Evidence session on Universal Credit and Housing
Report from informal meeting on 14th July 2020
The APPG on Universal Credit (UC) is a cross-party group, which was established in order for Members of Parliament and Peers of all parties to be able to come together to discuss their experiences of UC and those of their constituents, to receive advice and support from various agencies, to share best practice at supporting claimants and monitor this critical policy as it is rolled out.
The APPG accepts the core aims of UC in simplifying the benefits system and making it easier for people to move into work. The reality of UC, however, does not live up to these good intentions. We are seriously concerned that the design of UC does not sufficiently take into consideration the specific needs of the poorest working age people in the UK, that it fails to provide many of households with sufficient income to get by and that in its current form, UC does not work in their best interest. When this is coupled with the cuts to UC, for example, from the work allowances, taper rate and disability premiums, evidence indicates that some groups of claimants, including disabled people and single parents, are worse off than under the legacy system.
On 5 May 2020, the APPG held a virtual evidence on housing hearing evidence from: UC:Us, National Housing Federation, Shelter, Peabody, and APLE Collective.
UC:Us is a group of Universal Credit recipients based in Northern Ireland, representing a wide range of family circumstances and claimant groups. Led by Dr Ruth Patrick (University of York) and Dr Mark Simpson (Ulster University) the claimants have been part of a participatory study of the experiences of early UC claimants in Northern Ireland, where the benefit was first introduced in late 2017.
Dr Mark Simpson and claimant Joanna Close gave evidence about claimant experiences in Northern Ireland and how some of the NI exclusive features of UC work.
- There are a number of mitigation measures introduced alongside Universal Credit in Northern Ireland:
- By default, Housing Element is paid directly to landlords
- The social sector size criteria, colloquially called ‘the bedroom tax’ effectively doesn’t apply in Northern Ireland due to a supplementary payment
- The mitigations are helpful but they don’t make things perfect. One of the members of the study ended up receiving their rent directly because the landlord was tired of the administrative burden caused by the housing element not meeting the total cost of the rent. An inadequate LHA rate undermined the advantage of the direct payment to landlord.
- Joanna is a Universal Credit claimant and a volunteer trainee benefits adviser.
- She struggles on UC and is particularly concerned about the mitigation for the bedroom tax coming to an end in October 2020. Joanna lives in the home she grew up with and is now on her own. Once the mitigation stops she will need to pay £25 a week out of her entitlement to continue living there.
- Because Joanna is a benefits adviser she knew to apply for the supplement but she warns that many people will not know this and that Universal Credit staff are incorrectly advising that it happens automatically. This is causing some claimants to get into arrears.
- She feels under a lot of pressure to move into a smaller home which doesn’t suit her because of her grandchildren.
- The bedroom tax supplement should be continued in Northern Ireland.
- We can take learnings from the areas where Universal Credit diverges in devolved nations.
- NATIONAL HOUSING FEDERATION
The National Housing Federation is the membership body for housing associations in England. We represent almost 800 providers housing around six million people. We work with our members towards our vision of a country where everyone lives in a good quality home they can afford.
National Housing Federation’s evidence centred around their recently published report No Time to Wait: Claimant experience of Universal Credit and how to improve it
- National Housing Federation carried out a joint research project between nine housing associations across England who ran a survey designed by Curo. One of largest claimant surveys on Universal Credit – almost 3000 tenants – and covering a range of topics from the reasons for the claim to experience of the process as a whole.
- The vast majority (84%) did not have the equivalent of a month’s salary put aside to live on over the five-week wait, meaning they had to borrow.
- Around half of our respondents took the advance payment option (47%), but we did find many were still not aware of it (around 40%).
- In fact, it’s more common (56%) to borrow from friends/family than it is to take the advance. We also found alarmingly that 10% had borrowed from payday lenders/short-term loans.
- A very high incidence of struggling to afford necessities. 55% had struggled to afford food at some point since claiming.
- Our findings reflect quite widespread evidence that people are fearful of debt to government, which is not unreasonable because they are not in control of payment schedules as they might be with other types of borrowing.
- Also found that most claimants had a deduction of some kind, and that these can be a particular driver of financial difficulty over the longer term.
- The report also build on reports from frontline staff – that claimants health has been negatively impacted by their interaction with the welfare system. 25% of respondents said hardship experienced whilst on UC had worsened an existing condition – mostly mental health conditions such as anxiety or depression. The vast majority had visited their GP about this.
- Actually found claimant satisfaction was very mixed. Quite middling levels of satisfaction generally, but some very happy people as well as very dissatisfied ones. The main driver of satisfaction was responsive and knowledgeable staff.
Anya Martin also provided information on Discretionary Housing Payment spending:
- Where a claimant is eligible for Housing Benefit or housing element of Universal Credit but has a shortfall between their entitlement and the rent due*, they can ask their council for a DHP. Councils are given a fixed allocation by govt, but they may spend up to 150% more out of their own funds. DWP issues guidance but councils have quite broad flexibility over how they manage the whole process.
- Chart 1. DHPs expenditure and original allocations (nominal), England 2013/14-2018/19
Source: NHF analysis of https://www.gov.uk/government/collections/discretionary-housing-payments-statistics
- Chart 1 shows the amount spent on DHPs compared to the central govt allocation since 2013. Fluctuates yearly between £100m-£160m, but generally councils *overall* spend approximately 100% of the allocation.
- What that doesn’t show is that councils vary in how much they individually spend. Some overspend quite drastically, others underspend.
- Chart 2. Distribution of DHP expenditure as proportion of allocation, England 2013/14/19
- Chart 2 shows that the majority – and increasingly over time – spend more or less their allocation. The proportion of overspenders and underspenders has reduced.
- There are more underspenders than overspenders, but those who overspend tend to do so to larger amounts bringing the overall average to about 100%. So in other words, more small underspenders, and a few big overspenders.
- The latest available data only extends to 2018-19 so NHF has consulted members to understand more recent trends (N.B. This is from the perspective of housing associations who of course don’t directly administrate DHPs and are not necessarily involved in the process – tenants can apply independently. But members will often work with Local Authorities to secure DHPs).
- Our Members reported that LAs were quite different in their allocations processes. Some have very good relationships with their DHP officers and are generally able to secure a DHP for a tenant who is struggling to afford their rent, others are finding its more of a lottery and it’s not necessarily evident from a tenants’ circumstances whether the application will be accepted. So this does reflect one of the quite common complaints about DHPs that they’re a bit of a postcode lottery.
- If we find this is the case – as organisations with specialist employees who are well acquainted with the allocations processes – then it is almost certainly reflected amongst claimants who apply independently as well.
- One member commented that local private rental sectors have a big impact – where private rents are very high, DHPs are mostly focused on supporting tenants there, but this means relatively less for social housing tenants who may be affected by welfare reforms. This suggests at least high PRS rents are also driving unmet need in the SRS. Not necessarily wrong because it may be where greatest need is, but suggests higher allocations in high-rent regions not necessarily meeting all the need.
- Three primary criticisms of DHPs that you often hear:
- They are postcode lottery
- The allocations are insufficient – at least in some areas
- There are inherent flaws to any discretionary system in that they allow people to slip through the cracks
- Ending the five-week wait. NHF found very strong evidence that claimants struggle due to this wait, that the advance loan system is not an acceptable alternative because the later deductions still drive financial difficulties. They suggest that claimants receive this payment much sooner – in the form of a payment rather than a loan, and that this should be backdated to application date.
- Retain the £20 basic payment increase over the long term – as well as increase in the local housing allowance (doesn’t affect our tenants but still important). Deductions and benefit cap must be reviewed in light of the amount of money people are left to live on.
- Survey reported quite high levels of confusion about entitlement, calculations of their benefit, advances, et cetera. NHF suggest that there is real scope for DWP to improve the consistency, accuracy and accessibility of information provided to claimants – potentially as part of the Move to UC work in Harrogate.
- Highlight the important role that housing associations and other landlords can play in supporting UC claimants – by providing useful advice and support with completing the claim, and being patient and understanding regarding arrears resulting from the waiting period.
Shelter campaigns to end homelessness and bad housing in England and Scotland. It gives advice, information and advocacy to people in need.
- Resilience of Universal Credit and its ability to respond to the increased risk of homelessness that has come about due to the pandemic.
- When it became apparent that coronavirus was going to have a profound effect on the way that we are living Shelter were pleased that the government paused evictions – but a pause isn’t enough when people can’t pay their rents as rent arrears accumulate. Risk of cliff-edge when eviction ban is lifted.
- Universal Credit needs to meet this need – increase of LHA to 30% of market rents was welcome.
- Don’t yet have official stats on claims for Housing element but Shelter’s best estimate is that a third of private renters are now claiming Housing Benefit or Housing Element of UC. This makes Shelter concerned that LHA increase to 30th percentile will not be enough.
- Many new claimants have tended to be wealthier and therefore in more expensive housing than existing claimants, but have now had the rug pulled from under them due to coronavirus.
- Looking at average rents: found that two parent and two child families in a house on average rent would face a monthly shortfall of at least £50 in half of areas. May be possible to make up with savings but will have a cumulative effect.
- In one of six areas that family would face a shortfall of more than £100.
- Both homeless people presenting a need to Shelter and people in temporary accommodation are much more likely to be affected by the Benefits Cap – increase risk of homelessness and prevents people from getting back into a settled housing situation.
- Benefits Cap particularly problematic during lockdown and ongoing economic situation – less job opportunities, restricted childcare options.
- Shelter will be publishing a report on the Benefits Cap shortly – they expect it to show a large rise in the numbers of household affected. Increase to Standard Allowance and LHA will be a large contributor to this – this negates the intention of these rises.
- Everyone In campaign to offer emergency accommodation to anyone at risk of street homeless during lockdown has been fantastic – additional £85 million to try and keep this group of the streets – but when they are looking for move on accommodation many will hit the Benefits Cap.
- Benefits Cap can also be a major factor in people not being able to leave domestic abuse situations. Choice between subjecting children to homelessness or stay.
- Put in place provisions to ease lifting of eviction ban – i.e. allow court discretion.
- Lift the Benefits Cap for at least the next year
- Raise Local Housing Allowance to meet average rents
Peabody Group owns and manages more than 66,000 homes across London and the South East. They also have 17,500 care and support customers.
- Residents claiming UC have been going through challenging times for quite some time. A survey of over a thousand residents on UC pre-covid late last year, found that 14% had to resort to foodbank use to get by, despite Peabody rents being an average of £127 a week and, on in total, £400m lower than market rents every year.
- Data on arrears from the last few months has highlighted the continuation of this trend during pandemic. Many residents did not pay rent in April, and some didn’t pay rent in April or May, with a total of £1.8m rent going unpaid.
- The vast majority of those who did not pay for two months did so because they were waiting for UC payments to begin. It took about 8 weeks for the dip in direct debits starting March 23rd to be compensated by UC payments.
- The proportion of claimants in arrears has decreased in the past year, regardless of whether they receive UC or HB. However, the volume of UC claimants has risen drastically, by over 90%. While a lower proportion of those claiming UC are in arrears than June 2019, Peabody now have more UC claimants in arrears than they had UC claimants in total this time last year. Average arrears is higher, as the level of arrears has increased considerably across the board despite the higher absolute claimants. The average arrears levels of UC claimants has risen by nearly 40% since last year.
- 33.5% of UC claimants in June 2019 had arrears exceeding 8 weeks, making them about three times more likely than those on HB to be in 8 weeks’ worth of arrears. This compares to 2020, where 36% of UC claimants are in arrears of over 8 weeks, compared to only 10% of HB claimants. Again, however, the massive increase in claimant numbers is significant. In absolute numbers, Peabody now have almost as many UC claimants with over 8 weeks’ worth of arrears as they had UC claimants in any arrears this time last year.
- Peabody have been focusing on early intervention and improving customer service skills of Collections Officers, as well as extending their Financial Inclusion team to offer all tenants affected by the current challenging and unprecedented situation to ensure our residents get all the benefits they are entitled to.
- This table displays the trend that UC reduces arrears of 1 month when first awarded, the backdated month. The last peak before the fall represents the 5 week wait, and the impact it has on increasing claimants’ balances. However, in the long run arrear balances don’t go down, they just stop growing, as we can see from the trends in the months after the initial reception of UC.
- Peabody applies for a large number of Alernative Payment Arrangements for their tenant’s rent. They are currently making about 100 new APA applications per week, which take around 12 weeks to come through – this delay increases the risk of arrears in the meantime. In June, they received 348 new cases. The proportion of rent payments covered by an APA has doubled since June last year.
- Peabody finds that a large proportion of their tenants prefer APAs but they are still aware of some challenges, such as the proportion of a claim that can be taken by a third party deduction (i.e. repayment of debt).
- Residents are able to request that the amount taken from their benefits for third party payments be reduced if they are facing financial hardship. However, Paebody have heard reports of this reduction being implemented in an inconsistent way, with some residents having to re-request a reduction every month. Peabody has brought this to some councils’ attention and know it is being looked into.
- Peabody also has some supported housing – including under their Rough Sleepers Initiative. The average arrears of RSI tenants claiming HB is £316, compared to £1,444 for those claiming UC. UC is unfortunately not suited to these residents’ needs, and Peabody believe that more can be done to ensure they continue to receive HB instead.
- Implement policy that requested reduction of MAPA deductions will last a period of time such as three to six months, before it is reset. This would give residents more time to fix their financial situation without risking forgetting to request a reduction every month.
- Exempt Rough Sleeper Initiative residents from being migrated to UC as it causes unnecessary disruption.
More information can be found in Peabody’s report: The Impact of Universal Credit: Examining the risk of debt and hardship among social housing residents
- APLE COLLECTIVE
A national collective of individuals and organisations who have experienced or are experiencing poverty, whose aim is to create a sustainable, grassroots network across the UK to raise awareness of poverty, reduce stigma and work together with others to eradicate it They are network that promotes the voice of those with lived experience of poverty but that works collaboratively with others across society to use that voice to affect change.
- Many of the issues that are being raised are not new – coronavirus has highlighted existing issues.
- Tracey supports someone who is struggling to get by on £111 per fortnight due to a combination of deductions for rent arrears and budgeting loans, and he needs to live on a special diet due to having pancreatitis.
- Darren works for Hartlepool Action Lab, he has also found that there ae common themes between pre and post covid experiences of Universal Credit.
- They have been supporting a group of homeless people in Hartlepool to claim Universal Credit and secure housing. They have experienced a lot of barriers in securing accommodation for this group pre-covid but during lockdown this was cast aside and they have been temporarily housed in suitable accommodation. Lockdown has meant that they can’t offer this group on-going support though. There is a concern that this group will drop off a cliff edge when this support ends.
- A lot of people aren’t aware of what they can claim – HAL have secured an additional £350,000 for claimants through helping people to move to Universal Credit.
- Letting agents are claiming their own price for rents, meaning that many Universal Credit claimants can’t afford properties.
- Involve people with lived experience in designing the policies and systems that will affect them.
- Build better links between DWP and other organisations such as criminal justice system, letting agents.