Recommendation 3

Many vulnerable people risk falling into financial hardship if the proportion of legacy benefit claimants not switching to Universal Credit remains at its current level. Around one in five households on Tax Credits who received a migration notice have not moved to Universal Credit and so have had their benefit stopped. The median value of Tax Credits received by people who did not claim Universal Credit was £3,200 a year. The Department has a limited understanding of why some people do not switch to Universal Credit, but says it is reassured by having received only 20 complaints about the migration process from April to December 2023. But this does not provide sufficient assurance that people are not falling into hardship. The Department is now planning a survey of people who have not claimed UC, having before not been routinely in contact with people to ask why they are not claiming. Organisations who work with benefit claimants are also concerned about the proportion of legacy benefit claimants not transferring to Universal Credit and the financial impact it may have on them. The Department expects the non-claim rate for households claiming its legacy benefits, who are being migrated from April 2024, will be much lower at around 4%. However, even a small proportion of people not transferring to Universal Credit could translate into a substantial number of people facing financial hardship. Recommendation 3: The Department should publish by the end of August 2024 the Universal Credit non-claim rates by type of legacy benefit, and set out the action it is taking in the event that the non-claim rates are higher than expected. Before the end of the year, the Department should also publish the results of the survey of those Tax Credit claimants who did not apply for Universal Credit alongside a statement of what lessons it would learn.