William Eichler 10 July 2018

Universal Credit is a ‘flawed’ system, housing organisations warn

A group of housing organisations yesterday warned that Universal Credit is ‘flawed’ and is causing debt, suffering and hardship for millions.

The National Housing Federation, the Scottish Federation of Housing Associations, Community Housing Cymru and the Northern Irish Federation of Housing Associations all called on the Government to change their flagship welfare policy, which merges six existing benefits into one, before it is rolled out to all parts of the country this year.

Surveys of 118 housing associations in England, Wales, and Scotland have revealed that their Universal Credit tenants are in £24m of rent arrears.

They found that tenants of 65 English housing associations were dealing with £21.6m of debt. A sample of 29 housing associations in Wales found tenants had £1.1m worth of arrears due to Universal Credit, while 24 housing associations in Scotland had over £1.2m of arrears debt.

The debt is highest in England because Universal Credit was rolled out there first.

In December 2017, in England, there were 155,669 households in the social rented sector who were reliant on Universal Credit to help pay their rent. The figures for Wales and Scotland were 5,339 and 24,368 households respectively.

The survey of English housing associations found that nearly three quarters (73%) of Universal Credit tenants are in debt, compared to less than a third (29%) of all other tenants.

In Scotland two thirds (65%) of Universal Credit tenants are in arrears, compared to less than a third (32%) for all other tenants.

The English survey found there has been a significant increase in demand for support services as more people are moved on to the new system.

More than half (51%) of housing associations in England have reported an increase in food bank vouchers issued to people struggling to pay for food, while nearly two thirds (59%) reported an increase in demand for welfare advice needed to help tenants say in their homes.

The housing associations also called on the Government to scrap the ‘two child policy’ where families only receive benefits to cover the cost of their first two children.

The policy has been blamed for pushing families into poverty because families will no longer receive benefits to cover the cost of feeding and clothing more than two children.

‘Today’s findings show that the Government urgently needs to fix the fundamental flaws in Universal Credit,’ said David Orr, chief executive of the National Housing Federation.

‘There are some very simple changes they need to make, like ensuring payments are made on time and allowing housing associations to easily negotiate on behalf of vulnerable tenants, so tenants get their money when they need it. If people aren’t receiving money on time, of course they’re being pushed in to debt. People depend on these vital payments.

‘But the Government also needs to make bold decisions like amending the two child policy. Families across Great Britain with more than two children are finding themselves with the same amount of money whilst trying to provide the basics for more children.

‘Although the Government has made some positive changes to Universal Credit that will make a difference to families, serious challenges remain and they urgently need to be sorted out.’

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