Third wave of Universal Credit research shows system still driving rent arrears and poverty

18 September 2019

This week, the third part of the Safe as Houses trilogy of independent reports from the Smith Institute has been released. This most recent of the reports, which have formed extensive, in-depth research into the effects of Universal Credit on council tenants over three years, has again highlighted the negative impact welfare reform is having on people who live in council homes.

This latest report focuses on the changes introduced by Government last year (after recommendations from Southwark Council and others), looking at whether they have made a difference for our residents. Worryingly, Safe as Houses 3 shows that, two years after claiming Universal Credit, tenants have rent arrears which have still not been paid back. This suggests that problems with Universal Credit were not just ‘teething issues’ with a new system, but are in fact an ongoing challenge for councils in terms of growing rent arrears.

The impact on tenants extends further to affect council budgets. If this trend continues when all tenants eventually claim Universal Credit, Southwark Council alone will be left with a total rent debt of £5.6m by 2024/25.

There is some positive news from the report – rent arrears for the 2018 claimant group are lower than the 2016 group, though it appears that this is primarily because of the earlier and increased use of Alternative Payment Arrangements (APAs).

However, APAs were only ever designed to be used in a handful of cases, but more than 40% of our tenants claiming Universal Credit now have APAs in place to help manage their finances. APAs can be an effective means of controlling rent arrears, but they do not prevent them from happening in the first place.

Furthermore, the latest report states that separate evidence has emerged showing that the majority of working people claiming Universal Credit are paid weekly or fortnightly, rather than monthly, so the current system simply does not reflect their lived experience.

Councillor Victoria Mills, cabinet member for finance, performance and Brexit, said: “The findings from the report show the changes from government do not go far enough. Universal Credit is still creating poverty and stress for those already on the breadline. All three waves of research show the biggest problem is the five week waiting period and the fact Universal Credit payments are made monthly in arrears. How is anyone expected to survive in London with no money for five weeks, not least those who are already seriously struggling financially?

“More fundamental change is needed to Universal Credit – people shouldn’t be waiting so long to get their payment and there’s no reason they should have to be paid monthly. We will be sharing this latest research with government and urging DWP to make radical changes to tackle this broken system.”

Page last updated: 18 September 2019