What is Universal Credit
Universal Credit is a single monthly payment for people in or out of work. It replaces some of the existing benefits and tax credits and combines them into a single payment that goes directly to the claimant. The benefits being rolled up into Universal Credit include:
- Housing benefit
- Child Tax Credit
- Income support
- Working Tax Credit
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance.
Universal Credit is being rolled out across the UK in stages, by September 2018 anyone in the UK making a new application for benefits or anyone who has a change in circumstances will have to apply for Universal Credit. After this, existing benefit claimants who have not had a change in circumstances, will be moved over to Universal Credit at some point between July 2019 and March 2022.
What are the areas affecting Housing Organisations
Once Universal Credit has been applied for there is a 6-week delay until the first payment will be received (although longer delays are being reported). The delay comprises a 7-day ‘waiting period’, a 4-week assessment period and up to 7 days for payment to reach the bank account.
Currently individual benefits are paid to claimants weekly, Universal Credit will be paid to claimants monthly in arrears. This means that claimants will potentially need to change the way they manage their money.
Payments made directly to recipients
Although Universal Credit is made up of different elements it is paid to the claimant as one monthly lump sum, emulating the process for receiving wages when in work. This means the money for housing costs is no longer paid to the landlord, and the responsibility for paying rent falls on the claimant.
What is the impact
Despite the limited roll out of Universal Credit so far, the early results are creating concerns.
The main problem is an increase in rent arrears and evictions. Working with one London-based client we found that 33% of housing benefit claimants were in arrears, with an average value of £600. By comparison 70% of Universal Credit claimants were in arrears with an average value of £1700 per person. The impact on the organisation overall is huge with rent arrears projected to increase from 3.5% to 13% if all benefit claimants transitioned to Universal Credit without any further changes being made.
Some of the problems such as payment delays are being addressed to a degree by government. However, it is unlikely that tenant behaviour is going to adjust rapidly. This leaves social landlords in a difficult position in terms of timely rent collection. We have worked with numerous housing providers to improve rental income through better processes and in managing relationships with tenants. If you would like to know more about how we do this, or you would like to discuss your situation, please contact us at firstname.lastname@example.org.