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This note explains the Smith Commission’s proposals and the Draft Scotland Clauses in relation to Universal Credit (UC), including the housing costs element (currently Housing Benefit).

Universal Credit (UC) is to replace means-tested benefits and tax credits for working age families. The intention is to simplify and streamline the benefits system for claimants, making it easier for people to understand; to reduce the financial and administrative barriers to work; to tackle in-work poverty; and to bear down on fraud and error. When fully introduced, around 700,000 households in Scotland are expected to be in receipt of UC.

A detailed timetable for the introduction of UC has not yet been announced, but it is expected that the transfer of claimants of existing benefits to UC will not be completed until after 2019.

The Smith Commission proposed that Universal Credit would remain a reserved benefit, administered and delivered by the Department for Work and Pensions. The Scottish Parliament would however be given the power to vary the housing costs element of UC, including varying the under-occupancy deduction and Local Housing Allowance rates, eligible rent, and deductions for non-dependants; and to pay housing costs direct to landlords. It would also have the power to change the frequency of UC payments, and split payments between household members.

The Draft Scotland Clauses published in January 2015 give Scottish Ministers regulation making powers to vary the UC housing element and to make alternative payment arrangements for UC, but before doing so they must consult the Secretary of State on the practicability of the proposals. The Secretary of State must have given his agreement on when changes are to have effect, and must not “unreasonably withhold” his agreement.

Separate Library briefings will be published in due course on: Further devolution of powers to Scotland: devolved benefits and additional discretionary payments and Further devolution of powers to Scotland: employment programmes.

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