Universal Credit the impact on Children and Families

Universal Credit the impact on Children and Families Sam Royston, Poverty and Early Years Policy Adviser, The Children s Society sam.royston@childrenssociety.org.uk

Three flavours of welfare reform Cuts Benefit Uprating changes LHA reform Maternity benefit cuts Localisation Council Tax Benefit Social Fund reform Long term reform Universal Credit Personal Independence Payment

Universal Credit impact on children and families Overview of Universal Credit for a family Concerns: changes to amounts of support Disabled Children Young Carers Free School Meals Childcare Benefit administration issues Monthly payments Direct housing payments Backdating of claims Online delivery

How Universal Credit will work for a family Angela is a 24 year old single parent. She has two children aged 2 and 4. Her older child has a disability for which they get the low rate care component of Disability Living Allowance.

How Universal Credit will work for a family 1,600.00 1,400.00 1,200.00 1,000.00 800.00 Standard Allowance 600.00 400.00 200.00 0.00 246.81

How Universal Credit will work for a family 1,600.00 1,400.00 1,200.00 1,000.00 800.00 600.00 Child element (oldest) Standard Allowance 400.00 200.00 0.00 272.08 246.81

How Universal Credit will work for a family 1,600.00 1,400.00 1,200.00 1,000.00 800.00 600.00 400.00 200.00 0.00 226.67 272.08 246.81 Child element (second child) Child element (oldest) Standard Allowance

How Universal Credit will work for a family 1,600.00 1,400.00 1,200.00 1,000.00 800.00 600.00 400.00 200.00 0.00 123.62 226.67 272.08 246.81 Disabled child Child element (second child) Child element (oldest) Standard Allowance

How Universal Credit will work for a family 1,600.00 1,400.00 1,200.00 1,000.00 800.00 600.00 400.00 200.00 0.00 500 123.62 226.67 272.08 246.81 Housing component Disabled child Child element (second child) Child element (oldest) Standard Allowance

How Universal Credit will work for a family 1,600.00 1,400.00 1,200.00 1,000.00 800.00 600.00 400.00 200.00 0.00 146.44 500 123.62 226.67 272.08 246.81 Child Benefit Housing component Disabled child Child element (second child) Child element (oldest) Standard Allowance

How Universal Credit will work for a family 1,600.00 1,400.00 1,200.00 1,000.00 800.00 600.00 400.00 200.00 0.00 91.25 146.44 500 123.62 226.67 272.08 246.81 Disability living Allowance (LRC) Child Benefit Housing component Disabled child Child element (second child) Child element (oldest)

How Universal Credit will work for a family 1,600.00 Universal Credit entitlement 1,400.00 1,200.00 1,000.00 800.00 600.00 400.00 200.00-0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400

Household income How Universal Credit will work for a family 3,000 2,500 2,000 1,500 1,000 Child Benefit Disability Living Allowance Universal Credit entitlement earnings (net) 500 0 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 Net earnings

Some concerns about changes to entitlement

Disabled children Support for children with disabilities are to be substantially cut under Universal Credit, through replacement of the disability element of child tax credit with a disability addition for a child. The money is being moved into a substantial increase in the support component of ESA for disabled adults. Changes could cost disabled children up to around 1400 per year. This could amount to substantially more than 22,000 over the childhood of a disabled child, (for a family with two disabled children this loss could be more than 44,000.) The Government estimates that 100,000 children could be affected by this change.

Young Carers The Severe Disability Premium currently gives additional support to disabled adults with no other adult to care for them. This additional support helps to cover the additional costs of living with a disability but no carer. The Government is abolishing the Severe Disability Premium through the introduction of the Universal Credit. This will cost families with a young carer up to 55.30 per week ( 2876 per year). This cut could be equivalent to 20% of household income after housing costs. In addition the Enhanced Disability Premium is also being abolished, in total this means that families with a young carer looking after a disabled parent could lose up to 69.50 per week - more than 3500 per year.

Childcare costs UC childcare element was to cover 70% of childcare costs up to 175 per week for one child and 300 for two or more children. availability of support with childcare costs to be extended to parents working under 16 hours per week. Extended support from 2016-85% but only if all adults earn above income tax threshold Higher level of support now extended to all families on Universal Credit!

Free School Meals Eligibility criteria for FSM (and other passported benefits) will need to be revised as a result of abolition of key current passporting benefits under UC. Potential introduction of an income threshold for FSM over which entitlement would be lost creating a benefit cliff edge This benefit cliff edge is created because FSM has a significant cash value - worth an average of around 367 per child - for a family with three children this is equivalent to 1100 As such a family could be left significantly worse off as a result of earning more.

Weekly household income (including fsm equivalent value) Free School Meals Household income under Universal Credit for lone parent with three children with earnings limit of 144 per week for FSM entitlement. (Where rent is 85 pw, council tax is 15 pw the family are in receipt of FSM which is included as equivalent cash value) 550 530 510 490 470 450 430 410 390 370 350 0 50 100 150 200 250 300 350 Weekly household earnings

Weekly household income (including fsm equivalent value) Free School Meals Household income under Universal Credit for lone parent with three children with earnings limit of 144 per week for FSM entitlement. (Where rent is 85 pw, council tax is 15 pw the family are in receipt of FSM which is included as equivalent cash value) 550 530 510 hh income= 499 499 490 470 450 430 410 390 370 350 0 50 100 150 200 250 300 350 Weekly household earnings 144 231

Some thoughts for those working with families Need to consider the impact of changes to disability benefits on families. The loss of the SDP is going to be particularly severe. There will be a need to reconsider support services in light of this. Consider provision of FSM and other passported benefits need to be ready to deal with revised eligibility criteria. Childcare always complicated - need to support families with claiming help with costs.

Some concerns about changes to administration

1. Online delivery shift to online claiming for the most vulnerable claimants who are not able to use the internet, or do not possess the means to do so, has not yet been sufficiently addressed. interaction between an online first system, and having no automatic backdating of Universal Credit claims Particular support needed for digitally excluded families with children in childcare. Gremlins

administration issues: 2. monthly payments Monthly payments could be difficult to manage for some claimants. A recent DWP study looked at budgeting behaviour amongst benefit recipients (around half working). Of those who budgeted around two thirds budgeted weekly or fortnightly, only a third budgeted monthly or less. More than four in ten respondents said that monthly budgeting would make their lives harder Scottish study found that (in Scotland) only half of low income working adults (under 15k) were paid monthly.

3. Direct payment of housing costs Direct payment to tenants Intended to promote financial capability and independence

3. Direct payment of housing costs Direct payment to Landlords Intended to promote financial capability and independence 86% of social tenants believe strongly that it is better for Housing Benefit to be paid direct to the landlord 35% of social tenants on housing benefit, are not confident that they can keep up rental payments if they receive their rent direct. Direct Payment Demonstration Projects - 6,168 tenants are currently paid by direct payment, another 1,258 tenants had been paid by direct payment but have now had the payments switched back to their landlord.

4. Backdating of claims Claims will not typically be able to be made in advance of the point of entitlement, and the claim cannot be backdated as standard. Claimants will only be able to get (up to one month) backdating if they face certain circumstances such as:

4. Backdating of claims BUT. 1. It may be difficult to prove that a claim made online faced system failure whilst making the claim. 2. many claimants may find they have to delay their claim for Universal Credit in order to find support in using the online system. 3. A very large proportion of claimants will become entitled to Universal Credit at the point at which they have their first child.

Some more thoughts for those working with families Alternative Payment Arrangements will be available to help certain groups there is a need that those families with children that need them receive them. Lack of backdating will make it particularly important to ensure that families are supported to make a claim as soon as they become entitled. Need to consider online provision particularly for those requiring regular updates to claims such as parents with childcare costs. Need to consider that UC will be administered by DWP. This raises possible issues of stigma in delivery.

Conclusion A good idea, but.

Conclusion A good idea, but. Needs some work! Sam.royston@childrenssociety.org.uk