Is Universal Credit really helping people to help themselves?

Cracking the so-called ‘welfare benefit trap’ is one of the main aims of Universal Credit.

Like those who are employed and receive a monthly pay cheque, claimants are encouraged to be more financially responsible by managing their own monthly payment. The concept is simple, but also flawed.

The roll-out of Universal Credit has seen rent arrears rapidly increase due to administrative delays, bureaucratic red tape and, of course, the challenge of forming new habits.

“If the current rate of arrears continues… it will become unsustainable for us.”

For some tenants, making a monthly payment to their landlord has proved a difficult habit to form. If the intention is to truly empower people to become skilled managers of their own finances, then we need to start listening to their concerns and fine tune the system to make it work for them.

Although Universal Credit aims to mimic a monthly wage, it currently takes about six to seven weeks from the initial claim before a claimant receives their first monthly payment.

Tenants do not get paid for the first seven days of the claim either. Would this delay be acceptable to an employee starting a new job? Lord David Freud doesn’t seem to think so based on his article in The Guardian earlier this month.

Many of our tenants have told us of their frustration and difficulties with the new system compared to when they claimed benefits previously.

As landlords, we also have a duty of care to our more vulnerable tenants.

We recently had one tenant who was midway through a drug rehabilitation programme and had conscientiously requested on three occasions during the claim process for the Department for Work and Pensions (DWP) to directly pay the housing element of his Universal Credit to us, his landlord.

He was worried he would be unable to resist the temptation to buy more drugs rather than pay his rent. Sadly the DWP did not respond to this request and when his first payment was made he did in fact use the money to buy more drugs.

Not only did we ‘lose’ him for several days but his drug rehabilitation programme was set back several months.

Where is our duty of care to our most vulnerable tenants? 

We currently have 240 tenants claiming Universal Credit with arrears totalling a staggering £193,000. This is equivalent to an arrears rate of 13.3% compared with our non-Universal Credit arrears rate of 4.7%.

“Where is our duty of care to our most vulnerable tenants?” 

If this rate of arrears continues for Universal Credit claimants, it will become unsustainable for us as a landlord.

Through sustained efforts and years of work, we have developed strong and effective relationships with many local authorities.

The development of a similar relationship with the DWP was identified as one of the key outcomes of the DWP’s direct payment of housing benefit demonstration projects several years ago, which we were an active part of.

Although we are able to work successfully with some parts of the DWP, this relationship is not consistent across all area partners.  

The level of assistance, knowledge and customer service offered by the DWP call centre can also often be a lottery of who you manage to speak to.

The aim of empowering our tenants to become more financially responsible is a goal we want to help achieve. Our door is wide open to any member of the DWP to help each other achieve the true goal of Universal Credit: to help people to help themselves.  

Vivian Davies, director of collections and credit control, Family Mosaic