Council landlords are subsidising Universal Credit

A new survey has stressed that Universal Credit is draining cash and resources from already hard-pressed councils and their not-for-profit housing companies.

The fourth annual Universal Credit survey from the National Federation of ALMOs and the Association of Retained Council Housing, 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, as well as also owing more.

But the figures would be even worse, suggests the data from 39 of England’s councils and council-owned housing management ALMO companies, if local authorities weren’t plugging the gaps with their own staff, training, IT investment and cash.

Two council landlords estimate that Universal Credit has added upwards of £200,000 each more to their housing management costs in the previous 12 months. While others found it difficult to disentangle precise UC costs from their routine housing and social support work, most reported that they had taken on extra staff or bought new IT systems to cope with the problems cause by welfare changes.

Chloe Fletcher, the NFA’s Policy Director, said: “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. 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.

“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. 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.”

Terrie Alafat, chief executive of the Chartered Institute of Housing, said: “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. 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.”