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The government has been feeling the heat this week as it is confronted with some cold hard facts on the roll out of universal credit.
Despite prime minister Theresa May’s insistence that the system was working well, a growing body of evidence suggests serious flaws are causing significant hardship to claimants, many of whom are already vulnerable.
Stories of children going hungry and families on the verge of losing their homes as they endure a standard six-week wait for support have prompted widespread anger and left the government vulnerable to opponents’ accusations of cruelty and incompetence.
A report published yesterday by The Smith Institute on the impact on rent arrears in Southwark and Croydon LBCs examined a cohort of 775 claimants as they transitioned from housing benefit to the new system.
Beside the stark evidence that rent arrears grew rapidly and took longer to be recouped after social housing tenants made the switch, the report also contained qualitative evidence of the everyday hardship caused by the changes.
Some were due to the system’s lack of flexibility. It identified particular difficulties for those with changing circumstances as they endured added delays due to having to regularly update records to adjust payments.
The report also highlighted a lack of consistency in the information being provided to claimants, with evidence that many jobcentre staff were ill-prepared for the changes.
But it was the six-week waiting time that prompted the strongest responses, with claimants describing it as “scary, “horrible” and “a nightmare”.
“Peter” described how when an expected payment did not arrive, he spent an hour a day on the phone for ten days running before it was made.
The report detailed claimants reporting a lack of money for rent, bills and basic living expenses while waiting for payment. This caused high levels of stress and anxiety for “some without the means to manage”.
A discussion during the launch of the report yesterday heard that while some people had borrowed money from friends or relatives to get by, others had turned to short-term loan companies.
Attendees also heard that, even though only a minority of residents had transitioned to universal credit, mounting arrears were placing significant financial pressure on councils’ already stretched housing revenue accounts. This, we were told, could seriously impede plans to build much-needed social housing.
But councils also warned that pressures caused by universal credit could also impact on wider services as councils supported claimants that had got into difficulties.
Alison Butler (Lab), Croydon cabinet member for homes, regeneration and planning, said the council was using the general fund for discretionary housing payments. These, she said, were costing the council £0.5m more than the £1.5m provided by the government, with the cost to Croydon expected to rise to £3m by the end of the financial year.
Lord Kerslake, former head of the civil service and current chair of the Peabody housing association, chaired the discussion and told LGC he was concerned about the wider impact of universal credit on under-pressure council finances.
He had earlier unsuccessfully pushed deputy director universal credit policy at the Department for Work & Pensions James Bolton on whether the six-week waiting time for payment was a “policy” or ”administrative” choice.
Today the architect of universal credit Iain Duncan Smith shed some light on that question. He told Sky News that the decision to increase the waiting days was taken by the Treasury in order to save £150m a year and was one of the reasons he resigned from government. Mr Duncan Smith also joined calls for an end ot the six-week wait.
Councils are likely to welcome Mr Bolton’s announcement that guidance on alternative payment arrangements, which are shown to significantly reduce arrears, is to be reviewed with a view to introducing more flexibility into the system.
But so far just under 600,000 people have moved on to universal credit, with an estimated seven million people expected to claim by 2022.
With such serious and potentially far-reaching problems already emerging for claimants, landlords and wider council support services, significant changes are required to ensure a system intended to provide support does not end up doing the exact opposite.