The purpose of the government’s flagship policy of Universal Credit is to combine a range of working-age benefits into a single payment. The theory was that it would simplify the benefits system by merging means tested benefits, including housing benefit, into a single payment. One significant feature is that the payment of rent is directly to the claimant rather than direct to the landlord, as housing benefit was in many cases. However, the rollout of Universal Credit has been more problematic than anticipated. Recent stories have highlighted that Universal Credit is pushing tenants deeper into rent arrears and increasing food bank referrals.
Safe as Houses report
A report on the early rollout of Universal Credit in the London Boroughs of Croydon and Lambeth (‘Safe as Houses: the impact of universal credit on tenants and their rent payment behaviour in the London boroughs of Southwark and Croydon, and Peabody, October 2017), makes for alarming reading. The study found that tenants in receipt of Universal Credit saw their arrears rise rapidly in the first few weeks after claiming the benefit. Analysis of the rent accounts showed that one week after claiming the benefit, 36% of the total rent owing was not paid. While attempts were made to pay off arrears after 12 weeks, people struggled to repay the full amount. After 20 weeks the report found that while tenants in receipt of Housing Benefit had overpaid, tenants in receipt of Universal Credit were on average £156 in arrears.
According to the report, claimants had little knowledge about Universal Credit or understanding of how the benefit worked, and found the change to monthly payments hard, particularly for those used to weekly or fortnightly payments. The long waiting period to receive the benefit caused severe financial challenges and considerable levels of stress and anxiety.
The government recently committed to reducing the much-criticised minimum six-week waiting period to five weeks. However, this only starts from February, which means that new claimants won’t be paid until after Christmas, leaving them struggling to find money for rent, utilities and food. It has been widely reported that the use of food banks has risen exponentially, and that Universal Credit claimants are among those needing to rely on these services. Sadly, the Trussell Trust are expecting their busiest Christmas ever at their network of food banks. While the reasons for reliance on food banks are complex, a recent BBC analysis of Trussell Trust data found that benefit delays and changes accounted for 43% of referrals to their food banks.
Problems with possession proceedings
As social housing lawyers, we see these problems first hand with our clients facing possession proceedings on the basis of rent arrears. A tenant I recently worked with was facing eviction from her home after building up significant rent arrears. She had moved onto Universal Credit and faced a long delay in receiving her first payment, during which time she relied on food banks. For some time she had not understood that she was now responsible for making the rent payments herself, rather than these going directly to the landlord. Working on zero hours contracts she was subject to fluctuations in her wages which meant her Universal Credit also fluctuated, and monthly payments made it very difficult to budget and plan her finances. Fortunately, with significant help from a debt advisor, support worker and her landlord she was able to avoid eviction.
Providing more awareness and information on universal credits
It is clear that as well as addressing the practical problems with Universal Credit payment, there needs to be more information for new claimants to understand the benefit. In particular, those in receipt of Universal Credit who are in rent arrears should be made aware that they can request more regular payments than the standard monthly payments, and can also request direct payments to their rent account, to make managing their finances easier.
In conclusion, it is evident that the Universal Credit system has not necessarily simplified matters and is in fact pushing many people further into poverty and putting them at risk of losing their homes.
Co-author of this blog is Rumaysa Miah, a legal clerk in the social housing department.