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Crunch time for Universal Credit

As the roll-out of ‘full’ Universal Credit ramps up and grabs the headlines, we republish a piece looking at what it could mean for social landlords and tenants. Photography by Mark Pinder and Entertainment One (EONE)

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Crunch time for Universal Credit

The original version of this piece was published by Inside Housing on 16 August

Jo King shakes her head in desperation as Vivaldi’s The Four Seasons croaks from her phone speaker. She has heard it countless times since she first called the Department for Work and Pensions’ (DWP) Universal Credit (UC) helpline.

“I’ve rung up four times already,” she explains over the garbled concerto. “If my Universal Credit is not there by the close of play, then my direct debits will bounce.”


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Ms King, who was born blind and struggles with an array of physical and mental health problems, was told it would be in her account by 2pm. It’s now 3pm and there is no sign of the money. She could be fined £48 by her bank, which is a frightening sum for someone who needs every penny to pay for her care, bills and food.

“I won’t have much left out of my benefit if I’m charged for the direct debits,” she says when Inside Housing meets her at her homely council flat on the Newbiggin Hall Estate in Newcastle. “I will have to try to put something off until next month. Or it will be less food, probably.”

Eventually, she is passed to a manager from the DWP’s Grimsby call centre, who promises she will get her money. But Ms King, 43, has every reason to doubt his word. The month we meet, the DWP has already failed to pay her rent directly to Your Homes Newcastle, Newcastle City Council’s 28,000-home ALMO.

Usually under UC, the money goes to the tenant, but tenants are able to make special arrangements to have their rent paid directly to their landlords. “I’ve not had one payment on time, or paid or worked out correctly,” she says, fiddling with her dark hair anxiously.

Ms King started receiving UC –which combines six benefits, including housing benefit, into a single payment – last year. Previously it only applied to single, unemployed adults. The so-called ‘full’ version is now being rolled out to families with children and disabled people.

Since then, Ms King has frequently fallen behind with her rent. “I would get calls from my rent officer all the time saying ‘have you been paid the rent, because we haven’t been paid the rent?’” she says.

She has twice been left without any UC. Instead she relied on emergency food parcels and her disability benefit, which is supposed to pay for her care. “The food bank dropped stuff off for me. And they made me smile because they gave me a bunch of flowers,” she says, still grateful for such a small act of kindness.

Rising pressures

Ms King’s plight is not unusual. Across Newcastle – the government’s official test bed for UC – 86% of the 2,271 council tenants currently claiming UC are in rent arrears, owing a total of £2.5m. Before UC was rolled out, only 53% were in arrears.

Yet in October, the roll-out of full UC is set to increase from five to 50 areas a month. By 2022, more than seven million households are expected to be in receipt of UC. This will include half of all families with children and nearly 60% of households where an adult is disabled or has a long-term health condition.

Nick Forbes, leader of Labour-run Newcastle City Council, warns UC is pushing people into debt and destitution. “We are having to pick up the pieces of a badly designed and badly thought through system, which is leaving people, who are often vulnerable, in serious financially difficulties,” he says. “And that is not acceptable.”

“We are having to pick up the pieces of a badly designed and badly thought through system.”

Rather than evicting tenants waiting for payment, the council is offering advice and support, and, occasionally, emergency payments and food. “Staff in our customer service centre have tins of food in cupboards because people are presenting having not eaten for three days,” says Mr Forbes.

But the council cannot stop private landlords taking matters into their own hands. “We know a number of people are starting to run up significant arrears in the private rented sector,” he says. “And that increases their risk of homelessness through eviction.”

Nor can it keep bailing tenants out for ever. Newcastle has had to cut £221m over the past six years and needs to find another £70m worth of savings by 2020. “Over the next two years we won’t be able to provide the same level of support,” says Mr Forbes.

Rent arrears pose other problems for the council: less money for housing maintenance and new homes. “It is yet another pressure on the Housing Revenue Account at a time when there is a huge drive to build new housing,” remarks Mr Forbes.

The experience of other areas with full UC is equally troubling. A survey of councils and ALMOs by the National Federation of ALMOs (NFA) and the Association of Retained Council Housing (ARCH) found in July that 73% of tenants were in arrears, owing an average of £772.21, up from £611.73 a year earlier. This is far higher than the 31% of tenants in arrears under the housing benefit system.

A separate Citizens Advice survey in July found that 57% of UC claimants seeking its advice had been forced to borrow money while waiting for their first payment, which takes at least six weeks. It also showed that 39% were waiting longer, and 11% were waiting more than 10 weeks.

Evidence of hardship caused by these delays is easy to find. A report for The Trussell Trust, which runs food banks across the UK, found in April that food banks in areas with full UC roll-out had seen a 17% average increase in referrals, more than double the national average increase of 7%.

In the West End of Newcastle, there are already people queuing outside The Trussell Trust food bank at the Church of the Venerable Bede when Inside Housing visits at 9.30am, 30 minutes ahead of its opening. There is a young man in sportswear, an older woman and a young couple holding empty shopping bags. They look sheepish and apprehensive in the morning drizzle – nothing like the Benefits Street stereotypes.

Inside, washed-out light comes through a broken window. The hall was broken into the week before but staff managed to open the food bank, which featured in Ken Loach’s acclaimed film I, Daniel Blake.

Today’s volunteers – a mixture of local Christians and Muslims – form a circle and pray before opening the doors. The man leading the prayer is Michael Nixon, a softly spoken Anglican minister who doubles as the food bank manager.

“Lord, we ask for your help for all of those who come to us in need today. And we ask for your help for the team, particularly those who are new to us,” he says.

Two of the first to receive food parcels of breakfast cereal and bread have experienced problems with UC. “I went onto UC [at the] start of January but I had to wait about six weeks without money. I had to come to food banks. I was living on Cornflakes and whatever I could get,” says former homeless man Nicholas Hickwood, clasping the two bags of essentials he has been given.

Luckily, his landlord – Haven (Tyneside), a supported housing provider and homelessness charity – was understanding and “let him off the rent because they knew [his] circumstances”.

For Newcastle Council tenant Dave Ravel, who has been on UC for five months, the first month without money was the hardest. The 43-year-old survived with help from his family and food banks.

His rent was not paid, so he received an eviction letter. “But I said it cannot be right,” he says. “How can I give you £315 when I’m only getting £300? What do I live on?”

Even though the rent is now being paid directly, he still needs to come to the food bank. “I would turn to crime if it wasn’t here,” he says.

“How can I give you £315 when I’m only getting £300? What do I live on?”

Mr Nixon is not surprised by these stories. “State provision has been taken away and replaced with something punitive. If people are able to go out and work, let’s encourage them to do that,” he says, sipping from a mug of tea. “But these are not the people we see here – 90% need help and need it urgently. They can’t get a job. Many are depressed or suffer from mental illness. Many suffer from physical illness.”

 

The film I Daniel Blake features The Trussell Trust food bank, in the West End of Newcastle
The film I Daniel Blake features The Trussell Trust food bank, in the West End of Newcastle

The food bank helps around 46,000 people a year, making it the busiest in the country. In the past four months, referrals from doctors and other professionals have increased by about 10% each month.

Mr Nixon worries that these numbers could double in the next six months as the nearest job centre has only recently started moving families and disabled people onto UC. “My concern is that we have a massive raft of people who are just above the level of needing a food bank. And we think the UC roll-out will throw these families into need and we will suddenly see them,” he says.

Stark warning

These fears cut no ice with the DWP. It maintains that UC is helping people move into work faster and stay in work longer than under the previous system. “The best way to help people pay their rent and improve their lives is to help them into work,” says a spokesperson.

The DWP claims that the initial six-week wait prepares claimants for the world of work and extra help is available to those in need. It also argues that most tenants in financial trouble were already in rent arrears before moving onto UC.

The NFA/ARCH survey shows that 40% of tenants who are now in arrears had been keeping up with rent before they started getting UC.

So, what will happen to social landlords and tenants when the UC roll-out to families and disabled people is ramped up in October?

Mr Forbes argues that Newcastle provides a stark warning: “Others will be hit with a wave of vulnerable, frightened people, in a way that we have. They will find there is a huge additional strain on the support services they are able to provide.”

Back on the Newbiggin Hall Estate, Ms King has finally got off the phone. She doesn’t mention how much it has cost her, but calls to the helpline at the time cost up to 55p a minute (the government has since confirmed the helpline charges will be dropped) She now has a nervy wait to discover if she has been paid. “It’s a complete and utter nightmare,” she says.

Unsurprisingly, she is unimpressed by the DWP’s claims. She knows the system is not working for disabled people like her and has a message for ministers proclaiming UC a success story: “Take away your posh house and your yearly salary and you try living on what people have to live on.”


Universal Credit: the backstory

 

UC was the brainchild of the then-Conservative work and pensions secretary Iain Duncan Smith in 2010. He thought that rolling six benefits – including housing benefit and Jobseeker’s Allowance – into one universal credit would reduce administration costs and, crucially, make work pay.

Instead of stopping when claimants find work, UC tapers off slowly to ensure that people on benefits remain, in theory, better off working.

However, critics argue that IT problems, built-in delays and benefit cuts have undermined its aim.

Indeed, Mr Duncan Smith resigned in 2016, claiming that his colleagues in government had “gone too far” with welfare cuts and accused them of “salami slicing” the welfare-to-work system.


 

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