Struggling families could lose a “financial lifeline” amid the Government’s process of moving people receiving older benefits on to Universal Credit, a charity has warned.
More than a quarter of tax credit claimants have had their current benefits stopped and have not moved on to Universal Credit, analysis by the Child Poverty Action Group (CPAG) suggests, as it insisted more help is needed to ensure people are not losing out.
So-called managed migration for people to be moved from claiming legacy benefits to Universal Credit is aimed to be completed by 2024.
But the CPAG said its analysis of official figures from the Department for Work and Pensions (DWP) showed that only two thirds of people (1,800) sent a migration notice – informing them they would need to move onto Universal Credit – between November 2022 and March this year made a successful claim before their deadline.
Some 5% (140 claimants) made a claim after their deadline had passed, while 28% (770 claimants) did not claim Universal Credit at all and had their current benefit payments terminated, the CPAG said.
It said that the DWP plans to plans to have sent 500,000 tax-credit claiming households a migration notice by the end of this financial year, meaning that if the proportion of no-claims stays at 28%, around 140,000 households could have their current benefits stopped.
The charity cited the department as having stated that some tax credit claimants made a conscious decision not to claim Universal Credit where the amount they would receive was particularly small, others thought they were not eligible and some felt there was a stigma attached to Universal Credit that had not been there for tax credits.
The CPAG called on the DWP to change the rules so that no-one has their old benefits halted until they have been successfully moved on to Universal Credit, saying they and other groups had previously warned this issue would arise and of the “potentially disastrous” consequences for children of those claimants.
CPAG chief executive, Alison Garnham, said: “Something is really wrong when 28% 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 has recommended better outreach by DWP to 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”.
The charity also said claimants should be explicitly told that they might be able to extend their deadline for claiming if they have good reason, and said people should not have to attend a job centre to verify their ID before they can make a UC claim because they have already previously verified their ID to claim legacy benefits.
A DWP spokesperson said: “We alert people three months before they need to move to Universal Credit and follow up with reminder letters and texts.
“Evidence shows most Tax Credit claimants have been able to claim Universal Credit without the need for additional support.
“Extensions can be arranged for those who need more time to make a claim and support is available in local jobcentres and via a dedicated DWP helpline.
“Benefits are only ever stopped as a last resort after multiple unsuccessful attempts to engage with claimants.
“We also recognise the pressures of the rising cost of living which is why the Government is bearing down on inflation and providing record financial support worth an average £3,300 per household.”