Case Notes #2

ESA to Universal Credit Migration, Appointees and Misinformation from work coaches. The Insolvency Service confirms what we know about IVAs.

I’m chairing regular meetings with DWP representatives as my colleagues and I try to help our clients navigate the forced move from Employment and Support Allowance (ESA) to Universal Credit (UC). We had a meeting last week at which many concerns were raised without any immediate resolution in sight. UC migration is being imposed on chronically sick people, in my opinion, to get them into the Claimant Commitment mode of thinking. You might think you are too sick to work, and the medical profession might well agree, but the Department was just wondering if there might be something you can commit to doing, somehow.

The Dept’s rep told us how swimmingly — I think the word they actually used was ‘beautifully’ — it’s going. We, being benefits/debt advisers from a multitude of organisations, such as housing associations, local authorities, charities begged to differ.

We provided a case study of someone in the ESA Support Group, no family around to help, who simply doesn’t understand what the Claimant Commitment means for them. The person has a learning disability, and was perfectly able to manage until the moment they received the migration notice. Now they are in trouble — the online claim is an issue, managing the claim via an online journal is an issue, signing up to a claimant commitment that they don’t understand is something they may not have capacity to do. So what’s the answer?

The answer was that they should simply acquire an appointee. Like it’s that simple. Pop down to Appointees’r’us and pick one up. The Dept rep spoke as though this was our problem, rather than theirs. We should be helping our clients to find appointees to enable them to have someone take over management of their benefit claim, because otherwise they won’t claim and their income will stop. If someone didn’t need an appointee to manage their ESA, why on earth should they be forced into this situation when nothing in their situation or health has actually changed?

It’s not that we don’t want to help, and in the case study mentioned, the adviser was doing everything they could, but this is very much outside the remit of what a benefits adviser can and should be doing. Proper support is needed — this person can manage their own money but they can’t perform the mental gymnastics required to claim Universal Credit. Appointees are not the answer, but as so often with officialdom, the computer can’t hack anything that doesn’t fit neatly into the boxes. Universal Credit was supposed to simplify the benefit system, but it is not geared up for complex humans with multiple vulnerabilities.

In another case study, someone was accompanied to the JobCentre by their Care Co-ordinator for an appointment with their work coach. In case you are not familiar with Care Co-ordinators, they are professionals who help people with severe and enduring health conditions to access the right care. This person was also migrating from ESA to UC and had been in the support group. She was told by the work coach that she would need to have a work capability assessment (WCA) because ‘UC is a completely different thing’ and if she didn’t get assessed she wouldn’t get paid her benefit.

WRONG.

Aside from the sheer distress this caused to the person with a severe mental health condition, this is wholly inaccurate. The Department rep said this shouldn’t be happening, but it’s possible that some work coaches are new to their role and don’t yet fully know what they are doing (I’m paraphrasing — it’s working ‘beautifully’ in the main). The problem is that people rely on what they are told by their work coaches, or indeed anyone employed by the civil service to perform a government function. They think it must be true. So do some less experienced advisers, who having heard inaccurate information from a DWP employee, then go on to repeat it to another person facing migration, and so, like Chinese Whispers, the bad information starts to circulate more widely.

So let’s say it clearly, here: people who are migrating from Employment and Support Allowance, in either the Support Group or Work-related Activity Group, do not need another assessment, until they either request one themselves or the claim naturally comes up for review. Click here for the government website link — item 10 is definitive:

“10. Moving from Employment and Support Allowance to Universal Credit

If you have been receiving Employment and Support Allowance (ESA), you will not need to provide medical evidence such as fit notes, or have a Work Capability Assessment (WCA) again if all of the following apply:

• you move from ESA to Universal Credit without a break
• you have already completed a WCA
• you were in the ‘support group’ or ‘work-related activity group’ in ESA when you made your claim to Universal Credit

You may need to have another WCA if your WCA is due for a review or your condition changes.

If you were providing medical evidence on ESA before you moved, you will still need to provide medical evidence on Universal Credit until you get a WCA decision.”

Before we leave this subject (for now), we were also told that Tax Credits is coming to a ‘hard stop’ on April 5th 2025. So, I asked, have all the recipients of Tax Credits had their migration notices already? (October 2024) — the answer was ‘no’. But it is hoped that they will have done by the end of this year. And you can bet your life, those who haven’t had the notices will be at the more complex end of the spectrum.

With over a quarter of a million people (so far) not claiming UC after receiving the migration order, sorry, I mean ‘notice’, (34% of individuals), then, again, we are left to wonder what will happen to those people with severe mental health conditions or complex disabilities, who simply cannot navigate the migratory path.

This week, the Insolvency Service published a report ‘into concerns about take-on practices for Individual Voluntary Arrangements (IVAs).’ This is some vindication for debt advice colleagues who have been expressing such concerns for a very long time.

The report says what we already know, that the ‘on-boarding’ of people in debt on to unaffordable IVAs begins with fiddling their income and expenses, glossing over the complex terms and conditions, dismissing other, potentially more appropriate options, just plain fibbing, and more. Most alarmingly, despite the majority of the IVA cases analysed meeting the threshold for ‘poor take on’, defined as ‘practices by an insolvency practitioner, their staff, debt-packager or other introducer, insufficiently applying the requirements for take-on set out in the relevant Statement of Insolvency Practice and the IVA Protocol’, the Insolvency Service reported that:

Call data was absent in 43% of the dataset. It is important to note that cases were only marked as having experienced poor take-on if there was evidence as such. The implication of this is that the estimate of cases reaching the threshold set could be under-reported.

What we didn’t get in the report is names being named, but it appears that the ‘volume providers’ were targeted (or IVA factories as we call them). What we also didn’t get is conclusive next steps. We read the report, shrug our shoulders and carry on then? You would hope there would be a few shockwaves rippling through the ‘industry’ on the release of this report, but in 2023, we had a BBC Panorama programme and a Channel 4 News segment on IVAs, together with the FCA banning referral fees for debt packagers, and yet still you need not look very hard on TikTok and other social media platforms, to see that the practice of selling IVA leads continues unabashed. LinkedIn is still providing a platform to the sellers of bulk IVA leads and interest in purchasing the same is openly expressed. Who cares?

More recently, one of the most prevalent advertisers on TikTok published a video in which he pretended to hang himself. In the video he then fell to the floor of a rather barren-looking empty office, at which point two people rushed in to save his life, apparently with an IVA. It’s desperate stuff, and one wonders how these people sleep at night. One also wonders which insolvency practitioners are picking up these leads and why they believe they can continue to breach their own protocols with such apparent impugnity. Then again, 43% of the cases analysed by the Insolvency Service mysteriously lacked the recording of the initial phone call, as required by SIP 3.1.

I still say it’s a ‘wild west’ out there, in terms of who or what purports to be debt advice but is simply a mechanism for enrichment of someone other than the person in debt. Meanwhile, we continue to grow old while we await the next steps in the review of the personal insolvency framework but don’t hold your breath folks: ‘The Government aims to publish proposals for reform of the personal insolvency framework early in 2024.’

Finally, my most recent client is a 64 year old lady with around £10K of mostly catalogue debt (the analogue version of Buy Now Pay Later). She will have a Debt Relief Order and the slate will be wiped clean.

As part of the process, she needed to open a new bank account, and was able to do this online with quite amazing ease. She then had to contact the DWP so that they can pay her benefit into her new account. To this end, she was called to the Job Centre for an appointment with her work coach, who needed to verify her bank account details in person, apparently.

While all this could be very reassuring from a security point of view, I am left wondering why this lady, a widow with a number of health conditions, cannot yet draw her pension? Why does she have a work coach? She’s 64. Once upon a time, not that long ago, she would have been retired, but now she has to officially be 66 years old before the government will pay her state pension, along with any pension credit and winter fuel payment.

Until then, at least a significant portion of her UC can now go on looking after herself, rather than paying perpetual interest and charges to JD Williams. That’s a positive note to end on!