“Some will be worse off”: The mystery million who lose incapacity benefit for Universal Credit

The replacement of a benefit for incapacitated people on low incomes is one of the least-understood welfare changes, according to experts and frontline workers.

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About one million people a year will claim Universal Credit instead of an incapacity benefit under the new welfare system.

New benefit claimants, or those who have a change in circumstances which means they have to reapply for benefits, will be put onto Universal Credit, which is replacing income-related Employment and Support Allowance (ESA) – a benefit for people on low incomes whose ability to work has been affected by illness or disability.

This is unless they also receive another payment for the most severe cases called the Severe Disability Premium, which means they can claim the old benefit, which will no longer be available for any other claimants. When everyone is moved over to Universal Credit, they will continue to be paid the Severe Disability Premium to cushion the transition.

If you receive the Severe Disability Premium (or have received it within the last month and are still eligible), you can still also claim the old contribution-related ESA, a sister benefit to income-related ESA for people who had worked a certain amount over the past two years. A new version of that benefit has arrived with Universal Credit called “new-style” ESA, which can only be claimed by those who have paid enough National Insurance in the past couple of years or so.

Just 490,000 of the 1.7 million people claiming income-related ESA in 2017/18 were receiving the Severe Disability Premium, according to the most recent figures available. This means about 1.2 million people would no longer be eligible for the benefit.

As the number of claimants for this benefit is falling as it is phased out, we can call the figure one million.

So what happens to this one million instead? They receive Universal Credit. But it’s not so simple. The question among welfare advisers is how well this change is understood by claimants and benefits hotline operators.

Some claimants, sources believe, are being directed to Universal Credit when really they need only claim ESA – under the mistaken belief by benefits workers that ESA no longer exists at all under the new system.

This could have negative consequences for some claimants.

First, ESA is paid every two weeks – a regularity that previous claimants or low-income workers may be accustomed to, and will therefore find it easier to budget for than Universal Credit's monthly payment. It also doesn’t come with the five-week delay of Universal Credit, which has led to a rise in food bank use.

ESA is also an individual benefit, so you can still claim the non-income-related version regardless of your and your partner’s income. It doesn’t take any savings you have into account either. Universal Credit, in contrast, rolls all the benefits of one household into one payment, and you (and your partner) have to report your savings and capital – capital over £16,000 makes you ineligible.

Also, if your Universal Credit is sanctioned, the sanction would not affect your ESA, as it’s a separate benefit.

So there are people who would be eligible for ESA but won’t receive as much money, or be eligible for benefits at all, under Universal Credit – something insiders fear is happening.

“Some people will be worse off,” says one adviser. “New-style ESA is underreported, it’s not well-understood by many people at all. There is a potentially worrying lack of information.”

Indeed, welfare industry workers are finding information about these changes on the government website difficult to follow.

Although the Department for Work & Pensions says it updated the ESA page on gov.uk after its announcement of the changes on 7 June 2018, as far as I can tell from cached versions of the web page, the information about receiving Severe Disability Premium for ESA changed in the depths of the Christmas holidays in 2018, on Sunday 29 December.

The adviser I hear from believes some claimants are “not being directed to ESA anymore by people who deal with claims; they’re told they’ve got to claim Universal Credit when they could claim new-style ESA. And then they’re rejected by Universal Credit because they’ve got too many savings or their partner is working.”

Another frontline worker for a benefits advice charity tells me that these changes were not communicated by the government to its workers or claimants. “We did not receive any information to notify us of this change nor was it announced on a medium that would reasonably notify advice charities, other organisations, and claimants,” they tell me.

The former work & pensions secretary Esther McVey announced plans to provide for claimants on disability premiums ahead of moving over to Universal Credit last June. This was followed up her successor Amber Rudd and amendment regulations to Universal Credit in Parliament this January, introducing a protection for claimants on such premiums when moving over to the new system.

Anoosh Chakelian is senior writer at the New Statesman.