UK councils call for universal credit to be halted

18 Oct 17

Councils in the UK have called on the government to pause or slow down the roll of universal credit as they divert their own scarce funds into helping financially struggling claimants. 

Four authorities contacted by Public Finance said they were braced for rising rent arrears and were siphoning off resources to put into emergency hardship funds.

Authorities in Oxford, Birmingham, Oldham and North Lanarkshire, which have piloted elements of the universal credit programme, told PF they were concerned about the scheme.

One council branded the problems “unacceptable”, while others called for the roll out to be paused or slowed down.

It follows the news that Croydon Borough Council, which has piloted universal credit in full, is planning to spend £3m of its own budget preventing tenants from being evicted due to rent arrears caused by late payments.

This comes as the House of Commons is due to vote on a Labour-backed motion this afternoon to pause the rollout of universal credit’s full service.

The vote is not binding but if Theresa May loses with the support of rebellious Tories this could force her to re-think the policy. 

Work and pensions secretary David Gauke announced this morning the 55p-a-minute universal credit helpline would be scrapped and switched to a freephone number over the next month.

Oxford City Council, which has been trialing universal credit since April 2015, confirmed that it expected rent arrears to rise after the roll-out of full universal credit comes into effect in Oxford today.

In preparation the authority has allocated £50,000 to an emergency fund to help people who are affected by delayed payments.

Susan Brown, deputy leader of Oxford City Council, said: “People who claim universal credit face a six week wait for their first payment, and the Department for Work and Pensions admits that a fifth of claimants have to wait even longer.”

She added: “Waiting periods and payment delays mean that universal credit leads to debt, rent arrears and the risk of homelessness, and this is unacceptable.”

She said the advanced payment offers from the Department for Work and Pensions only amounted to half the expected reward, which she argued is not enough to live on.

John Campbell, North Lanarkshire Council’s financial inclusion manager, told PF that most councils in the UK are reporting an increase in rent arrears after the introduction of the welfare reform.

Campbell highlighted that in Scotland most councils tenants pay rent fortnightly so a six- or eight-week delay in benefit payments could lead to significant arrears. He said this is what has happened in North Lanarkshire.

Of the 3,500-4,000 universal credit claimants in North Lanarkshire some 900 are council tenants. Of these, around 500 are in rent arrears compared with 241 in March 2016, Campbell said.

“We have called for a pause [in the roll-out] through the Convention of Scottish Local Authorities, in partnership with the Scottish government and local charities who have also called for it to be halted.”

The council has earmarked £580,000 a year to pay exclusively for additional staff to work directly with people affected by universal credit.

Abdul Jabbar, deputy leader of Oldham Council, which has run the live universal credit service since 2013 and the full service since April this year, said the scheme has “potential to be better” than the previous benefits system. But its fundamental flaw of delayed payments needed to be addressed.

“The whole purpose of the pilot is learn the lessons from it, to look at what is working and what isn’t and the lessons from Oldham are loud and clear,” Jabbar said.

“The deliberate policy to delay payments is causing a lot of problems for claimants. Payment should be made as soon as applications are assessed.”

He cited figures from Oldham’s largest housing provider, First Choice Homes, which showed 68% of those tenants who are universal credit claimants were in rent arrears, 25% of claimants were facing legal action and 15% had been evicted for falling behind on their rent.

Jabbar said this was squeezing the council’s housing budget because the authority was having to pay the landlord rents for the temporary accommodation when claimants failed to do so.

According to a briefing from First Choice Homes, since April rent arrears for the year for temporary accommodation stands at £70,000. This compares to a total of £36,000 for the previous four years – a change Jabbar said was “largely attributable” to universal credit.

Birmingham’s multi-agency welfare reform implementation group - comprised of housing providers and homelessness charities - has also asked the government to rethink its plans amid fears the roll-out would result in more debt and homelessness.

The council noted that around 3,000 people in Birmingham currently receive universal credit covering their housing costs, but the potential number eligible under the full roll-out could be as high as 60,000.

Tristan Chatfield, Birmingham City Council's cabinet member for transparency, openness and equality, said: “We know from the pilot areas that rent arrears increase significantly when universal credit is introduced, because, for many vulnerable people, the switch from multiple benefits paid in stages, to a single monthly payment in arrears with a built in delay, provides too much of a cliff edge.”

He urged the government to avoid “disastrous consequences” by making changes to the planned roll-out, such as agreeing to a slower transition and other safeguards to reduce the risk of rent arrears and evictions.

The DWP has been approached for comment. 

UPDATE: 

Yesterday Labour's motion to pause universal credit passed 299 votes to 0. It represented a symbolic victory for Labour, although the vote is not binding.

All but one Conservative MP abstained. Tory rebel Sarah Wollaston MP for Totnes voted with the motion.

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