UC and natural migration now

Simon Osborne rounds up developments regarding natural migration from legacy benefits to universal credit (UC).

Natural migration from legacy benefits to UC is an ongoing possibility. The only substantial legislative attempt to prevent natural migration is regarding certain severely disabled claimants – and even that is now scheduled to end on 27 January 2021 (see ‘Natural migration and severe disability’ below). Natural migration will therefore continue, even alongside the operation of the managed migration process.

Migration to UC is only completed by the making of a claim for UC.1Reg 8 Universal Credit (Transitional Provisions) Regulations 2014, No.1230. The Secretary of State must be satisfied that the basic UC conditions (excluding the financial conditions and conditionality requirements) are met, but the official position is that is automatically the case. There is no legislative requirement to make such a claim. A claimant who does not claim UC will not migrate to UC. However, it remains that making a new claim for employment and support allowance (ESA) or jobseeker’s allowance (JSA) (income-related or contributory) will (subject to protection for, in the main, those covered by the ‘SDP gateway’) result in the abolition of income-related ESA and income-based JSA for that claimant.2This is provided for in Article 4 of the relevant Welfare Reform Act Commencement Order that applies to area that the claimant lives in (see, for example, Art 4 of the No.27 Order at SI 2016 No.407). In that event, a claim for UC may well be a practical inevitability. (But note that the payment of ESA pending appeal to an ESA claimant appealing a work capability assessment failure is not a new claim for ESA.3Reg 3(1)(j) Social Security (Claims and Payments) Regulations 1987, No.1968)

Outside the managed migration process, the main driver (or ‘trigger’) for a claim for UC is a change of circumstance that requires new/additional means-tested support that may, in practical terms, necessitate a claim for UC – eg, the birth of a first child where no tax credit is already in payment, or the ending of housing benefit (HB) entitlement following a move to a different local authority (in both cases prevention under the rules from claiming UC, in particular the SDP gateway, provides exceptions). It should be remembered that a UC claim is not mandatory – despite official advice to the contrary in some cases.

Since 15 May 2019, a ‘mixed-age’ couple (ie, where one has reached pension age but the other has not) generally can no longer make a new claim for pension credit (PC) or pension-age HB, but (as before) can claim UC.4Welfare Reform Act 2012 (Commencement No.31 and Savings and Transitional Provisions and Commencement No.21 and 23 and Transitional and Transitory Provisions (Amendment) Order 2019, No.37 Mixed-age couples on PC and/or pension-age HB as that couple on 14 May 2019, and who retain entitlement as that couple to one or both, can continue (and, for example, make a new claim for PC if still on pension-age HB), rather than claim UC.

Under natural migration, there is no transitional protection to the level of legacy benefit formerly in payment. This risks much lower levels of entitlement for disabled claimants, especially those entitled to the severe disability premium (SDP) as part of their legacy benefit – ie, as UC includes no equivalent of the SDP. Two arrangements have evolved for attempting to mitigate that: (1) the ‘SDP gateway’ and (2) the ‘transitional SDP amount’.

From 16 January 2019 until 27 January 2021, claimants of legacy benefits entitled to the SDP (or who had been entitled to it in the last month) are prevented from making a new claim for UC, until such time as they become subject to the managed migration process.5Universal Credit (Transitional Provisions) (SDP Gateway) Amendment Regulations 2019, No.10 (‘UC Transitional Provisions Regulations’), which inserted a new reg 4A of the UC Transitional Provisions Regulations; reg 4A is revoked from 27 January 2021, by virtue of reg 7 of the Universal Credit (Managed Migration Pilot and Miscellaneous Amendments) Regulations 2019, No.1152 (the ‘Managed Migration regulations’). See also ‘The SDP gateway’, Welfare Rights Bulletin 269, April 2019. Regarding HB, local authorities have been reminded of the possibility of an ‘HB only’ claim that includes the SDP and the importance of responding urgently to any DWP request to confirm the inclusion of the SDP.6DWP, LA Welfare Direct Bulletin 12/2019, December 2019

In effect, in this period the claimant is prevented from naturally migrating to UC. This is widely referred to as the ‘SDP gateway’. Corresponding changes mean that a claimant who is prevented from claiming UC by the gateway can make new claims for legacy benefits and tax credits.7Reg 3 UC Transitional Provisions Regulations The intention is that preventing migration until that takes place under the managed migration process will ensure that severely disabled claimants are entitled to transitional protection and so do not lose out at the point they transfer to UC.

The closure of the gateway on 27 January 2021 means that from that date severely disabled claimants will once again to be vulnerable to naturally migrating to UC. Their only protection from losing out will be the availability of the ‘transitional SDP amount’ (see below) which, it should be emphasised, is not the same as the full transitional protection that will apply to claimants who undergo managed migration to UC.

The SDP gateway was introduced after a judicial review (‘TP and AR’) in which the High Court ruled that the absence of transitional protection in natural migration for SDP claimants who had to claim UC instead of HB following moving to a new local authority was unlawful, on the basis that they had been unlawfully discriminated against.8TP and AR v Secretary of State for Work and Pensions [2018] EWHC 1474 (Admin) (14 June 2018) The Court of Appeal has recently upheld that decision.9R (TP, AR and SXC) v Secretary of State for Work and Pensions [2020] EWCA Civ 37 (29 January 2020)

A separate challenge (taken by CPAG) – that claimants who had had their legacy benefit terminated wrongly (as established on appeal), but who had in the meantime had to claim UC instead and were worse off, had also been unlawfully discriminated against – has been rejected by the High Court.10TD, AD and others v Secretary of State for Work and Pensions [2019] EWHC 462 (Admin) (1 March 2019) – now TD, AD and Reynolds v Secretary of State for Work and Pensions CPAG has been granted leave to appeal to the Court of Appeal. At time of writing, no hearing date had been set.

What if, post-introduction of the SDP gateway, an SDP-entitled claimant is wrongly allowed to pass through it and claim UC, thus ‘naturally’ migrating to UC? The most obvious examples are: (1) where the claimant’s entitlement to the SDP is only established retrospectively (ie, after claiming UC) by having to wait a long time for an award of personal independence payment by the DWP or First-tier Tribunal; and (2) where the claimant was indeed entitled to the SDP in her/his legacy benefit but this was missed by the DWP who allowed the UC claim.

We now know that the official (DWP) intent is that all such claimants are to remain on UC, but (ostensibly) be compensated for loss of the SDP by the inclusion of a ‘transitional SDP amount’ in their UC11.See para 7.51 of the Explanatory Memorandum to the Managed Migration regulations However, the DWP has recently confirmed that, where it has ‘inadvertently’ allowed someone to breach the SDP gateway, it can instead revise the UC decision and reinstate legacy benefit (official error provisions are cited). It says it will do this where UC has not been paid yet or otherwise ‘where it is in the claimant’s best interests’ to do so. It says that HM Revenue and Customs will not do the same for tax credits, which would have to be reclaimed after the legacy benefits have been reinstated.12DWP, Freedom of information request FO12020/01998, 7 February 2020

Since 24 July 2019, rules (the ‘Managed Migration regulations’) have provided for the inclusion as an ‘additional amount of UC’ of a ‘transitional SDP amount’ for certain severely disabled claimants who have naturally migrated to UC.13Sch 2 UC Transitional Provisions Regulations, inserted by the Managed Migration regulations. See also ‘The transitional SDP amount’, Welfare Rights Bulletin 272, October 2019 In effect, this is aimed at providing compensation for the loss of the SDP to claimants who have undergone natural migration and who had been entitled to the SDP in their legacy benefit (excluding HB).

In some cases, payments of the transitional SDP amounts have simply appeared in the claimant’s bank account, without proper notification (which is clearly required, as it concerns what should be a decision about the claimant’s entitlement to UC).

When the managed migration rules were in draft form, the provisions on transitional SDP amounts, then restricted to those who (naturally) migrated to UC before 16 January 2016, were quashed in a judicial review challenge (‘TP, AR and SXC’).14TP, AR and SXC v Secretary of State for Work and Pensions [2019] EWHC 1127 (QB) (3 May 2019) The judge left it for the Secretary of State to devise a response. The judge considered that the difference in treatment compared to claimants who would receive full transitional protection under managed migration had not been properly explained by the Secretary of State, and therefore amounted to unlawful discrimination.

We now have the Secretary of State’s response, in the form of the finalised version of the Managed Migration regulations. Those regulations differ from the draft in some respects, in particular by having increased amounts for the transitional SDP amount (£120 instead of £80, £285 instead of £280, £405 instead of £360), and by not limiting the payment to those who naturally migrated to UC before 16 January 2016.

However, the finalised regulations still provide for fixed-rate, generic payments as the transitional SDP amount, rather than the full transitional protection that will apply (via the ‘transitional element’) in managed migration cases. Neil Couling, Director General of the Universal Credit Programme, has said (in correspondence with the National Association of Welfare Rights Advisers (NAWRA)) that: ‘…the Ministerial intent was to ensure that claimants do not see a cash loss of an equivalent amount to the severe disability premium…it is not to replicate the transitional protection that will be available to claimants that the Department will move to universal credit…’.15Letter from Neil Couling to Daphne Hall, Vice Chair of NAWRA, 8 August 2019

The decisions in both TP and AR and TP, AR and SXC have recently been upheld by the Court of Appeal.16R (TP, AR and SXC) v Secretary of State for Work and Pensions [2020] EWCA Civ 37 (29 January 2020)

Meanwhile, one of the claimants in TP, AR and SXC unsuccessfully applied for financial compensation regarding the fact that the transitional SDP payment (ie, even under the finalised regulations) has still not fully compensated her for the loss of the SDP (she is still £63.48 a month worse off).17R (SXC) v Secretary of State for Work and Pensions and another [2019] EWHC 2774 (Admin) (23 October 2019) In refusing her application, the judge (Mr Justice Swift, who also made the decision in TP, AR and SXC) indicated that the finalised Managed Migration regulations, although not actually the subject of his decision, may not be vulnerable to judicial review merely because they do not equate to full transitional protection.

Finally, the other two claimants who made the challenge in TP, AR and SXC have commenced judicial review proceedings (in the form of a pre-action letter to the Secretary of State), arguing that the finalised regulations are still unlawful as ‘they short-change individuals who previously received the severe disability premium and enhanced disability premium...’. They point out that they are £180 per month worse off but will still receive just £120 per month.18‘Government faces third legal challenge to universal credit migration arrangements’, leighday.co.uk/News/2019/August-2019

At time of writing, the courts were due to rule again regarding the absence of transitional protection for claimants who naturally migrate to UC – ie, in TD, AD and Reynolds. The courts may also consider once again the transitional SDP amounts paid to severely disabled claimants who have undergone natural migration. Whether and how the outcomes of these challenges affect natural migration to UC remains to be seen.

But natural migration seems set to continue to affect many claimants of legacy benefits. The closure of the SDP gateway on 27 January 2021 will once again involve severely disabled claimants in that process. What the courts have to say in future cases and how the government responds will be vital.