In the latest of a series of joint reports, ARCH and the
National Federation of ALMOs (NFA) have highlighted the increasing
burden of debt that Universal Credit (UC) is causing for tenants
and landlords, and we call for the Government to slow down the
roll-out and fix the outstanding problems with UC. We also
voice strong concerns about the length of time it is taking tenants
to get control of their finances after the initial transfer to UC,
and the impact on council Housing Revenue Accounts.
Our report 'Carrying the debt, Measuring the impact of
welfare reform on tenants and landlords' has tracked the
impact of the UC roll-out on landlords and tenants again this year.
Although we are pleased the Government has introduced improvements
that we called for in our previous report, including removing
the 7-day waiting period, our latest research shows that the
arrears situation has not changed significantly and issues
highlighted previously have not been resolved.
Key findings include:
- Average rent arrears for UC households (£520) were one and a
half times higher than arrears in general (£328). Nearly three
quarters of UC households were in rent arrears (74%) compared with
26% of all households.
- The situation has not changed significantly since 2017 and many
of the same problems remain.
- For those organisations tracked over time there has been a
total increase in debt of 12% up to £43.6 million; 25% of this debt
is from UC households even though they only make up 4% of total
households.
- The length of time it can take for tenants to clear rent
arrears built up in the transition to UC, with the knock-on effects
for both the tenants and landlord, is very concerning, with
evidence that it can take up to 24 months to clear the
debt.
ARCH and the NFA support the principles of UC and our members
are investing significant resources to make it work and support
tenants in the transition to UC. We are therefore pleased, that our
members report positive working relationships with local Job
Centres; and positive feedback around the new Landlord
Portal.
However, we have deep concerns around the scalability of this
work, as the roll out of UC accelerates and substantially more
people transfer to UC, with intensive support stretched over
increasing numbers of households, and a cumulative impact on local
authority HRAs.
We continue to call on the Government to move to monthly
payments in advance, rather than arrears, to recognise the fact
that claimants often do not have a safety net to get them through
the first month; and recognising the fact that the current advance
system is a loan, which further puts claimants into debt. We are
also calling for the Government to slow down the speed of UC
roll-out, until the procedural issues with the existing system have
been resolved and improvements are made to the "APA" system and
Landlord Portal; and to implement a wide-reaching advertising
campaign to educate the general public about UC
Commenting on the launch of the report, John Bibby, ARCH Chief
Executive said:
"Our members are investing heavily in supporting tenants to
successfully transition to UC, however the level of rent arrears
being accrued is having a huge impact on Council HRAs, which are
already under pressure. It will not be possible to sustain the
levels of intensive support to tenants as the roll-out continues
and resources become increasingly stretched. For this reason, we
are calling on the Government to provide sufficient transitional
funding for landlords to enable them to effectively manage the
roll-out and adequately support vulnerable tenants.
We have submitted a copy of our latest report to Ministers and
officials at the Department for Work & Pensions and will be
seeking a meeting to discuss the findings of our report"
Read the full report " Carrying the
debt"