Joint research from the NFA and ARCH reveals almost nine in ten Universal Credit (UC) claimants living in council housing are in rent arrears, two and a half years after Iain Duncan Smith’s flagship new benefit was introduced.
The research charted the impact of UC on the rent arrears of claimants living in council owned homes and found 86% are in arrears, up from 79% in March 2016, with 59% of these more than a month behind on their rent.
Although 63% of UC tenants in arrears had pre-existing arrears before their UC claim only 44% of them are on APAs (alternative payment arrangements with direct payment from DWP).
The average value of rent arrears owed by UC claimants living in council housing has almost doubled since 31 March 2016, from £321 to £615.
John Bibby, Chief Executive ARCH, said: “We are extremely concerned with the upward trajectory of rent arrears for universal credit households. Not only are numbers of households increasing as UC is rolled out, but the percentage of households falling into rent arrears and experiencing financial difficulty is critically high.
“If this trend is not reversed it will have significant impact on local authorities’ rental income streams and the long term ability for housing departments to provide essential services to their communities.
“Together with the NFA we continue to hold regular conversation with the DWP to find ways to resolve the problems currently being experienced by claimants.”
The NFA and ARCH have been monitoring the impact of UC on levels of rent arrears since April 2013, and are calling for an end to the seven day waiting period for Universal Credit claims.
Hugh Broadbent, NFA Chair, said: ‘We will continue to work with the DWP to help identify and resolve operational issues and improve service performance in processing universal credit claims.
“We believe the current unacceptable waiting times and errors in processing claims are causing significant financial hardship to our tenants and communities.
“The reported increase in the presence of loan sharks within our communities is alarming, but sadly not surprising.
“The delay in claimants receiving benefit inevitably forces households to turn to other ways to survive, including family and friends, pay day lenders and as a last resort loan sharks.
“The repayment of extortionate interest only further exacerbates a tenant’s ability to pay their rent”.
Today’s analysis is the most up to date research available and records information on UC rent arrears up to 30 September 2016. Further data will be captured from local authorities and ALMOs (Arm’s-length management organisations) at the end of March 2017.
The news comes as the Scottish National Party call on the UK Government to halt the roll-out of UC and planned Jobcentre closures in Glasgow.
Speaking ahead of today’s opposition day debate, SNP MP Drew Hendry said: “The Tory obsession with austerity continues to punish low income families despite Theresa May’s latest “shared society” slogan.
“Despite Iain Duncan Smith quitting his role at the Department for Work and Pensions last spring, the Tories’ still haven’t abandoned his failed UC project.
“The reality is that Universal Credit will fail to lift children out of poverty, it will fail to eradicate existing inequalities for families who are already struggling to make ends meet and it will fail disabled people due to the devastating cuts to Employment Support Allowance.
“And on top of these cuts, the DWP plans to slash 50% of the Jobcentres in Glasgow – these proposals are morally outrageous and fly in the face of the Tory promise to “work for the many and not the privileged few”.
“While 85% of welfare spending – including Universal Credit – remains reserved to the UK Government and firmly in Tory hands, the SNP Scottish Government is working to ensure we build a Scottish Social Security Agency with respect and dignity at its core with the powers that we do have.
“The Tories must pay attention to the evidence and bring this disastrous project right back to the drawing board – Theresa May must halt the roll-out of UC and planned Jobcentre closures in Glasgow so that these regressive policies can do no more damage to some of the most disadvantaged in Scotland.”
Published: 16 January 2017 at 23:18 (GMT). Updated: 06:04 (GMT) on 17 January 2017.