Understanding the Recent Changes to ESA and Universal Credit Benefits
People who are claiming Employment Support Allowance (ESA) have been advised by the government to take necessary steps in order to prevent the loss of their benefits by the end of this year. The Department for Work and Pensions (DWP) issued this warning as part of an extensive reform that will consolidate a range of benefits and tax credits into Universal Credit. These include child tax credit, housing benefit, income support, income-based Jobseeker’s Allowance (JSA), income-related ESA, and working tax credit.
A significant aspect of this transition is that ESA payments will not automatically be transferred to Universal Credit. Instead, ESA claimants will need to actively apply for Universal Credit if they want to continue receiving their benefits. Approximately 800,000 people who currently claim ESA will be receiving letters from the DWP instructing them to apply. Without taking these steps, many claimants risk losing their payments before the Christmas period.
What Is ESA?
Employment Support Allowance (ESA) is a benefit designed to support individuals with health conditions or disabilities that limit their ability to work. It offers financial aid to cover living expenses and assists individuals in returning to work if and when they are capable. This benefit is open to individuals who are employed, self-employed, or unable to work due to their condition. In addition, ESA claimants can also qualify for Personal Independence Payments (PIP), which offer further support for those with long-term physical or mental health conditions or disabilities.
How Much Is ESA on Universal Credit?
The amount of ESA a person is eligible for depends on the type of ESA they are claiming: new-style ESA, contribution-based ESA, or income-related ESA. Income-related ESA is no longer open to new applicants, and most people will be eligible only for the new-style ESA, according to Citizens Advice.
For those who qualify, new-style ESA pays £90.50 per week for individuals placed in the “work-related activity group” after assessment by the DWP. Those placed in the “support group” will receive £138.20 per week. In contrast, Universal Credit provides a monthly allowance, with the amount depending on the claimant’s circumstances. For example, single individuals under 25 receive £311.68, while those over 25 receive £393.45. For couples living together, payments vary between £489.23 and £617.60, depending on their age.
Since Universal Credit is means-tested, total benefits can vary based on income and other household factors. Claimants with limited capability for work and work-related activities could also receive an extra £416.19 per month under Universal Credit. Citizens Advice notes that this additional amount is typically granted after three months, though it could be provided immediately in cases of terminal illness or for those receiving new-style ESA.
Loss of ESA Disability Premiums
A notable change is that individuals transitioning to Universal Credit may lose certain disability premiums previously available under ESA. However, according to the disability charity Scope, some claimants may be entitled to a “transitional amount” if they face a reduction in income.
How to Qualify for ESA Payments?
To qualify for the new-style ESA, claimants must be under the state pension age and have a disability or health condition that affects their work capacity. Applicants must also have worked as an employee or been self-employed and have paid enough National Insurance (NI) contributions in the past two to three years. National Insurance credits, which help cover gaps in a person’s NI record if they cannot work, can also be counted toward this eligibility requirement.
Migration to Universal Credit
If you receive ESA, the DWP will send a migration notice instructing you to claim Universal Credit by a certain date. This migration process will be gradual, and failure to claim by the specified deadline could result in a loss of financial support. Some individuals may need to move to Universal Credit sooner if their circumstances change, such as relocating to a new council area or separating from a partner.
How Long Is ESA Paid For?
The new-style ESA is paid for a maximum of 365 days for individuals in the work-related activity group, while there is no time limit for those in the support group. Under Universal Credit, however, payments are assessed and calculated monthly, based on the claimant’s current circumstances and earnings. This can introduce fluctuations in payment amounts compared to ESA.
What Other Benefits Are Being Replaced?
Other benefits set to be merged into Universal Credit include income-based JSA, housing benefit, working tax credit, income support, and child tax credit. Like ESA recipients, individuals on these benefits will receive migration notices, which give them three months to switch to Universal Credit. Upon transitioning, they will receive one monthly payment, which must be managed online.
PIP Exemptions
Personal Independence Payments (PIP), unlike ESA, are not part of the benefits being phased out. However, some changes to PIP may still be on the horizon, particularly in light of past government proposals to replace cash payments with vouchers. Although this suggestion has faced criticism for potentially stigmatizing disabled individuals, further reforms could be introduced after ongoing consultations are reviewed.
To ensure continued financial support, ESA claimants must take immediate action by applying for Universal Credit upon receiving their migration notice. Staying informed and proactive will help individuals avoid disruptions to their benefits during this transition period.