Welfare reform

Supporting detail:

Government policy on Universal Credit: an introduction

This page explains the government’s policy on Universal Credit.

If you are looking for information about how Universal Credit will affect you, see information for Universal Credit claimants.

Universal Credit is a new single payment for people who are looking for work or on a low income.

Universal Credit will help claimants and their families to become more independent and will simplify the benefits system by bringing together a range of working-age benefits into a single payment.

It will be introduced in 2013 and will replace:

  • income-based Jobseeker’s Allowance
  • income-related Employment and Support Allowance
  • Income Support
  • Child Tax Credits
  • Working Tax Credits
  • Housing Benefit

The differences between Universal Credit and the current system

The main differences between Universal Credit and the current welfare system are:

  • Universal Credit will be available to people who are in work and on a low income, as well as to those who are out of work
  • most people will apply online and manage their claim through an online account
  • Universal Credit will be responsive – as people on low incomes move in and out of work, they’ll get ongoing support, giving people more incentive to work for any period of time that is available
  • most claimants on low incomes will still be paid Universal Credit when they first start a new job or increase their part-time hours
  • claimants will receive just 1 monthly payment, paid into a bank account in the same way as a monthly salary
  • support with housing costs will go direct to the claimant as part of their monthly payment

Changes to other benefits

The following benefits are also changing:

When Universal Credit starts

April 2013 – start of Universal Credit pathfinder

Starting in April 2013, DWP, with our delivery partners in HMRC and local authorities, is introducing Universal Credit for claimants within certain areas of the north-west of England.

October 2013 – introduction of Universal Credit

We will introduce Universal Credit in a managed way, progressively rolling it out nationally from October 2013. The transition from the current system of benefits and tax credits to Universal Credit will be gradual and it is expected to be completed by the end of 2017.

Additional support for Universal Credit claimants

Giving evidence at the Work and Pensions Select Committee on 17 September 2012, Ministers announced 3 additional areas of support for Universal Credit claimants.

Help with budgeting

DWP will explore the feasibility of new types of bank accounts or other financial products to help benefit claimants budget and manage their money. These financial products could help make sure people’s essential bills are covered – helping them to build up their credit rating and break the cycle of financial exclusion.

Supported accommodation housing costs

Help towards housing costs for those living in supported housing that satisfies our definition of ‘exempt accommodation’ will be provided separately from Universal Credit. DWP wants to continue to provide a flexible system to help meet the higher costs often associated with providing supported accommodation.

Supported accommodation is:

  • a resettlement place
  • accommodation provided by a county council, housing association, registered charity or voluntary organisation where that body or person acting on their behalf provides the claimant with care, support or supervision

Self-employment start up period

We recognise the need for claimants who are setting up a business to be given time to establish themselves and find sources of support. Therefore where a claimant has been self-employed for less than 12 months, a start up period will be granted.

This means that claimants will not be required to look for work or satisfy requirements to be available for work, and we will not assume a minimum level of income from self-employment (known as the ‘Minimum Income Floor’). This will give them time to concentrate on developing their business.

Claimants will be allowed a new start up period every 5 years rather than once in their lifetime.

Help for claimants who may need extra support claiming Universal Credit

On 11 February 2013 we published the ‘Universal Credit local support services framework’. The framework will be put in place for the introduction of Universal Credit from October 2013 to help claimants who may need extra support claiming Universal Credit. It explains:

  • who may need help
  • what services they may need
  • how these services will be provided through locally developed partnerships

The framework was developed following careful and intensive working between DWP and colleagues in the Local Government Association, Convention of Scottish Local Authorities and Welsh Local Government Associations with input from local authority representatives.

We invited feedback on the framework and published a summary of the responses on 2 August 2013.

Evaluation framework

On 10 December 2012 we published an evaluation framework for Universal Credit. The framework sets out our broad intentions for the evaluation of Universal Credit, highlights the main aims and objectives of the evaluation and considers possible analytical approaches.

Providing information about Universal Credit

We have published information about Universal Credit for claimants. They can find out if they are eligible and what they need to do to get ready for Universal Credit.

We have also published information about the introduction of Universal Credit for support organisations and claimant advisers, particularly those in the pathfinder areas, in the ‘Universal Credit toolkit for partner organisations’.

The toolkit contains information that will help these organisations to explain the changes that Universal Credit will bring for their customers. It includes a range of information products that can be printed off and shared and brand guidelines to help you create your own materials.