Universal Credit: Survey suggests 79% of claimants have a rent arrears gap

Recently, we published a post about the DWP Universal Credit report. While the system is still very much in its infancy, the statistics clearly indicated that changes needed to be made if it were to be rolled out on a national scale.

With this in mind, it should come as no surprise to hear that Universal Credits has one again been spotted in the limelight, this time where tenants are concerned. According to a recent study referenced in an article by Inside Housing, tenants on Universal Credit owe, on average, £321.05. By comparison, all tenants in arrears owe a lower average of £294.57.

But how can this be? How can a system designed to help the British public be so flawed as to steer them into more debt? At Hylton-Potts, our experts are very familiar with the ins and outs of benefit and tax credit law, and how these circumstances can come about. If you would like a straight-talking lawyer to give you the facts, you have come to the right place.

What is the latest study?

One year on from the initial roll-out of the Universal Credit system, The National Federation of Arm’s Length Management Organisations (NFA), and the Association of Retained Council Housing (ARCH), conducted a survey on councils and ALMOs. Shockingly, it found that across England, 79% of around 3,000 tenants who are on Universal Credits were in rent arrears. This is even more surprising beside the mere 31% of other tenants.

The reaction to this from social housing representatives has been so strong, that the NFA and ARCH paid a visit to Minister for Welfare, Lord Freud, in order to urge the government to abandon the standard seven-day waiting period for Universal Credit, review the in-arrears policy with immediacy, and to assess whether or not it is causing “unnecessary hardship and long term disadvantage”. If successful, this would speed up the Universal Credit assessment process to three weeks.

Interestingly, the organisation conducted a similar survey towards the end of year, and found that from the same 20 councils and ALMOs, it received similar responses. The report added: “Households in receipt of Universal Credit remain much more likely to be in arrears and also have, on average, larger levels of arrears than tenants in general.”

What does it highlight?

So, why is this? What exactly does this report mean to the everyday people claiming Universal Credit? Let’s not forget that it was invented to streamline and simplify the tax credit process, improving the lives and aspirations of the people it helps, giving them the chance to get back into work.

For many within the survey, the main problem surrounded the fact that it was the six-week period before a tenant received their first Universal Credit payment, that frequently led them to fall into arrears.

Given that this is a government scheme, most would like to think that all scenarios and situations relating to the public would be realistic, but in the case of Universal Credits, many claimants simply are not able to save. They are therefore unable to cover the deficit when renting, and are unable to ever dig themselves out of that hole in future.

This is a fundamental flaw in the Universal Credit system, so more than a simple review may be needed, especially given that this rental situation will become fairly common as the number of people on Universal Credits has increased. John Bibby, Chief Executive of ARCH, commented: “A review of current policy is imperative if we are to reduce unnecessary hardship within our communities.”

It is at this point that desperation sets in for the average person on the streets. The survey also revealed that many respondents said they had noticed tenants increasingly using loan sharks and pay day loan companies, which is of course, the ultimate last resource for a family.

What is the solution?

Clearly, there needs to be more than reform with Universal Credits, but more like a complete overhaul. We must remember that this argument surrounding rental arrears is part of a much bigger picture, such as the fact that DWP figures suggest that Tax Payers lost £35million to fraud and error over the past year alone. With 118,000 claimants on Universal Credits, this means an average of £296 each.

It is important to remember though that it has been proven just how much error this new system is open to, and you should always contact a legal advisor if you feel you are being chased for overpayments that you do not owe. Everyone’s circumstances are different, and while you can read the horror stories surrounding financially broken families, it is never a good idea to take them as gospel.

For many people, their interpretation of a “benefit cheat” is a single person or a couple, whose greed leads them to claim for many thousands of pounds in benefits. However, with so much error available, everyday people could find that they are being chased for money when they did not knowingly give the incorrect details that would lead to such a thing. This kind of stigma needs to cease now if we are to reform Universal Credits to a standard that will provide aid across the country.

Clearly something needs to be done to improve the systems and processes that work in the background of Universal Credit, but if you are currently dealing with a fraud grievance or a tax credit problem, then please do get in touch. Our experts have dealt with these questions since the launch of the Universal Credit system last year. They deal with dozens of families every day who are just like you, and manage to unwind their tricky and confusing rules.

If you are being chased for an overpayment that you do not feel responsible for, or if you have any other tax credit query that makes you feel at a loss of what to do, you can call us on 020 7381 8111, or via email at [email protected].

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