AN alarming 28 per cent of tax credit claimants who are required to move to universal credit (UC) as it replaces older benefits have not claimed UC, and have had their tax credits stopped by the DWP as a result, new Child Poverty Action Group (CPAG) analysis shows.

CPAG warns that the figures do not bode well for the roll-out of the so-called ‘managed migration’ to UC which by the end of 2024/25 will see 1.8 million households currently on older benefits required to claim UC. The charity is deeply concerned that families who need and are entitled to UC are not getting enough support to claim and will be left unable to manage unless the DWP changes tack. Those who have their current benefits stopped because they do not move to UC will also miss out on the Government’s £300 cost of living payments.

Under the DWP’s phased ‘managed migration’ process, claimants of tax credits and other older benefits, known as ‘legacy benefits’, will be required to switch to universal credit (UC). They have three months after receiving their ‘migration notice’ to claim UC. Managed migration started last year when in a ‘discovery phase’ the DWP informed a small number of claimants of ‘legacy benefits’ that they must claim UC. In April this year the process was scaled up, focusing on single, tax credit-only claimants, many of them working.

But Child Poverty Action Group’s analysis of DWP figures published earlier this month reveals that only two thirds of people (1,800) sent a migration notice between November 2022 and March 2023 made a successful UC claim before their migration deadline. A further five per cent (140 claimants) made a claim after their deadline had passed. Twenty-eight per cent (770 claimants) did not claim UC at all and had their current benefit payments terminated.

By the end of this financial year, the DWP plans to have sent 500,000 tax-credit claiming households a migration notice, requiring them to claim UC. If the proportion of ‘no-claims’ stays at 28 per cent, 140,000 households could have their current benefits stopped.

The DWP says its research into non-claims shows some tax credit claimants made a conscious decision not to claim UC where the amount they would receive was particularly small. Others believed they were not eligible for UC and some felt a stigma attached to claiming UC that they didn’t feel with claiming tax credits. But the DWP hasn’t said, or doesn’t know, how many claimants are in each of these categories.

Other research by the DWP found that some people didn’t believe that they needed to apply for UC because they had recently renewed their tax credit claim for another year, and some thought they would be moved to UC automatically. Despite there being no clarity about how many of the 770 cut-off tax credit claimants fully understood the implications of what was being imposed on them, the DWP has no intention to slow down its plans to roll out managed migration at scale.

UC requires claimants of tax credits to make significant adjustments to how they manage their day-to-day finances. UC payments are less frequent than tax credits, are primarily claimed and managed online, and claimants have their income assessed each month. CPAG says the new ‘no-claim’ figures show that the DWP must slow down its roll-out of managed migration to further refine the process so it can ensure that all claimants understand what they have to do and that the process of migrating over to UC is fully accessible.

Chief Executive of Child Poverty Action Group Alison Garnham said: “Something is really wrong when 28 per cent of people who have maintained a tax credit claim haven’t gotten a UC claim off the ground. And with the managed migration to UC set to continue apace, it’s desperately worrying that so many families are at risk of having their tax credits summarily stopped because they haven’t got a UC award up and running. An alarm is ringing loud and clear for the DWP – unless it gets more help to the families it’s migrating to UC, they could lose a financial lifeline.

“We and many others warned all along that not every family would successfully claim UC within the deadline and that terminating their current benefits is draconian and potentially disastrous for the children concerned. The Department must change its rules so that no household selected for managed migration has its current benefits stopped until it’s safely in receipt of UC. The risk involved in moving from old to new benefits should be shouldered by the DWP and not by families on low incomes.”

CPAG’s new Briefing on managed migration to UC – based on case studies from its Early Warning System – urges the DWP to make a number of changes to enable legacy benefit claimants to move safely to UC including:

  • Step up DWP outreach to managed migration claimants – in particular to those approaching their ‘migration deadline’ to ensure they understand that they are eligible for UC, that their tax credits will be stopped if they do not claim UC and that they will not automatically receive future cost-of-living payments worth £300.
  • Remove or amend the requirement that some claimants attend a job centre to verify their ID before they can make a UC claim (since they have already verified their ID to DWP’s or HMRC’s satisfaction in order to claim legacy benefits).
  • Explicitly inform claimants that if they have good reason they may be able to extend their deadline for claiming, and how to request an extension.

By the end of 2024/25, the DWP intends to close the legacy benefit system for all except employment and support allowance (ESA) claimants (and associated claims for housing benefit).

* Read Beneath the trends: A detailed look at the issues facing claimants going through managed migration here.

* Source: Child Poverty Action Group