No transitional protection for families with looked-after children moving onto Universal Credit

5 mins read

Monday 16 October 2023

Tags: universal credit, managed migration, looked-after children, transitional protection

Contact is deeply concerned that families asked to claim Universal Credit under managed migration will be left much worse off if they have a disabled child who is “looked after” by their local authority in a residential setting.

These families will be denied access to the system of top-up payments called transitional protection. These payments ensure that everyone moving onto Universal Credit via managed migration isn’t worse off.

We have already spoken to a family likely to see a drop in income of £850 per month. Unfortunately, they won’t get transitional protection payments to make up these losses.

We are urging the Department for Work and Pensions (DWP) to rectify this problem before managed migration rolls out to more families.

Families will struggle to keep in contact with their children

Derek Sinclair, our Family Finance expert, says:

“We are really concerned that some families on tax credits whose disabled child has looked-after status face a substantial drop in income when the DWP asks them to claim Universal Credit.

“This isn’t just an issue for families with a disabled child in residential care. In some cases, a disabled child in residential school or residential college can have ‘looked after’ status, even though their accommodation is on a voluntary basis.

“Parents with a looked-after child in residential accommodation still incur significant costs. They pay for their child’s clothes and personal belongings as well as travel, leisure and social activities. In many cases, looked-after children will return home frequently, not only during school holidays but at weekends too.

“Faced with such a significant drop in income, families may struggle to maintain regular home visits and keep in contact with their child. This will have a detrimental impact on the mental health of the family and the disabled young person.”

Why are families with looked-after disabled children likely to be worse off?

The treatment of looked-after children is much less generous under Universal Credit than tax credits. Under tax credits, a parent can continue to receive amounts for a child looked after by the local authority in residential accommodation, so long as they are in that residential accommodation solely because of their disability.

Under Universal Credit, a parent cannot receive any amounts for a looked-after child. This is the case even if they are in a residential accommodation for disability reasons. The only exceptions to this will be where either:

• A child is only looked after as part of a planned short break.
• A child with looked-after status is living with their parents.

Won’t these families get transitionally protection to make up for this loss so long as they claim via managed migration?

No, they are unlikely to benefit from transitional protection to make up for the loss of payments.

In deciding how much transitional protection someone gets, the DWP is meant to compare the amount of legacy benefits someone was getting with an “indicative” amount of Universal Credit they expect them to receive. If their “indicative” Universal Credit figure is lower, they receive a top-up payment to make up the difference.

However, the indicative Universal Credit figure is not necessarily the true amount they will get under Universal Credit. Instead, the indicative Universal Credit figure is based on certain “assumptions”. One assumption is that they will receive Universal Credit payments for any child they’ve been getting tax credits for. This means the DWP assumes they will receive Universal Credit payments for a looked-after child, despite knowing that they will get no such payments. By artificially inflating the Universal Credit indicative figure, the DWP treats a family’s income as if it won’t drop under Universal Credit, even though in reality it will reduce greatly.

This means affected families will either get no transitional protection or a much smaller amount of transitional protection that does not make up for the loss of payments for their looked-after child.

When is a child treated as looked after by a local authority?

This means that a child is being looked after by a local authority under section 22 of the Children Act; section 17 (6) of the Children Scotland Act; or section 74 of the Social Services and Well-Being (Wales) Act 2014.

Most children in local authority-funded residential care will have looked-after status. Some children in residential schools or colleges whose placements the local authority funds/part-funds may also fall under this definition. Someone accommodated under section 20 of the Children Act falls under section 22.

What can I do if I have a looked-after disabled child and I get a managed migration notice?

We are working with another charity – the Child Poverty Action Group – to convince the government to change these rules.

In the meantime, if you are a family getting tax credits for a disabled child in residential accommodation who has looked-after status, and you have received a managed migration notice giving you a deadline to claim Universal Credit, phone the Contact Helpline as soon as possible. You can call us on freephone 0808 808 3555 (Mon-Fri; 9.30am-5pm) .

The DWP can cancel a managed migration notice if they accept this is in the best interests of the claimant. There is an argument that they should consider doing this in cases involving a looked-after child, given the financial loss you will face.

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