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Impact of Universal Credit 24/10/2017 Labelled as Rent

ARCH member Croydon Council has jointly commissioned a report by the Smith Institute on the impact of Universal Credit on tenants and rent arrears in the London Borough of Southwark and Croydon and the Peabody Trust.


The terms of reference were to understand:


  • How is the early roll-out of Universal Credit (UC) affecting rent payment behaviours among residents in social housing tenants in the London borough of Southwark?


  • How are identified changes in behaviour - or the absence of behaviour change - affecting the tenancies of those social housing tenants who are receiving housing cost support under the new arrangements?


The work undertaken to answer these questions was split into two pieces of research. The first was an analysis of 775 tenants' rent accounts to give a quantitative understanding of how rent behaviours were changing (compared with rent accounts of those moving onto Housing Benefit); how rent behaviour changed over time; whether any arrears accrued were paid down and whether there were any differences in rent payment behaviour between different groups.


The second piece of research was a qualitative study commissioned by the Smith Institute and undertaken by the research company BritainThinks. 


This work involved undertaking 36 in-depth telephone interviews and four focus groups with tenants. The purpose was to: understand their journey once they found out they were on UC; document and evaluate their understanding of the new system; and examine what worked and what could be done better.


The report's findings mirror the issues identified in the latest ARCH/NFA welfare reform survey "Pause for thought" published in August this year and come at a time when the government is under significant pressure to pause the roll out of Universal Credit.


Read the Smith Institute Report "Safe as Houses".


The Smith Institute report was launched in the week when the Commons Work and Pensions Committee published a report recommending that the Government should aim to cut the "baked-in" six week wait for the first payment of Universal Credit to a month, saying this is a major obstacle blocking the potential success of the Universal Credit policy:


  • In areas where the full service has rolled out, evidence compellingly links it to an increase in acute financial difficulty, with widespread reports of overwhelmed food banks, problem debt and steeply rising rent arrears and homelessness.  


  • Most low-income families simply do not have the savings to see them through this extended period without resorting to desperate measures.


The Commons Work & Pensions Committee report also says that while increased availability of Advance Payment loans of up to half the estimated monthly award are welcome, the Committee says they are no solution to a fundamental flaw in the current design of the Universal Credit system:


  • Universal Credit seeks to mirror the world of work, but no one in work waits six weeks for a pay cheque. 


  • The Committee calls on Government to reduce the standard waiting time for a first Universal Credit payment to one month. This would be entirely consistent with the monthly in arrears philosophy of Universal Credit.


Read the Commons Work & Pensions Committee Report.




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