The Department for Work & Pensions has said it will review current guidance on alternative payment arrangements for universal credit claimants after research found rent arrears grew rapidly under the new benefits system.
The Safe as Houses report by The Smith Institute, published yesterday, examined the experiences of 775 universal credit claimants in Southwark and Croydon LBC’s. It found arrears quickly increased as claimants waited six weeks for payment after switching from housing benfit.
But it said that arrears quickly fell once claimants were approved for an APA, which include options to pay rent directly to a landlord, increase the frequency of payments or split benefit payments between two members of a household, and called for their use to be extended.
Panellists at a discussion during the reports launch in the Lords yesterday said universal credit claimants in severe financial difficulties were often not being being made aware of the option to apply for APA by frontline job centre staff.
Responding to these concerns, deputy director universal credit policy at the Department for Work & Pensions James Bolton said the current guidance would be re-assessed.
He added: “It is clearly something that we can look at to make sure we have got the guidance right. There is actually a lot of discretion and a claimant does not have to get into difficulty.
“There are a set of criteria for APAs but there is quite a big difference in what people experience on the ground.”
Charing the event Lord Kerslake, former head of the Civil Service and current chair of Peabody housing association, described the commitment to look at this issue as “significant”.
Claimants, their representatives and landlords can all request APAs which are approved by jobcentre staff.
Fiona Colley (Lab), Southwark cabinet member for finance, modernisation and performance, told LGC that councils should also be able to approve APAs.
She said: “We need the option for local authorities to authorise whether someone would go on to an APA or not – the reality is very different from the policy, and handing more control over who may need an alternative payment arrangement is the key.
“Work coaches – the front line staff who are focused on finding people jobs or looking at earnings - are not currently offering or signposting people to APAs if they should need it, so they have the discretion but not all the options available to hand.”
Cllr Colley said more research should also be done to provide a clearer understanding of people’s personal circumstances.
During the discussion she said Southwark was expecting “substantial losses” to the housing revenue account as 12% of tenants that had so far moved to universal credit had accumulated rent arrears of £5.3m, with the expectation that a significant proportion would never be recouped.
She added that the council had so far spent £0.5m from the council’s general fund on covering the cost of temporary accommodation for universal credit claimants waiting for payment.
Alison Butler (Lab), Croydon cabinet member for homes, regeneration and planning, said universal credit was having a “huge impact” on the council’s finances. She said the general fund was being used for discretionary housing payments which 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.
Speaking to LGC after the launch, Lord Kerslake said he feared councils’ use of the general fund to support universal credit applicants could mean funding was diverted away from other council services that support vulnerable people, he said: “It is an absolute concern that universal credit could impact in that way across local government, particularly at a time when finances are so stretched.”
He called for more information to be gathered on the cumulative impact of a full universal credit roll out on local government finances.
Just under 600,000 people have so far been moved on to universal credit nationally, with 7 million people expected to be included in the full roll out by 2022.