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People on Universal Credit ‘more at risk of falling behind on rent’

A new report from the work and pensions select committee recommends a range of measures to stop people on Universal Credit falling further into poverty

Universal Credit pushes more people into rent arrears than those on other kinds of benefits, MPs have warned in a cross-party report.

The work and pensions select committee recommended the introduction of a “starter payment” in response to concerning evidence that the five-week wait many face before receiving their first Universal Credit payment pushes people into debt and leaves them reliant on food banks.

Committee chair Stephen Timms said the payments were “already barely enough to get by on”.

The ministers heard evidence from representatives of London Councils, Harrogate Borough Council, Highland Council and Cornwall Council — who all reported that local tenants on Universal Credit were more likely to fall into rent arrears than those on housing benefits.

Harrogate’s Noel Duke said 56 per cent of Universal Credit recipients were behind on their housing costs compared to 38 per cent of those on other benefits.

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Last year Citizens Advice research found that nearly twice (40 per cent) as many people on Universal Credit struggled with rent and mortgage costs compared to those who had not been migrated to the new system (23 per cent).

The Department for Work and Pensions (DWP) cautioned against comparing the two groups because they do not have the “same characteristics”, adding that those on housing benefits are more likely to have their debts under “long-term management”.

The select committee report pointed out that someone claiming Universal Credit may have just experienced a destabilising life event, making it more difficult for them to get their arrears under control and in less time.

Analysis of National Audit Office data showed a pattern of rapidly increasing rent arrears shortly after a person has claimed Universal Credit, peaking 13 weeks later. Evidence gathered in the report showed that while rent debt usually starts to decline after that point, it reaches the same level it was at the time of the claim after around a year.

In response to the suggestion that people receiving Universal Credit were more likely to be in rent debt than people on other benefits, the DWP was reported to have said it “had not seen evidence in that regard”.

Neil Coulin, Universal Credit director general, said the life event or change in circumstances could be more to blame for rent arrears than the benefit itself.

But Shelter CEO Polly Neate said the policy puts more people at risk of homelessness after “quickly discovering the levels are simply too low to pay the rent and safeguard their home”.

Timms said: “They leave people facing the toughest of choices: go without income for at least five weeks or have repayments subtracted from their future universal credit payments, which are already barely enough to get by on.

“For people claiming benefits for the first time, or people who’ve faced a significant change in their circumstances, the government should provide starter payments. Doing so would both cut down on the need for advance loans and ensure that nobody is forced into debt just to be able to afford to eat and keep a roof over their heads.”

The ministers also joined calls for the £20 increase to Universal Credit put in place at the start of lockdown to be made permanent beyond April.

Trussell Trust chief executive Emma Revie told the committee that data collected through the network of more than 1,250 food banks showed that Universal Credit claimants were more likely to need help from food banks and that this was largely driven by the five-week wait pushing people into destitution.

Meanwhile Wellcome Trust analysis presented to the ministers suggested that the introduction of Universal Credit impacted the mental health of seven in 100 claimants — meaning an estimated 64,000 unemployed people put in “psychological distress” because of the policy.

Andrew Forsey, director of the charity Feeding Britain, said the report “hits the bullseye”.

He added: “The rate at which sums are deducted from universal credit to repay advances and historical debts is driving all too many people to the brink of destitution.”

The Big Issue has approached the DWP for comment.

Image credit: Children and Young People’s Research Network/Flickr