McVey faces further SFHA calls for Universal Credit pause

Delaying system changes to allow bedroom tax to be abolished at source until at least May 2020 will be “fraught with difficulty”.

universal credit

Secretary of state for work and pensions, Esther McVey, will face further pressure to pause Universal Credit (UC) when she appears before the Scottish Parliament’s Social Security Committee today.

The Scottish Federation of Housing Associations (SFHA) has once again called for the pause so ‘vital’ system improvements to be made.

The federation first called for a pause following the announcement that system changes to allow the bedroom tax to be abolished at source in Scotland will be delayed by over a year until at least May 2020.

Under the Scotland Act 2016, the ability to vary the housing element of UC was devolved to the Scottish Parliament, with the Scottish Government committing to using these powers to fully abolish the bedroom tax at source.

Negotiations had been taking place with the DWP, with the hope that systems would be in place by April 2019 ahead of the managed migration of all claimants still receiving the old legacy benefits to Universal Credit, currently planned to start in July 2019.

Sally Thomas, SFHA chief executive, said: “Dealing with Universal Credit and bedroom tax mitigation has been a huge challenge for housing associations and co-operatives as well as their tenants.

“The problem stems from the split of responsibilities: calculation of liability for the bedroom tax lies with the DWP and calculation of Discretionary Housing Payment entitlement to mitigate the bedroom tax lies with local authorities.

“With Housing Benefit, this is not such a problem as responsibility for both parts lies with local authorities, and the process is practically seamless.

“At present, there are still comparatively few tenants on Universal Credit but, even so, it is understood that local authorities are finding data sharing problematic, which makes the accurate assessment of entitlement to Discretionary Housing Payments a challenge, with a greater chance of tenants not receiving the right money and housing associations tied up in having to unravel incorrect assessments.

“Abolishing the bedroom tax at source is essential, as it will bring the calculation of entitlement back under one roof – the DWP’s.”

And there’s the issue of scale.

In November 2017, there were under 22,000 households in social housing receiving UC housing costs.

By comparison, there were 234,000 households in social housing receiving Housing Benefit.

A vast majority of these households on Housing Benefit are expected to move over to Universal Credit in a managed migration between July 2019 and 2022.

“The switch from using Discretionary Housing Payments for mitigating the bedroom tax to its full abolition needs to be completed beforehand.

“Without the switch, the managed migration could be extremely challenging; to try to make the switch in 2020, when in the middle of moving so many households over to the new system, is fraught with difficulty,” Thomas said.

Last week the government was warned of an even harder backlash against welfare ‘reform’ as millions of claimants now moving on to UC realise the extent of income cuts.

That warning came from a senior government welfare adviser and coincided with calls for a new Beveridge Report to rebuild social welfare beyond punitive government plans.

Paul Gray, chair of the independent social security advisory committee, acknowledged simplification of the welfare system was right – but building in significant budget cuts would become an issue once claimants realised how much they would lose.

To Gray, there is a significant challenge is the ‘serious numbers’ of claimants receiving tax credits migrating to UC.

Figures from the Resolution Foundation alone suggest UC will leave over three million working families worse off – with an average loss of £48 a week.

About 600,000 of those who lose out, mainly couples with children, will no longer be entitled to help at all.

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