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10 July 2018

Joint call to change the flawed Universal Credit system as tenants are already in over £1m debt

Welsh housing association tenants on Universal Credit are already in over £1 million of rent arrears debt, according to a survey of housing associations in Wales.

A survey conducted with 3,475 people living in Welsh housing association homes shows each person is in an average of £420 worth of arrears.

Community Housing Cymru, the membership body for housing associations in Wales, is warning the Government’s flagship benefit scheme is pushing families into debt; causing suffering and hardship for tenants and threatening housing associations’ financial stability.

In Wales, the Universal Credit scheme has been rolled out to just 40,000 claimants in social and private homes, just 10% of the expected roll out figure.

Community Housing Cymru, along with its partner federations the National Housing Federation, the Scottish Federation of Housing Associations and the Northern Irish Federation, are now urgently calling on Government to change the “fundamental flaws” with Universal Credit before it is fully rolled out. This includes scrapping the “two child policy” where families will now only receive benefits to cover the cost of their first two children.

The policy is impacting housing association tenants across the UK, with housing association tenants in England now in arrears equating to £21.6 million, while in Scotland tenants have well in excess of £1.2 million worth of arrears.

The four Housing Federations, representing more than 1,000 housing associations across the UK, say serious problems with the system include tenants losing thousands of pounds upon reassessment. The ‘two child policy’ and ‘benefit cap limit’ has also been held up as pushing families into poverty, as they will no longer receive benefits to cover the cost of feeding and clothing more than two children.

The UK Government addressed some of Universal Credit’s flaws in the last budget in October 2017 and has already committed to making some changes before its roll-out in the summer. However the four Housing Federations say these changes aren’t enough, and are now urging Government to make five vital changes before the next rollout due this year, when hundreds of thousands more will be moved on to Universal Credit.

Five vital changes needed to Universal Credit

1. Allow housing support staff and agencies, such as Citizens Advice, to negotiate Universal Credit claims for vulnerable individuals. This will ensure people receive the vital payments they’re entitled to and will help minimise rent arrears.

2. Scrap the ‘two child policy’ and ‘benefit cap limit’ pushing families into poverty.

3. Ensure Universal Credit is paid to people and their landlords on time, at the same time. The DWP has set up a system of Alternative Payment Arrangements so that people’s housing costs can be paid direct to their landlord. At the moment, landlords receive this money in arrears on widely varied and unpredictable dates which causes confusion. The crucial and no-brainer ask is to ensure landlords are paid rent at the same time it is deducted from the tenants benefit.

4. The Department for Work and Pensions agreed to put in place Universal support (US) to provide advice, assistance and support to tenants. They must adapt it to cope with greater numbers and more complex cases, and provide the funding to support more tenants. Vulnerable people are struggling to navigate the new Universal Credit system.

5. Government needs to restore the in-work allowances and revise the rules so that the self-employed, those working in the gig economy with fluctuating pay packets or those who are not paid monthly do not lose out. Present policies mean people are losing money as a consequence of moving onto Universal Credit now.

Stuart Ropke, Chief Executive of Community Housing Cymru says: "The recent changes to Universal Credit are welcome, but as it stands, the system is still not fully fit for purpose. Implementing our five asks will improve the mechanisms of the policy while empowering tenants to take responsibility for their finances. However, to do this, it’s crucial more support is offered around budgeting to improve financial and digital literacy among the most vulnerable in our society."