warning them to take action or risk having their payments stopped. The DWP is transitioning millions of people from six ‘legacy’ benefits to Universal Credit.

This week, the first letters were dispatched to individuals receiving income-based Job Seekers Allowance. These letters should have started arriving from September 1 – but if they are ignored, the benefit will be halted after three months.

The massive migration process by the DWP affects eight million people who were on Income Support and Tax Credits with Housing Benefit, Housing Benefit, ESA (Income Based) with Child Tax Credit, Tax Credits and JSA. Those targeted with letters in 2024 have been people on ESA (Income Based) with Child Tax Credit in July, in August Tax Credits (Pension Aged including mixed aged couples) and in September those receiving them are JSA (Income Based).

To qualify for income-based JSA, you must be receiving contribution-based JSA, be single, or have a partner who works less than 24 hours a week on average, and have £16,000 or less in savings. The transition to UC timetable also included Income Support and Tax Credits with Housing Benefit from April, and Housing Benefit in June.

The switchover began last year with a focus on tax credits, and the DWP reported that 130,000 people initially made the change. However, concerns have been raised about the lack of support for vulnerable individuals who are required to apply themselves.

Charity Contact for families with disabled children issued a warning about the process: “You’ll receive a “migration notice” in writing that your legacy benefits will be ending. You’ll receive a date three months from the date on your migration notice within which to make a claim for Universal Credit. This is known as your deadline day.”

“The DWP may agree to extend your deadline day if there are good reasons, for example you are unwell or need more time to get help to make a claim. However you need to ask for an extension before your deadline day.”

“If you haven’t claimed Universal Credit by your deadline day, you will have a further month within which to claim Universal Credit. This is your “final deadline day”. So long as you claim before your final deadline day, your Universal Credit claim will be automatically backdated to your deadline day. You’ll also be eligible for transitional protection.”

Earlier this year, it was revealed during Work and Pensions Topical Questions in the House of Commons that individuals are missing out on £3,200 annually by not switching their benefits. It was estimated that about a quarter of people were not applying for the change meaning their benefits are stopped.

A significant report from the Institute for Fiscal Studies (IFS) examined the ongoing changes from the Department for Work and Pensions. Once the process is completed, eight million people will have switched over, and the IFS report investigated the financial impact on those who have already made the switch. Alarmingly, one group of people were losing out to the tune of £4,000 due to the change.

These were households with one adult above and one adult below state pension age, which were described as ‘significantly worse off under the UC system than under legacy benefits’. The IFS stated: “Because the reform means they are entitled to UC rather than the much more generous pension credit 70% of these households (180,000) lose out by more than £4,000 per year under the UC system. Households with over £16,000 of assets and the self-employed can also lose out significantly under the UC system.”

The report revealed that families with childrens are likely to do best under Universal Credit (UC) compared to the old system – 72% will pocket at least an extra £200 annually, while only 22% might find themselves down by that amount.

But the IFS warned: “The UC reform makes large numbers of households worse off, even though the average household gains from it. Families receiving disability benefits, mixed-age couples, the self-employed and those failing a harsher assets test are much worse off under the UC system than under legacy benefits.

“There are transitional protections in place to ensure families do not lose out when moving from the legacy system to UC in the short run. But under current plans, they will still be left worse off in the long run. One policy option for a future government would be to permanently compensate these and other families who are left worse off under UC. But doing so would be expensive, making the UC reform a larger net giveaway than it already is.”

For more official information from the Department for Work and Pensions, click here.