People on some benefits are being sent letters telling them they must switch to Universal Credit - or face having their payments stopped. The Department for Work and Pensions said that 500,000 people will be impacted - and doing nothing would mean they could miss out on thousands of pounds.

In an announcement this afternoon (April 9) the DWP said that from this month hundreds of thousands of people will be sent letters. People on certain ‘legacy’ benefits which will stop being paid have to change to Universal Credit.

The first change will happen to those receiving Income Support and Tax Credits with Housing Benefit with letters going out this month (April 2024). In June those only getting Housing Benefit will be contact, with people getting ESA (Income Based) with Child Tax Credit from July, Tax Credits (Pension Aged including mixed aged couples) from August and JSA (Income Based) from September.

More than 130,000 people have so far successfully switched from tax credits to the modern digital Universal Credit system which the DWP says allows claimants to access their benefits more easily and amend their claim should their circumstances change.

The government says people on Universal Credit have a greater chance of finding work within six months. However many have failed to make the change - last month Work and Pensions Topical Questions in the House of Commons was told that people are losing out on £3,200 a year by failing to switch their benefits over.

In this scheme the Department for Work and Pensions is replacing Income Support, income-based Jobseekers Allowance, income-related Employment and Support Allowance, Housing Benefit, Child Tax Credits and Working Tax Credits with Universal Credit. When the change is due people get a letter telling them they need to make a new application - but around a quarter are failing to do so - many of them vulnerable people.

Minister for Employment, Jo Churchill MP said: “Universal Credit is a proven benefits system fit for the modern age. With even more people moving to Universal Credit, we can continue to provide the best level of support for people to secure financial independence through work.

“I would encourage all those who receive their Migration Notices to take action to ensure they continue to receive the benefits they are entitled to.”

The DWP has said benefit claimants will not lose out financially when moving to Universal Credit. Where an individual’s entitlement to Universal Credit is lower than their legacy benefit entitlement, they will be entitled to a top-up payment known as Transitional Protection. This ensures that their Universal Credit is the same as their legacy benefit entitlement.

Migration Notices will be issued to all legacy benefit types, apart from ESA claimants, over the next six months. The National Audit Office has said that almost all of those people who have failed to claim Universal Credit after being told their legacy benefit is being stopped are on tax credits. In a report the NAO said by the end of December 2023, DWP had sent nearly 350,000 migration notices advising legacy benefit claimants they need to apply for UC if they want to continue receiving financial support. At this point, DWP had closed nearly 150,000 of these migration cases, with more than one in five (over 31,000) closed cases resulting in the claimant having their legacy benefits stopped and not moving to UC.

The NAO said: “DWP does not fully understand why some people on legacy benefits do not claim UC. It is monitoring the proportion of people who do not claim after receiving a migration notice and considers that the non-claim rate is not a cause for concern as it has received few complaints. However, DWP lacks data to be sure that people are claiming the benefits they are entitled to.”