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Three in four Universal Credit tenants in arrears

July 26 2016
"as an ex rough sleeper I feel this scheme has not been fully thought through"

Housing campaigners have called on the government to review Universal Credit, after a survey found that almost one in eight people receiving it are in rent arrears.

The survey of all tenants who receive Universal Credit in England, carried out by National Federation of Arm’s Length Management Organisations (NFA) and the Association of Retained Council Housing (ARCH), found that 79 per cent had fallen behind on rent.

The total number of tenants (not on Universal Credit) who are in arrears is just 31 per cent.

The report, which comes one year after the introduction of the new benefit, suggests “households in receipt of UC remain much more likely to be in arrears and also have, on average, larger levels of arrears than tenants in general”.

Those who are on Universal Credit owed an average of £321.05, compared to other tenants who owed £294.57.

All those who responded to the survey said that the six-week period between a tenant making a request for Universal Credit and receiving their first payment was “very frequently or frequently a factor in claimants falling into arrears”.

The report concluded many claimants simply do not have sufficient savings (including their last pay cheque) to get them through this period.

The NFA and ARCH met with Lord Freud, the Minister for Welfare Reform, in June to call for the government to speed up the assessment process for Universal Credit to three weeks. They also asked for a review of the in-arrears policy, which they claim is causing “unnecessary hardship and long-term disadvantage” for tenants receiving Universal Credit.

John Bibby, chief executive of ARCH, said: “A review of current policy is imperative if we are to reduce unnecessary hardship within our communities.”

A spokesperson at the Department for Work and Pensions has denied that Universal Credit is to blame, stating that “around half [of households in arrears] were already behind with their rent before their Universal Credit claim started.

“Our evidence shows that the majority of Universal Credit claimants are comfortable managing their budgets and we continue to work closely with landlords, local authorities and other organisations to ensure claimants are supported”.

Analysis: Ian Kalman has been on the receiving end of benefits. And as he finds, it's important to know your rights.

Universal Credit is slowly being rolled out across the country. This new scheme affects everyone who is getting some sort of benefit including Job Seeker's Allowance, Housing Benefit, Working Tax Credits, Child Tax Credits, Employment and Support Allowance and Income Support.

A spokesman for the DWP told me that Universal Credit “simplifies the benefits system and supports claimants to move into work and turn their lives around”. But he said it was recognised that some claimants need “extra support” and as such:

•  Work search and availability requirements can be suspended when a person is dealing with a domestic emergency, or other temporary circumstances, including homelessness;
Alternative payment arrangements can be made for claimants who need it, and budgeting advice and support is available; and • Universal Support will enable claimants to access joined up local council and volunteers services through the job centre.                       

There are still some issues. If you receive your benefit on a fortnightly basis once you are on Universal Credit, it will go to monthly period. Apparently this better reflects the working world.

Those who receive housing benefit will also get it all in one lump sum. For some, this will be a temptation. What if someone spends all their benefit? I put this to the spokesman. He informed me that there will be hardship payments and the decision to award this will be up to the person’s work coach – ie. help would not be automatic and the money has to be paid back.

What’s more, you have to apply for this online but as we know, many people still have problems with computers. The spokesman tells me there will be help available at every job centre.

One person I spoke to about the problem of people spending all their benefits upfront said it was unthinkable. As we all know, the unthinkable happens a lot.

The majority will manage on it but there will be a percentage that will not. That is what concerns me: as an ex rough sleeper I personally feel this scheme has not been fully thought through. I will be keeping an eye on it.