Thursday, 19 January 2017

Universal Credit arrears soar in Scottish council

The introduction of Universal Credit has caused a dramatic rise in rent arrears in eastern Scotland, according to a local council report.

The study by East Lothian Council found that this is causing private sector landlords to be more reluctant to let to claimants of the new benefits system, is increasing the risk of potential homelessness and is having an impact on temporary accommodation.

The impact on rent collection, it said, “has been severe”. A total of 590 tenants receive Universal Credit in East Lothian, 481 of whom have rent arrears.

Universal Credit was fully rolled out in East Lothian in March, when rent arrears were around £1.2m. In the next financial quarter, this figure jumped to around £1.45m.

According to the report, the council had reduced rent arrears since 2014, but that progress has now been completely wiped out.

The report admitted that only about half of this increase is directly related to debt associated with Universal Credit, but claimed nevertheless that the remaining increase represents its indirect impact. Time spend dealing with claimants, it said, is detracting from the time officers can spend with other tenants.

In June this year, the National Federation of Arm’s-Length Management Organisations and the Association of Retained Council Housing found that across England 79% of 3,000 tenants on Universal Credit surveyed are in rent arrears compared to 31% of other tenants.

In East Lothian, the report found a similar situation, reporting that the average rent arrears for a Universal Credit claimant is £898, while the average arrears for non-claimants is £589.

A Department for Work and Pensions spokesperson said: “The reasons for rent arrears are complex and to link it to welfare reform is misleading.

“We work closely with local authorities, including East Lothian Council, to ensure that claimants are fully supported and rent can be paid directly to landlords for people who need extra support.”

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