Will UC changes make a big enough difference for claimants and landlords?

Last year the government made a series of changes to universal credit – but will they make a big enough difference for claimants and landlords?

universal credit

Evidence of the issues with the new benefits system continues to build – last month a National Housing Federation survey showed 73% of housing association tenants on universal credit had fallen into arrears, compared to 29% of tenants not on universal credit.

Meanwhile a Residential Landlords Association survey showed that 62% of private landlords were unwilling to let to universal credit tenants, and two-thirds of frontline Department for Work and Pensions staff said the roll-out should be paused in a recent poll for Channel 4’s Dispatches.

The changes announced in November were largely aimed at reducing the long wait that new claimants faced for their first payment – including removing the seven-day ‘waiting period’ for universal credit, allowing tenants to claim an extra two weeks’ worth of housing benefit while they are waiting and making it easier to apply for an advance.

CIH was one of many organisations calling for these changes – there was substantial evidence that the six (now five) week wait for payment was simply unmanageable for most tenants. Many were going on to universal credit and immediately falling behind with their rent.

Many more were accruing other debts and some were having to turn to food banks to cope during the transition.

The new rules are now all in place – a definite improvement, but we still need to ask whether they have solved all the problems with universal credit.

Unfortunately I think the answer is no, and CIH has written to the Department of Work and Pensions to raise our concerns.

Probably the most significant of the changes is the two week housing benefit ‘run-on’.

This means when someone who is already receiving housing benefit moves across to universal credit following a change in their circumstances, their existing claim doesn’t stop immediately. Instead their rent continues to be paid for an extra two weeks.

This extra money makes a really tangible difference to claimants and significantly reduces arrears. However, it only helps those with an existing housing benefit claim and it is also a temporary measure. Once UC is fully rolled out, housing benefit won’t exist any more.

Of course the government would point to the availability of advanced payments and argue that tenants who cannot cope with the wait should simply request an advance.

These are indeed a help for many but they are loans and that means that they have to be repaid, via deductions from future universal credit payments. For those whose claims may already have been reduced by benefit cuts like the bedroom tax or the benefit cap, further deductions can be unaffordable.

There is a danger that for some people advanced payments are simply deferring problems until a later day, while many tenants who already have other debts are understandably reluctant to apply for more.

In the longer term we still think that the DWP needs to find a proper fix for the problem of the five-week wait. We understand that ministers will want to stick to the principle that UC is a monthly benefit and that it is paid in a similar way to a monthly wage.

However even working within these constraints, there are some options.

The DWP could for example simply shorten the first assessment period for new claimants, so that they get a smaller initial payment before moving on to regular monthly payments.

This could provide a more gradual transition from the weekly payment cycle that many low-income households are used to.

Alternatively, universal credit payments could be made halfway through each assessment period – i.e. half of the award could be paid in arrears and the other half in advance.

Of course this assumes there will be no changes of circumstance shortly after a payment has been made, and so some decisions would have to be made about how to deal with over or under payments when this does occur.

But with proper consideration that is not an insurmountable problem and this approach would still replicate the way that many monthly salaries are paid, as some employers do make payments in the middle of the month on exactly this basis.

These ideas need proper investigation to make sure that they are likely to be workable in practice, but it is really important that the DWP gives the issue some further consideration.

It’s really positive that minsters have recognised there is a problem and have taken some action to at least begin to address it.

But without a more substantial change, it seems likely that many claimants will continue to struggle while they are waiting for their first universal credit payment.

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