Universal Credit responsible for increasing rent arrears, MSPs say

12 June 2019, 06:45

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Universal credit has greatly increased rent arrears, with immediate action now needed in order to tackle the issue, according to MSPs.

In a report published by Holyrood's Social Security Committee on Wednesday, MSPs indicated that the number of arrears has increased since the new benefits system was introduced.

Universal Credit (UC) was brought in as a benefit to replace six other benefits by merging them into one monthly payment.

However, the roll-out of the system has been hit by delays, whilst concerns have been raised about the way that UC is being implemented.

Earlier this year, an inquiry was launched by the committee to explore how social security support for housing costs is impacted by welfare reform, with a particular focus on the local housing allowance and Universal Credit housing costs.

In its report, the committee stated that it was "alarmed" by evidence which indicated increasing rent arrears under UC.

Referring to a submission by Citizens Advice Scotland (CAS), the committee noted that CAS stated that in the last 18 months, their clients' rent arrears issues were predominantly caused by them moving onto UC and experiencing problems with the delivery of support to pay the rent through the new benefit.

The committee noted evidence from Scotland's CAB network, as well as from other stakeholders, which suggested that the incidence of rent arrears is far higher amongst tenants receiving UC.

In data produced by the Convention of Scottish Local Authorities (COSLA), referenced in the report, it was also outlined that mainstream rent arrears for four local authorities (East Lothian, Highland, East Dunbartonshire, and Midlothian) had increased by a total of 26% in the two-year period from March 31, 2016.

The report stated: "COSLA acknowledged that increased rent arrears could not be attributed solely to UC but pointed out that its data 'generally shows sharp increases in the levels of rent arrears once local authority areas go onto the full service'.

"COSLA noted the UK Government's recent changes to UC but is yet to assess their impact."

In its recommendations, the Committee stated that the Department of Work and Pensions (DWP) should pay the housing element of UC directly to landlords as a default.

It also outlined that the minimum five-week delay for tenants receiving their first UC payment must change to help combat rent arrears.

The committee also raised concerns over the cost and condition of temporary accommodation and called for housing benefit in that area to be devolved with the aim of addressing issues of homelessness and rough sleeping.

A widening gap between private sector rents and the amount provided by the social security system is also highlighted in the report.

The Committee stated that it wants an urgent review of the Local Housing Allowance (LHA) so that rates are increased as required to help tenants afford rents in the private rented sector.

Committee convener Bob Doris MSP called the increase in rent arrears "unacceptable".

"The rapid increase in rent arrears since the introduction of Universal Credit is unacceptable," said Mr Doris.

"The UK Government must take immediate steps to tackle this issue which is costing local authorities and social landlords critical money at a time when budgets are already stretched.

"We want to see the housing element of Universal Credit paid directly to landlords and the DWP must review the minimum five-week wait for new UC claimants, both of which contribute to rising arrears."

Mr Doris added: "Our inquiry highlighted a number of issues, including the frankly discriminatory shared accommodation rate which should be abolished immediately.

"It is also clear that LHA rates are not fit for purpose and are failing to help claimants meet the rising cost of the private rented sector.

"We hope the DWP will take heed of the recommendations in this report and act swiftly to change the system, to help reduce arrears and ensure that our most vulnerable in society can pay their rent."

A UK Government spokeswoman said: "While rent arrears cannot be linked to any one cause, many people join Universal Credit with pre-existing arrears and research shows that number falls by a third after four months.

"In Scotland we already pay rent directly to landlords where requested and can pay Universal Credit more frequently to help with budgeting. This is in addition to 100% advance payments available from day one and two weeks' of extra housing support at the start of a claim.

"Meanwhile, Scotland has significant welfare powers, including flexibilities within Universal Credit and the power to top-up existing benefits, pay discretionary payments and create entirely new benefits altogether."