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Lords debate findings of ARCH/NFA Welfare Reform survey 21/07/2016

The findings of the ARCH/NFA welfare reform survey were referenced in a debate in the House of Lords on 13 July 2016 where Lord Freud, Minister for Welfare Reform, announced the commissioning of further work into the high rate of rent arrears owed by tenants who have moved onto Universal Credit.


Under Universal Credit, benefit for housing costs is in most cases paid directly to the tenant on a monthly basis instead of to the landlord like Housing Benefit. The government argues that payment of benefit direct to the claimant encourages people to take control of their finances, prepares them for work and reduces dependence.


Last month, our joint survey found 79% of 3,000 tenants claiming Universal Credit in England are in rent arrears, compared to 31% of other tenants.


ARCH Chair, Councillor Paul Ellis and Chief Executive John Bibby, together with representatives from the NFA, held a meeting with Lord Freud on 7 June to discuss the findings of our survey.


Following that meeting, Lord Freud has now announced the commissioning of a review into the high rate of rent arrears owed by Universal Credit claimants.


In the debate earlier this month, Lord Freud said:


"I appreciate the concern with this. The reality is that there are a lot of factors at play and universal credit is not the sole issue. Many people are coming into universal credit with pre-existing arrears. Safeguards are in place for claimants, including advances, budgeting support and alternative payment arrangement. Research shows that over time claimants successfully reduce their arrears. I have commissioned work from the department to help understand the true level and causes of these arrears."


Responding to the announcement of this review, Lord McKenzie of Luton referred to the ARCH/NFA survey and echoed our call for the seven day waiting period to be scrapped, saying:


"I thank the Minister for his reply. He will be aware of the survey conducted by the National Federation of ALMOs and ARCH which details the shocking build-up of rent arrears by council tenants. Of those covered by the survey, 79% in receipt of universal credit were in arrears and only half of those previously had been in arrears. Despite what the noble Lord says, it seems that the rollout of universal credit is causing a build-up of debt among social tenants, creating financial hardship and reportedly driving some into the arms of loan sharks. That is not surprising, given the long processing times and the recently introduced imposition of a further seven-day waiting period before the benefit can kick in-an imposition opposed by the Social Security Advisory Committee. As the rollout of universal credit is to widen, does the Minister agree that these arrangements have to be reviewed urgently, from the point of view of both landlords and tenants, and the seven-day waiting period scrapped?"


During the debate Lord Freud acknowledged discussions with ARCH and the NFA saying:


"…I have had a couple of meetings with Eamon McGoldrick and John Bibby to discuss their findings. It is complicated. The essential fact is that landlords like their money paid in advance and all benefits systems pay in arrears, so we do not know how much of this is what the ALMOs call book arrears and how much is real arrears. We need to get to the bottom of that and we need to get to the bottom of what are the processing and payment systems issues. We need to understand what the existing arrears are. They are much higher than we expected-50%-and that is a frightening fact. We may be looking at a group going into UC which is unusual because it is moving up and down, and we need to understand and quantify those factors."


Read the full debate.


Responding to the announcement of the review into the high incidence of Universal Credit claimants falling into arrears of rent, John Bibby commented:


"It is heartening that the Minister has listened to our members' concerns regarding this matter. We look forward to the outcome of the further work that Lord Freud has commissioned into the high level of tenants falling into rent arrears on the new Universal Credit system. We have contacted officials in the Department of Work and Pensions (DWP) to offer our assistance with this review."


On Wednesday 20 July 2017, DWP announced the latest planning for local authority areas and Job Centre Plus sites that will transition to the full Universal Credit service during 2016 and the first quarter of 2017. View the schedule.

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