Title of Presentation Universal Credit 07/2015

Document classification: Public

Into Work - Breakout Session

What impact will the latest roll out of Universal Credit

have on the labour market and employers?

Justin Spandley – Head of Employer Services

Sacha Crowe – Head of Business Development

14th JULY 2015

Scope of Discussion

• Universal Credit is a complex issue

• This session is NOT about the rights and wrongs of Universal Credit

• There will inevitably be challenges and potentially unintended

consequences for different stakeholders

• It would appear the potential impact of Universal Credit on Employers

has not been as broadly discussed

• Employers are still the lifeblood of achieving outcomes

• This session focuses on any potential implications for employers in

taking on employees who are in receipt of Universal Credit.

• We will compare some early research done by DWP with the findings

of our own localised survey

Background

The Government is introducing significant changes to the way

that benefits will be paid to working age people. The current

system is being gradually replaced by Universal Credit over a

number of years in a phased process.

Universal Credit will bring together a range of benefits for those

who are not in work and the tax credit system for those in work,

replacing the following core elements of the benefits system:

• Jobseekers’ Allowance

• Employment and Support Allowance

• Child tax credit

Other benefits such as free school meals and prescriptions are

also available via UC.

• Working tax credit

• Housing benefit

• Income support

Key Principles

• Universal Credit - it should always pay to move from benefits

into work

• There is no upper limit to the number of hours that can be

worked on Universal Credit

• Universal Credit will continue when moving from unemployment

into paid employment. The number of ‘in-work’ UC claimants is

likely to be the same as those out of work.

• It will be paid as a monthly lump sum, allowing claimants to

manage their budgets for their total household expenditure and

reducing the impact of living ‘hand to mouth’

Breakdown of UC

In 2015-16, spending on benefits, pensions and tax credits is expected to total £220bn

• State pensions and age-related benefits, such as winter fuel allowance and free

TV licences, will account for £95bn

• Child tax credits and working tax credits - £30bn

• Housing benefit - £26bn

• Disability and incapacity benefits - £37bn

• Child benefit - £12bn

• Pension credit - £6bn

• Jobseekers Allowance and income support - £5bn

Source: Institute of Fiscal Studies

This shows the disparity between the £56bn of Tax Credits/Housing Benefit

vs £5bn JSA. The DWP’s estimates from 2013 stated that they anticipated

11 million UC claimants of which 5 million would be in work

Universal Credit Roll Out

Where does Universal Credit

Operate

• Map, taken from DWP latest

information shows red

markers where UC operates

• We have not yet seen

customers with complex

family/caring benefits

situations referred on UC

• UC claimant starts - 74,120

and UC current caseload -

65,380 as of May 2015.

Seetec’s Experience

• Seetec is a Provider of Employability, Skills and Justice

services

• We currently deliver Work Programme in 3 CPAs, including

Greater Manchester

• Seetec participated in the UC Pathfinder provider events and

early provider meetings on impact of UC on Work Programme

• Greater Manchester is one of the DWPs test areas and

therefore we have started to deal with UC customers

transitioning from unemployment into work

• Seetec currently has 760 customers on UC

• As part of our ongoing welfare provision we have started a

dialogue with some of our employers to track the impact of UC

on them.

The UC Claimant Journey

Claims for Universal Credit are

expected to be made online.

A telephone number is available

Monday to Friday, 8am to 6pm,

for help and advice on making an

online claim.

You will then submit your

claim. The date of claim will be

the date of submission.

When you claim Universal Credit

you will need to accept a

Claimant Commitment.

If you claim Universal Credit as a

couple both of you will need to

accept a Claimant Commitment.

Straight away, a figure will be

displayed showing what someone

in your circumstances is likely to

get to cover their household

needs. This will only be a guide

based on the information you

have given, and may be different

to the amount you actually

receive.

You will then be asked a set of

questions that will determine

whether you are eligible to claim

Universal Credit.

If you are not eligible to claim

Universal Credit a message will

appear on the screen

When making a claim you will be

asked to input your personal

details including your National

Insurance number.

You will need to have all the

information ready that you need

to make the claim, as it must be

completed in one session.

After you make your Universal

Credit claim, most interactions

will be face-to-face, by telephone

or by post. In time the range of

Universal Credit activities that can

be done online will increase.

After submitting your claim DWP

will contact you by telephone to

tell you the date of your

personalised work search

interview and what evidence you

need to bring to it.

At the interview you will:

discuss your job search and draw

up a Claimant Commitment.

You will need to accept your

Claimant Commitment as a

condition of entitlement to

Universal Credit.

You will be informed that your

decision letter can be used as

proof of your claim when

applying for other benefits

that are available to Universal

Credit claimants. This letter

will be posted to you.

You are responsible for notifying

DWP of all changes to your

circumstances, including any

periods of work, which you can

do through the Universal Credit

helpline.

Universal Credit is paid for the

household as a whole and, where

appropriate, includes housing

costs which you will be

responsible for paying directly to

your landlord yourself

The UC Employer Guidance

Employer Guidance:

• HMRC now requires employers to send in PAYE information about

every payment made to employees at the time it is made.

• It is important that employers report their employees’ PAYE

information on time; that is on or before the time they are paid, so

that DWP can make the correct Universal Credit payments.

• Employers on the PAYE Real Time information system will need to

use it, those who are not will need to submit monthly information

• Claimants will have to contact DWP with any queries and updates

What will employees claiming Universal Credit have to do?

• With Universal Credit, claimants will be set achievable work goals

based on their personal circumstances.

• They may have regular meetings with a Work Coach

• DWP has begun to pilot new approaches to achieve these aims

Existing Research

DWP commissioned a piece of early research in to attitudes of

employers. This was conducted on the basis of a set of focus

groups to understand employers views on Universal Credit.

https://www.gov.uk/government/uploads/system/uploads/attachm

ent_data/file/387531/universal-credit-employers-insight.pdf

It should be noted that this research was completed in 2013 prior

to the launch of Universal Credit in areas of Greater Manchester

and Cheshire.

Existing Research

A summary of the research is as follows. We have focused on

some key elements here - the report can be accessed for a full

rundown of the findings.

• Employers were generally supportive of Universal Credit in

terms of addressing recognised issues in the current system

• Furthermore employers were able to discern the potential

business benefit of Universal Credit in terms of enabling a

more flexible and agile workforce

Helping to stimulate opportunities to increase work

• Employers held the view that any interventions designed to

support progression through the work place should focus on

training and up-skilling employees while addressing the key

issue of childcare

Existing Research

Enabling employers to play a role in Universal Credit

Practical resources were also felt to be critical, suggestions made

by employers included the following:

• Helping employers clearly understand the link between RTI and

Universal Credit to reinforce the importance of accurate and

timely payroll data

• Equipping employers with the necessary tools to show the

impact of increasing hours on Universal Credit

• Ensuring employers are able to direct and signpost employees

to other resources and support that will help them understand

their Universal Credit

• Ensuring that verification processes are designed to minimise

any potential administrative burden

Existing Research

The Challenge

• At the time of the research, prior to the roll out of UC, there

was low engagement with the benefits system in general from

employers sampled in this research

• There was relatively low awareness of Universal Credit The

main focus of reform from the sample’s perspective was RTI

which could be more prominent in employer’s minds than

Universal Credit

• The greater focus on RTI from an employer perspective could

run the risk of employers seeking compliance rather than the

benefits with Universal Credit, undermining a sense of a wider

employer role in the new system

• Overall, at the time of the research, there was limited

preparedness to play an active role in the benefits system

even amongst more paternalistic employers

Feedback from our Survey

• We conducted an external survey with Employers in the test

region of Greater Manchester.

• We sent out 1,000 questionnaires which were completed

either over the telephone (60%) or online response (40%)

and received 104 responses including 8 large employers

(greater than 1,000 employees nationally).

• This is of course not a scientific process but we feel gives

some current insight into employer’s views on Universal

Credit from the perspective of Welfare Provider working

with its employer base where an Employer’s capacity to

incorporate any UC requirements may become essential to

achieving outcomes in the future.

Feedback from our Survey

Yes No

54% 46%

1 We asked:

Are you aware of the Government’s programme to roll out

Universal Credit?

2 We asked:

Have you had any employees who have been in receipt of

Universal Credit?

Yes No

31% 69%

Feedback from our Survey

Yes No

25% 75%

If yes we asked employers to make any further comments

3 We asked:

If Yes were there any implications (particularly in terms of

processes or paperwork) as a result?

4 We asked:

If No, have you considered the implications of the roll out of

Universal Credit on staff employment?

Yes No

6% 94%

Feedback from our Survey

Yes No

5% 95%

If yes we asked them briefly describe those plans

5 We asked:

Have you made any specific plans to deal with new employees

who are in receipt of Universal Credit?

6 We asked:

‘Are you aware of HMRC’s Real Time Information payroll

initiative?’

Yes No

10% 90%

Comments from our survey

The themes of the comments we received were:

“Would like to find out more about it”

“Considered roll out of UC on staff employment on a

case by case basis and would make plans to deal with

new employees in receipt of UC if needed!”

“We are small so worried it will mean we have to do additional paperwork”

“Haven’t really thought about it”

“There is a restriction on the number of

hours that can be worked….”

“Never heard of Universal Credit”

“Wouldn’t really know what we were planning for”

“Don’t really want to get caught up in an employee’s

benefits claims”

General Conclusions

• Universal Credit is a complex issue

• There are bound to be challenges and unintended consequences

• The level of awareness of UC is still relatively low (especially amongst SMEs)

• Those that are aware of Universal Credit still retain concerns that it might become an

administrative burden

• There is a general sense that employers want to support the policy but will want

guidance on how to do it

• It will be essential to drive home the positive benefits of progressing customers to

employers (roughly half of all UC claimants will be in work)

• Employers are wary of getting caught up in managing benefits policy

• Some of the burden of informing employers on UC processes may need to be

addressed by W2W providers to achieve outcomes

• Plea - Ensure that employers are fully included in the journey towards full UC roll out.

• If employers are reluctant to engage with UC claimant it could impact on W2W

Thank you. Do you have any questions?