30 October 2018
Budget October 2018 announcements (updated 1 November 2018)
The Chancellor announced another package of changes to Universal Credit following growing concerns that the system is leaving people in hardship and not working as well as it should.
1. Changes to the work allowance for households with children and people with disabilities will be increased by £1,000 per annum from April 2019. The announcement says that this means 2.4 million households will keep an extra £630 of income each year, although the measure fell short of reversing the previous cuts to restore work allowances to all claimants.
2. From October 2019, the maximum rate at which deductions can be made from a Universal Credit award are to be reduced from 40% to 30% of the standard allowance and from October 2021, the period over which advances will be recovered will be increased from 12 to 16 months.
3. The scope of the surplus earnings policy in Universal Credit will continue to affect large earnings spikes above £2,500 only until April 2020, when it will revert to affecting smaller earnings spikes of £300, as originally intended.
4. Following the move to allow Housing Benefit claimants to receive a 2-week run-on housing benefit payment when they start to claim Universal Credit, the Chancellor announced that, from July 2020, the government will extend this provision to cover the income-related elements of Jobseeker’s Allowance and Employment and Support Allowance, and Income Support. The detail is currently unclear whether this measure will be restricted to those under the formal migration exercise or whether it will apply to those who naturally migrate from the relevant legacy benefit to universal credit, as is the case with the current housing benefit run-on payment.
5. The minimum income floor will now apply to all gainfully self-employed UC claimants after a 12 month grace period. This measure will be effective from July 2019 for those who are ‘managed migrated’ to UC by DWP and from September 2020 for claimants joining UC as a result of a change of circumstance. Currently, the MIF applies to all new UC claimants unless they are within the first 12 months start-up period of their business.
The Budget documents are available on the GOV.UK website