Universal Credit is creating systemic indebtedness and arrears for new claimants
Ahead of giving evidence today (Thursday 4 April) to the Scottish Parliament’s Social Security Committee inquiry into social security support for housing, the Scottish Federation of Housing Associations (SFHA) said that “Universal Credit is creating systemic indebtedness and arrears for new claimants”.
SFHA Policy Lead Jeremy Hewer said:
“Universal Credit is creating systemic indebtedness and arrears for new claimants. A claimant’s five-week wait for their first Universal Credit payment means that two monthly rent debts have been raised before a payment is even made to them. Although the UK Government has allowed new claimants to request a 100% payment advance, this is itself a debt, as it represents a loan which has to be paid back over the course of a year.
“There are also concerns that claimants are not being made aware by the Department of Work and Pensions that advance payments include housing costs; anecdotal evidence from housing associations highlights that advances are not used for rent payments, though it is unclear whether this was a conscious choice made by the individual or a lack of understanding regarding what the payments were meant to cover. Regardless of the reason, claimants who receive advances will be in in debt until they pay back the advance and possibly also in rent arrears, too.
“Our monthly survey on the impact of Universal Credit on our members has revealed a consistent pattern: the average level of arrears for tenants on Universal Credit is higher than for those tenants not receiving Universal Credit. The real concern is that as the number of claimants on Universal Credit increases, the levels of arrears and debt will also increase, and social landlords’ income could be under threat.”
The federation acknowledges that Universal Credit Scottish choices – allowing a tenant to have their Universal Credit housing costs paid directly to their landlord or for fortnightly payments instead of monthly – have the potential to have a positive impact on the social security system, however, at present, their administration can increase difficulties for tenants and landlords.
Jeremy Hewer continued:
“At present, social landlords receive direct payments of housing costs – in arrears and on varied and unrelated dates – from the DWP in a single bulk payment. Landlords then have to manually sort through the data to identify each tenant and their payment amount. This is a labour-intensive process for housing associations, and it can cause distress to their tenants. Even though rent has been deducted from claimants’ Universal Credit awards, for several reasons, including admin errors and non-payment by the DWP, this is not always clear to housing associations and can result in a claimant building arrears.
“Housing associations should be paid rent at the same time it is deducted from the tenant’s benefit. If the systems underpinning administration of Scottish choices are improved, much of the anxiety many individuals feel regarding claiming Universal Credit will be resolved, and the administrative burdens for both the DWP and its stakeholders will subside.”
Ends
For further information, please contact SFHA Media Adviser Kirsten Walker on t: 0141 567 6221 m: 0788 788 8348 email: kwalker@sfha.co.uk
Visit our website at www.sfha.co.uk
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NOTES:
- SFHA’s written submission to Inquiry into social security support for housing
- Since its introduction, the SFHA, together with its sister UK housing federations in England, Wales and Northern Ireland, have been calling for changes to Universal Credit in order to improve the whole system for tenants and housing associations. The four federations are currently campaigning for six changes to be made:
1. End to the five-week wait for payment. Claimants should be able to get a payment in the middle of this period and there should be greater flexibility on payment frequency for all
2. More data sharing between DWP and social landlords and the restoration of implicit consent (when a claimant allows a person or organisation to help with their Universal Credit claim) will mean landlords can better support tenants and prevent problems. This is key to the success of managed migration.
3. Where benefit is paid direct to the landlord, we need a system that is fit for purpose, with the landlord receiving the payment on the same cycle as the tenant
4. Increased funding for support and advice to make sure people do not miss out on entitlement, including allowing backdating for more claims
5. Making sure that work pays for everyone by matching monthly assessments to earnings within that period, improving work allowances and reducing the taper
6. Restore inflation linked uprating to working age benefits from April 2020
- The Scottish Federation of Housing Associations (SFHA) was established in 1975 and has around 133 members providing affordable housing and wider community services across Scotland, as well as a further 150 sector associates. The SFHA is owned and governed by its members and exists to lead, represent and support the work of housing associations and co-operatives throughout Scotland.
- The SFHA is the voice of housing associations and co-operatives in Scotland. SFHA’s 133 members represent 85% of the sector, own and manage 86% of the 247,000+ housing association stock across Scotland. Together, housing associations and co-operatives provide housing for almost 500,000 people, which is one in every 11 households.
- Over 15,000 staff are employed by SFHA members across Scotland, 93% of the staff within the sector.
- Housing associations and co-operatives are not-for-profit bodies, regulated by the Scottish Housing Regulator.