Council owed £400k in rent after universal credit roll out

Hove Town Hall
Hove Town Hall

People on universal credit are leaving Brighton and Hove City Council almost £400,000 short when it comes to paying their rent.

Just eight per cent of the council’s tenants are in arrears after receiving the six-in-one payment that combines housing benefit, child tax credit, jobseeker’s allowance, income support, working tax credit and employment support allowance.

This eight per cent – or 948 people – owe 38 per cent of all rent arrears, leaving the council with £368,000 in unpaid rent for the first nine months of the current financial year.

The council said: “We have carried out a number of analyses of arrears affecting council tenants and the effect of universal credit.

“Arrears for council tenants claiming universal credit are significantly higher than for those claiming housing benefit or not claiming benefits at all.”

The five-week wait for payment is one of the main contributing factors along with Department for Work and Pensions (DWP) administration problems.

Wrong amounts are often paid to tenants, causing further problems beyond the initial five-week wait, according to the council.

It also said that “sanctions” – or reduced payments – were an issue. Universal credit is paid as a lump sum to the claimant, with sanctions deducted from the total. Previously, housing benefit was paid directly to the landlord.

Payments have also been reduced for some after the severe disability premium was removed.

A further 552 people owe £55,000 as a result of the removal of the “spare room subsidy” – a move known as the bedroom tax – intended to penalise those who under-occupy their homes.

The council said: “We continue to provide support to those affected by the removal of the spare room subsidy.

“Discretionary housing payment can be used to cover the shortfalls for temporary periods for the most vulnerable.

“The council has partnered with Money Advice Plus to help those affected by the change to access budgeting support and help with money advice.”

Just 42 people are affected by the benefit cap of £384.62. They make up less than half a per cent of council tenants and owe £6,000 in rent.

In total welfare reform is estimated to have cost the council £429,000 so far this year.

The vast majority of council tenants are able to pay their rent.

So far this financial year more than 98 per cent of rent was collected.

Out of about 11,400 council tenants in Brighton and Hove, about 9,000 owe no rent, with a further 2,500 owing the council anything from 1p to more than £500.

Councillor Tracey Hill, Labour’s lead for housing, said: “The Labour council takes very seriously the impact that Conservative government welfare changes and austerity overall is having on the ability of many in the city to maintain their housing, including our council tenants.

“Many welfare changes have had a serious impact on residents, affecting their lives in many ways and not least driving a rising demand for food banks, which is a national scandal.

“Council tenants deserve our support to maintain their tenancies with as little stress and worry as possible, and any loss of rental income through arrears also impacts on the budget that the council has to spend on the council housing stock and tenants services, so there are two issues at stake.

“What is very positive is the hard work and joined-up approach across departments that has been established under the Labour council to support tenants and residents who are impacted by austerity and welfare changes in this way, and this has been monitored through regular committee reports.

“With respect to council tenants, our 2018 Annual Report shows that during the year 500 tenants affected by Universal Credit were supported, and over 2,000 tenants with rent arrears were helped with managing difficulties paying their rent.”

Green councillor David Gibson, who is the party’s spokesman on the Housing and New Homes Committee, said: “The figures show that 45 per cent of current tenants’ arrears are owed by the 14 per cent of tenants affected by punitive universal credit welfare changes.

“As more tenants are moved over to universal credit, arrears will get worse – and along with the misery of being in debt they will be forced to choose between food and rent.

“Then it is the council that has to pick up the pieces left by austerity.

“Greens have pushed the council to increase support, including the introduction of a better and fairer debt collection policy, which seeks to recognise the impact of universal credit, as well as boosting the capacity of voluntary organisations to help people affected by welfare reform in our city.

“Welfare reform punishes poorer people and forces them to pay the clear-up costs of a banking crisis they did not cause.”

Brighton and Hove Conservatives were approached for comment.