William Eichler 24 October 2017

London borough warns Universal Credit pushing tenants into rent arrears

London borough warns Universal Credit pushing tenants into rent arrears image

Rent arrears for those claiming Universal Credit (UC) are worse than under the previous housing benefit system, new report reveals.

Southwark Council, one of the first boroughs nationally to see the full roll out of UC, has today launched an in-depth report by the Smith Institute into the impact on tenants of the controversial benefit reforms.

The report, published in conjunction with Croydon Council and Peabody, found delayed UC payments were pushing many into debt and rent arrears, causing considerable stress.

UC tenants were on average £156 in arrears by week 20, while Housing Benefit (HB) tenants had overpaid by 4% of rent due, the report revealed.

Big underpayments and under-payers contributed most to arrears. 69% of the value of underpayments was from those failing to pay more than 75% of rent owed. The top fifth of those in arrears collectively owed over half of the level of arrears.

There is also a pattern of arrears accumulating each week for 11weeks. After the eleventh week arrears begin to be paid down, but not enough to pay back all arrears accumulated.

Southwark has already submitted evidence to the Work and Pensions Select Committee that shows the average council rent account in its area sits at £8 in credit. However, for UC recipients, it’s at £1,178 in arrears.

The borough has already seen a £5.8m debt from arrears for those on UC and this only represents 12% of residents.

The roll out of UC in Southwark has also coincided with increased demand on local welfare services. Pecan Foodbank has reported a 94% increase in the number of referrals it has received between 2016 and 2017.

The council’s own local welfare fund - the Southwark Emergency Support Scheme - also reported a 34% rise in the numbers of food parcels issued over the same period.

‘This report’s stark evidence is why we need to lead this debate; I implore the Government to listen to how this is affecting the poorest and most vulnerable people in our borough, and the potential effects reverberating nationally,’ said Cllr Fiona Colley, cabinet member for finance, modernisation and performance at Southwark.

‘Universal Credit, in its current form, has the potential to be catastrophic, not just for residents at an individual level, but for councils’ HRA budgets for housing.

‘The arbitrary delay in receipt of money – particularly for those already in difficult situations such as temporary accommodation, could mean a spiral of debt, poverty and people not being able to afford to eat. I cannot think of a more compelling reason to push for change on this.’

Cllr Alison Butler, Croydon Council’s deputy leader and cabinet member for homes, regeneration and planning, said: ‘This report underlines the major flaws in Universal Credit, which is placing more and more Croydon and Southwark families in rent arrears and at risk of losing their home.

‘The Government needs to fix this policy now or risk devastating thousands more people not only in Croydon but nationwide.’

Pushing for real reform image

Pushing for real reform

The pandemic was a game changer for the central/local government relationship, says Joanne Roney, who has started her two-year stint as president of Solace.
SIGN UP
For your free daily news bulletin
Highways jobs

Part Time Occupational Therapist - Children & Families

Essex County Council
£39168 - £42254 per annum
Part Time Occupational Therapist - Children & Families - ColchesterPermanent, Part Time£30,906 to £42,254 per annumLocation
Recuriter: Essex County Council

School Crossing Patrol Officer

Essex County Council
Up to £8.92 per hour
School Crossing Patrol Officer Temporary, Term Time £8.92 per hour Location
Recuriter: Essex County Council

Associate Educational Psychologist

Essex County Council
Up to £450.00 per day + Limited
Associate Educational Psychologist Temporary, Part-Time £450 Ltd per day Location
Recuriter: Essex County Council

Team Manager - SGO and Connected Person Fostering

Essex County Council
Negotiable
Team Manager - Special Guardianship Order and Connected Person FosteringPermanent, Full Time£47,405 to £58,727 per annumLocation
Recuriter: Essex County Council

Duty Senior - Assessment and Intervention

Essex County Council
£39168 - £47405 per annum + + Free Parking & Benefits Package
Duty Senior - Assessment and Intervention - Chelmsford basedPermanentFull Time£39,168 to £47,405 per annumLocation
Recuriter: Essex County Council

Public Property

Latest issue - Public Property News

This issue of Public Property examines how how flexible workspaces can lead the way in regeneration for local authorities, Why local authority intervention is key to successful urban regeneration schemes and if the Government’s challenge of embracing beauty is an opportunity for communities.

The March issue also takes a closer look at Blackburn with Darwen Council's first digital health hub to help people gain control over health and care services.

Register for your free digital issue