Councils struggle to sustain cash draining Universal Credit ‘subsidies’

Fourth annual Universal Credit survey from NFA and ARCH warns already unsustainable situation could be even worse.

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Universal Credit is now draining cash and resources from cash-strapped councils and their not-for-profit housing companies to an extent that “just isn’t sustainable”, a new report reveals.

And the fourth annual Universal Credit survey from the National Federation of ALMOs and the Association of Retained Council Housing warns the figures could be even worse.

“We cannot stress enough how much time it takes and how much it costs NFA and ARCH members to cope with the impact of Universal Credit,” said the NFA Policy Director Chloe Fletcher.

“This level of intense support from social landlords just isn’t sustainable as Universal Credit rolls out and the government starts to move existing benefit claimants onto UC,” she said.

Patching the net: Measuring the impact of Universal Credit on tenants and landlords shows that households on the new benefit are still significantly more likely to have housing debt than those on Housing Benefit, and they also owe more.

But the figures would be even worse – the data from 39 English councils and ALMO companies suggests – if local authorities weren’t plugging the gaps with their own staff, training, IT investment and cash.

 “Councils and their management companies have had to innovate and come up with countless work-arounds to make sure arrears don’t escalate and tenants are able to keep their homes when they move onto the new benefit system,” said Fletcher.

“Council housing budgets are already under enough pressure from the cuts in rental income imposed upon them by Government for the past four years. We are calling for government to both improve the way it administers UC and to fund social housing organisations to provide the support tenants need during the transition to UC,” she said.

The report references two council landlords estimating  that Universal Credit has added upwards of £200,000 each more to their housing management costs in the previous 12 months.

Others found it difficult to disentangle precise Universal Credit costs from their routine housing and social support work, most said they had taken on extra staff or bought new IT systems to cope with the problems cause by welfare changes.

Since the NFA-ARCH annual UC survey was first published in 2016, it has become a trusted source of information about the impact of welfare reform.

Its evidence has played a critical role in a number of recent changes to UC policy, including the removal of the seven-day waiting period, the run-on of Housing Benefit, and the development of the Landlord Portal which makes direct contact with DWP possible.

“This report is timely, showing as it does that Universal Credit as it stands isn’t working as it needs to.

“Far from supporting people into work, it is leaving some of the poorest people having to choose between rent and food. And the burden is falling on already hard-pressed councils and their not-for-profit housing companies,” said CIH chief executive Terrie Alafat CBE.

“These councils are doing great work, despite the obstacles the system places in their way.

“It’s time for the government to review the impact of Universal Credit and this report indicates the key issues to address as a start,” she said.

 

 

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