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Universal Credit claimants make up 25% of council rent arrears, report finds
Universal Credit households now account for 25% of unpaid council rent despite representing just 4% of tenants, according to a new report.
The study, published jointly by the National Federation of ALMOs (NFA) and the Association of Retained Council Housing (ARCH), found 72% of council tenants receiving Universal Credit are in arrears, compared with 26% of all households.
And households using the new welfare system had also fallen further behind on rent than others struggling to pay – owing an average of £520 compared to £328 average arrears.
In the 2017 survey, Universal Credit claimants represented 10% of total unpaid council rent, while the new benefit had been rolled out to 2.6% of tenants.
Tenants of the 28 councils and ALMOs surveyed over both years who are receiving Universal Credit now owe £10.9m in rent. The total arrears for these organisations has climbed 12% to £43.6m.
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ARCH and the NFA said it appeared there had been no significant improvements in the picture since last year, and called for ministers to slow down the roll-out of Universal Credit until “procedural issues” with the system are fixed.
John Bibby, chief executive of ARCH, said: “Our members are heavily investing in supporting tenants to successfully transition to [Universal Credit], however the level of arrears [and] debt being accrued is having a huge impact on council [Housing Revenue Accounts], which are already under pressure.
“It will also not be possible to sustain the levels of intensive support to tenants as the roll-out continues and resources become increasingly stretched.
“For this reason, we are calling on the government to provide sufficient transitional funding for landlords to enable them to effectively manage the roll-out and adequately support vulnerable tenants.”
At the Autumn Budget, chancellor Philip Hammond announced tweaks to Universal Credit, including the removal of the seven-day waiting period while new claims are processed.
But the two trade bodies also want payments to be made in advance rather than in arrears to stop claimants slipping behind on rent in their first month.
“We are pleased that the government has listened to us and other partners and implemented changes to the [Universal Credit] system which should see improvements for tenants and landlords as the roll-out progresses,” said Eamon McGoldrick, managing director of the NFA.
“However, we still have deep concerns about the ongoing impact of [Universal Credit] on tenants, many of whom are already deeply vulnerable, and we are calling on the government to fix the biggest flaw in the [Universal Credit] system, which is payment in arrears.”
