Council housing providers are calling on the government to pause the roll-out of universal credit amid warnings the system cannot cope with rising rent arrears and the raft of changes to benefits.
Research published today by the Association of Retained Council Housing and the National Federation of Almos found levels of arrears continue to be high amongst tenants on universal credit with just under three quarters of such tenants behind on their rent in March 2017.
The report, Pause for Thought, said this level was roughly the same as March 2016 but the average amount owed had increased from about £612 to just over £772.
Tenants in receipt of universal credit accounted for more than 10% of the total £68.5m arrears bill reported by the 37 respondents, despite accounting for just 2.6% of the more than half a million tenants served.
Arch and the NFA say this level of arrears will not be sustainable if universal credit is fully rolled out by September 2018 ,as currently planned by the Department for Work & Pensions.
Eamon McGoldrick, NFA managing director, said members were “supportive of the principles of universal credit and are willing to work with the DWP to find solutions to the problems identified within our survey” but urged the “government to restrain its ambition to accelerate” the roll-out of universal credit.
Asked about reasons why tenants on universal credit fell into arrears, 100% of respondents said the six week wait between a claim being made and paid out was a factor. Arch and the NFO are also calling on the government to remove the seven-day wait period which means claimants do not receive any payment relating to the first seven days after they have made the claim.
Tenants already being in arrears was another major factor as was tenants not recognising they had become liable to pay their own rent.
Data from the 10 responding organisations that were able to provide data on tenants rent accounts before and after universal credit, found 60% were already in arrears.
Senior council and almo staff that took part in a roundtable held as part of the research reported that the new ways of working they had introduced to accommodate the initial roll-out of universal credit, which has so far been focused on single people and new claimants, were “resource intensive” and “not scalable”. As a result there were “considerable concerns about how landlords would manage the full transition to UC without further support,” the report said.
Arch chief executive John Bibby called on the government to create a transition funding pot. He said: “If the level of intensive support needed to vulnerable tenants is to be sustained during the planned roll-out additional resources are essential… Without this increasing numbers of vulnerable households will drop through the net.”
The report also looked at the impact of the ‘bedroom tax’ and the benefits cap. It found 9% of households were affected by the under-occupancy penalty, down from 10% in 2014-15, its second full year, suggesting it was not having the desired effect of encouraging tenants to downsize.
Analysis of budgets for discretionary housing payments (DHP) shows that 60% is attributable to the impact of the under-occupancy penalty, 16% to the benefits cap and 24% to other needs including temporary accommodation.
There are concerns that the DHP pot, which is provided by the DWP, will not be adequate in some areas once the impact of the reduced benefits cap and reduced benefits for families with more than two children is felt.
A DWP spokesperson said: “This report clearly states the majority of tenants in rent arrears were already behind on their rent before moving onto the new system, so it is misleading to link rent arrears to Universal Credit.
“We are rolling out universal credit in a gradual, safe and secure way, and the majority of people are managing their budgets well.
“In the rare cases where issues arise, we work closely with local authorities and landlords to provide extra support to people who need it.”