Housing bodies condemn Universal Credit rent arrears chaos

Debt woman

Social housing tenants that have been moved onto the new Universal Credit benefits system are twice as likely to build up rent arrears

10th July 2018 by Robert Armour 0 Comments

Social housing groups representing nearly seven million people across the UK have joined to condemn the roll out of Universal Credit and demand changes to the “flawed” system.

The Scottish Federation of Housing Associations (SFHA), England’s National Housing Federation, Community Housing Cymru and the Northern Irish Federation of Housing Associations warn that the system is causing debt, suffering and hardship for the families they house.

Together the organisations represent more than 1,000 housing associations. They are urgently calling on the UK government to change its flagship benefit policy before it is rolled out to all parts of the country this year.

This includes scrapping the two child policy where families only receive benefits to cover the cost of their first two children.  

Surveys of 118 housing associations in England, Wales, and Scotland reveal that their Universal Credit tenants are already £24 million in rent arrears.

While tenants may have existing arrears before moving on to Universal Credit, the survey found tenants on Universal Credit are more than twice as likely to be in debt compared to all other tenants. 

In Scotland two thirds (65%) of Universal Credit tenants are in arrears, compared to less than a third (32%) for all other tenants. If this level of indebtedness was to be maintained in Scotland, when all social housing tenants currently on housing benefit eventually migrate to Universal Credit, arrears will exceed £110 million.

This figure, which is replicated in other areas of the UK, is only a snapshot of what’s happening to social housing tenants across the country on Universal Credit, say the housing bodies. They believes many more tenants are struggling financially.

Sally Thomas, chief executive of the Scottish Federation of Housing Associations, said: “We have worked with the government and made significant strides in making Universal Credit fit for purpose. We would like to see the UK government accept our five asks as they will allow for further vital changes that will facilitate better administration of Universal Credit and reduce its negative effects on tenants.”

According to the surveys, a total of 65 English housing associations revealed that tenants were dealing with £21.6million of debt. A sample of 29 housing associations in Wales had £1.1million worth of arrears. While, 24 housing associations in Scotland had well over £1.2 million of arrears debt from tenants on Universal Credit.

The UK government addressed some of its flaws in the last budget in October 2017 and has already committed to making some changes to prevent severely disabled people losing out.  

However, the four housing federations say these changes aren’t enough, and are now urging government to make five vital changes before hundreds of thousands more people move on to Universal Credit. These recommendations are aimed at ensuring people don't lose money in the move to Universal Credit and get more support to apply for the benefit.

David Orr, chief executive of the National Housing Federation, said: “Although the government has made some positive changes to Universal Credit that will make a difference to families, serious challenges remain and they urgently need to be sorted out.”