The Department for Work and Pensions (DWP) will start to make the first of two payments which make up the £650 means-tested Cost of Living Payment from this Thursday. Eligible claimants who are in receipt of certain benefits will be paid £326 between July 14 and 31, however, there may be a delay for a small number of people with complex benefits.
Not everyone on a low-income benefit will be eligible for the payment and the DWP has previously explained why those on Contributions-based and new style Employment and Support Allowance (ESA) do not qualify. Put simply, it’s because these benefits are not means-tested.
However, DWP has now shared that ESA claimants may be eligible for the £324 cost of living payment in the autumn if they make a “successful claim to an eligible benefit” before the next qualifying date, which has still to be announced.
In a written response to Labour MP, Thangam Debbonaire, who asked about the “potential impact of the decision to not provide the cost of living payment to claimants of new-style Employment and Support Allowance on those claimants”, David Rutley MP explained that “non-means tested benefits are not eligible benefits for the cost of living payment in their own right”.
The DWP Minister said this was because “people claiming these benefits may have other financial resources available to them”.
He said: “Many claimants of contributory and new style Employment and Support Allowance are also in receipt of a means tested benefit.
“For example, as of November 2021 there were around 400,000 claimants getting both income and contributory Employment Support Allowance, and around 100,000 claimants getting Employment Support Allowance and Universal Credit.”
He continued: “If someone in receipt of a contributory or new style benefit makes a successful claim to an eligible benefit made after the initial qualifying date, they may qualify for the second, £324 cost-of-living payment in the Autumn.”
The main option for those on non-qualifying ESA benefits would be to make a new claim for Universal Credit, but as the managed migration process for 2.6 million people on legacy benefits restarted in May, this move would trigger a ‘voluntary migration’ to the other benefit and could result in lower entitlement as it would not be protected by the transitional protection payment - which is only available during the manage migration process.
Not something to step into lightly given the latest energy price cap is now predicted to be £3,245 in October which could plunge millions of people into poverty unless additional support is announced by the UK Government.
At the moment, this looks unlikely as a new Prime Minister will not be in office until September 5, according to financial guru Martin Lewis, who has already expressed grave concerns over people making choices between heating and eating this winter.
Migration process from legacy benefits to Universal Credit
There are three ways people can migrate to Universal Credit, outlined in the DWP’s ‘2022-24 strategy for implementing the final phase of Universal Credit’ - you can read it in full on the GOV.UK website, here.
These are:
- Natural migration - a change of circumstances triggers a move
- Voluntary migration - claimants chooses to move
- Managed migration - DWP triggered
The DWP explains: “Of the 2.6 million households remaining on legacy benefits in April 2022, should they choose to claim UC today, we estimate around 1.4 million (55%) would have a higher entitlement on UC, 300,000 would see no change and approximately 900,000 households (35%) would have a lower entitlement.”
The DWP also estimates that of the 900,000 households who would essentially be worse off moving to Universal Credit, around 600,000 would receive transitional protection through the managed migration process, while others will “either leave benefits, migrate naturally before DWP asks them to move or receive a severe disability transitional payment”.
You can read the full guide to the DWP's managed migration to Universal Credit on the GOV.UK website, here.
Which groups are expected to be better or worse off on Universal Credit?
The DWP estimates ESA claimants who are in the support group but who do not get the Severe Disability Payment to be better off on Universal Credit.
Households who get ESA and receive the Severe Disability Premium and the enhanced disability premium, are expected to be worse off.
More details about which groups could receive a higher or lower entitlement on Universal Credit can be found here.
DWP estimates on who will receive higher or lower entitlements or see no change to the amount of benefit they receive are summarised below.
Higher entitlement after moving to Universal Credit
- ESA claimants: 600,000
- Tax Credits (Working and Child) claimants: 700,000
- Total, including other legacy benefits: 1.4 million
Lower entitlement after moving to Universal Credit
- ESA claimants: 500,000
- Tax Credits (Working and Child) claimants: 300,000
- Total, including other legacy benefits: 900,000
No change after moving to Universal Credit
- ESA claimants: 100,000
- Income Support: 100,000
- Total, including other legacy benefits: 300,000
Transitional protection
The DWP said that around 400,000 ESA and 100,000 Tax Credits claimants will receive transitional protection, which means they should not see any reduction in their benefits when they transfer.
However, the value of this protection will be eroded every year because, with the exception of the childcare element, any annual increase in Universal Credit will be deducted from the transitional protection.
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