Universal Credit

Universal Credit is a United Kingdom based social security payment. It is means-tested and is replacing and combining six benefits, for working-age households with a low income: income-related Employment and Support Allowance (ESA), income-based Jobseeker's Allowance (JSA), and Income Support; Child Tax Credit (CTC) and Working Tax Credit (WTC); and Housing Benefit.^[1][2][3] An award of UC is made up of different elements, which become payable to the claimant if relevant criteria apply: a standard allowance for singles or couples, child elements and disabled child elements for children in the household, housing cost element, childcare costs element, as well as elements for being a carer or having an illness or disability and therefore having limited capability to work.

The new policy was announced in 2010 at the Conservative Party annual conference by the Work and Pensions Secretary, Iain Duncan Smith, who said it would make the social security system fairer to claimants and taxpayers. At the same venue the Welfare Reform Minister, Lord Freud, emphasised the scale of their plan, saying it was a "once in many generations" reform.^[4] A government white paper was published in November 2010.^[5] A key feature of the proposed new benefit was that unemployment payments would taper off as the recipient moved into work, not suddenly stop, thus avoiding a 'cliff edge' that was said to 'trap' people in unemployment.

Universal Credit was legislated for in the Welfare Reform Act 2012. In 2013, the new benefit began to be rolled out gradually to Jobcentres,^[6] initially focusing on new claimants with the least complex circumstances: single people who were not claiming for the cost of their accommodation.^[7]

There were problems with the early strategic leadership of the project and with the IT system on which Universal Credit relies. Implementation costs, initially forecast to be around £2 billion, later grew to over £12 billion.

More than three million recipients of the six older "legacy" benefits were expected to have transferred to the new system by 2017, but under current plans the full move will not be completed until at least 2028. The Department for Work and Pensions started full-scale migration in 2023 and by September 2024, all claimants other than claimants on income-based ESA or income-based ESA and housing benefit, will begin migrating to Universal Credit.^[8]

One specific concern is that payments are made monthly, with a waiting period of at least five weeks (originally six) before the first payment, which can particularly affect claimants of Housing Benefit and lead to rent arrears (although claimants can apply for emergency loans paid more promptly). In May 2019, one million people were receiving less than their entitlement, often due to the repayment of loans given during the initial five-week wait period.^[9]