Universal credit is having a “devastating impact” on families as council tenants’ rent arrears continue to rise, research has found.
A Joint report by the Association of Retained Council Housing and the National Federation of ALMOs says 86% of tenants receiving universal credit were in arrears in September last year, compared to 79% when a survey was conducted last March.
This compares to just over a third of all council tenants being in arrears in September.
The research also found the average level of arrears among universal credit claimants had almost doubled in six months from £321 in March to £615 in September, with 59% of households having rent debts equating to more than one month’s rent.
The survey tracked a cohort of 4,000 households receiving universal credit based on data provided by 20 organisations.
The report says the number of tenants that had pre-existing arrears before moving on to universal credit had increased from 51% in March to 63% in September.
It added: “This suggests that not all arrears can be attributed to the rollout of universal credit, but that it has clearly had an impact on increasing both the number and value of tenants’ arrears.”
Arch’s chief executive John Bibby said the level of households receiving universal credit experiencing financial difficulty was “critically high”.
He added: “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.”
Oldham MBC’s cabinet member for neighbourhoods and co-operatives Barbara Brownridge (Lab) said while the initial impact of the roll out of universal credit had not been as severe as first feared, there was growing concern.
She told LGC: “Our general view is that people who have to choose between going hungry and delaying the rent are going to spend the money on food.”
Universal credit claimants who require additional support are given three options under an ‘alternative payment arrangement’.
These are the housing element being paid directly to a landlord, split payments to members of a couple, and more frequent payment cycles.
However, the survey found just 44% of those in arrears had an alternative payment arrangement.
In Lambeth, London, the roll out of universal credit began in February last year.
Council figures for October last year showed that of the 164 claimants in the borough, 134 were in arrears to the total value of £206,000, with 16 alternative payment arrangements for direct payment of rent to the council in place.
A spokesman told LGC: “We recognise that universal credit represents a significant risk to the council’s rental income stream and to the ability of many of our tenants to sustain their tenancies and avoid falling into arrears.”
A spokesman for the DWP said: “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 universal credit claimants are comfortable managing their budgets, and that after four months the proportion of claimants we surveyed, who were in arrears at the start of their claim, fell by a third.”