Councils buckling under Universal Credit arrears

Family debt

Survey reports vast majority of English council tenants on Universal Credit are in arrears  

26th January 2017 by Robert Armour 2 Comments

Councils in England are buckling under the pressure of Universal Credit after a survey revealed 86% of tenants on the scheme have rent arrears.  

Research conducted by the National Federation of Arm’s-Length Management Organisations (NFA) and the Association of Retained Council Housing (ARCH), which represent more than one million council homes in England, carried out annual research into Universal Credit claimants and found the percentage of council home tenants in receipt of Universal Credit who are in rent arrears has increased by seven percentage points – from 79% in March last year to 86%.

In comparison, just 39% of tenants are in arrears who don’t receive Universal Credit.

Researchers said although pre-existing rent arrears is an issue for many people moving onto Universal Credit, “it does not completely explain the higher levels of arrears among UC claimants”.

The research found 50% of the claimants were in arrears before going onto Universal Credit, which rolls several benefits – including housing benefit – into a single monthly payment to claimants, rather than directly to landlords.

Increased use of loan sharks in the affected areas was also reported.

All respondents said the six-week waiting period was either “very frequently or frequently” a contributing factor in tenants falling into arrears.

Ministers in Scotland have announced the impact of Universal Credit was to be mitigated by increasing frequency of the payments and paying landlords rent directly. 

Glasgow City Council published a report showing claimants' arrears could potentially impact on jobs and lead to cuts in services.  

Hugh Broadbent, chair of the NFA, said: “We believe the current unacceptable waiting times and errors in processing claims are causing significant financial hardship to our tenants and communities.”

We are extremely concerned with the upward trajectory of rent arrears - John Bibby

John Bibby, chief executive of ARCH, said: “We are extremely concerned with the upward trajectory of rent arrears for Universal Credit households. Not only are numbers of households increasing as UC is rolled out, but the percentage of households falling into rent arrears and experiencing financial difficulty is critically high.

“If this trend is not reversed it will have significant impact on local authorities’ rental income streams and the long-term ability for housing departments to provide essential services to their communities.”

A spokesperson for DWP said: “The best way to help people pay their rent is to help them into work, and under Universal Credit, people are moving into work faster and staying in work longer than under the old system.

“As this report makes clear, over three-quarters of their tenants were already behind with their rent before their Universal Credit claim started.

“Our research shows that the majority of UC claimants are comfortable managing their budgets, and that after four months, the proportion of UC claimants we surveyed, who were in arrears at the start of their claim, fell by a third.

Comments

26th January 2017 by sue

uc are are not paying the way jsa did ie; every 28 days. therefor there are two to three days a month not being payed which when added up leaves a shortfall in paying the rent....

23rd February 2017 by Adam

At Wakefield and District Housing rent arrears increased from 2% to 11%, Bron Afon community housing in South Wales reported a 50% increase in arrears, while in Edinburgh, Oxford and Southwark there is around a 30% increases in arrears. Southwark for example are predicting that arrears will increase by £14m. where UC was rolled out first https://universal-credit-helpline.co.uk/2017/02/21/welfare-benefits-reform-universal-credit/