Quater of tax credit claimants told to move to UC had benefits stopped
Over a quarter of tax credit claimants who were required to move to Universal Credit have had their benefits terminated, alarming research shows.
In a warning to Tory ministers, the Child Poverty Action Group said many families on so-called legacy benefits risk losing a "financial lifeline" with many yet to transfer. The Government is in the process of moving those on older benefits - including tax credits - onto Universal Credit (UC) through a system called "managed migration".
According to a new analysis by the Child Poverty Action Group, 72% of the 1,800 people sent a notice to switch between November 2022 and March 2023 went on to claim UC. Some 5% made a claim after the deadline had passed, but 28% did not claim UC at all and their current benefit payments stopped.
The organisation said in some cases a claimant "will have made an informed choice that they did not want to move to UC". But they added: "For many the financial consequences of not moving to UC will be significant and the DWP has not published data on the income lost by those who did not move to UC."
The Department of Work and Pensions is set to send 500,000 tax-credit claiming households a notice to transfer to benefits under the new regime of UC. But CPAG warned if the proportion of no claims remains at 28% overall then around 140,000 households could have their current benefits stopped.
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Chief Executive of the Child Poverty Action Group 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."
She added: "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.”
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.”
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