Opinion: is the Universal Credit challenge greater than feared?

Published by Max Salsbury for 24dash.com in Universal Credit and also in Central Government, Housing

Figures have shown that the government's Universal Credit pilot projects have caused a large increase in tenant rent arrears, with Wakefield and District Housing reporting an increase of an average of two percent to 11 percent.

Here, Emma Duke, associate and social housing specialist at Anthony Collins Solicitors, explores the impact of the controversial new policy.

Twelve pilot schemes have been taking place across the UK in order to judge the effectiveness of the government's proposed Universal Credit scheme.

Whereas previously benefits have been paid directly to social landlords, housing benefit payments will now be paid directly to the tenant as part of Universal Credit.

The intention behind the new system is to give claimants responsibility for their own income. Whilst in theory this is a positive move, local authorities and housing associations need to ensure that tenants are appropriately equipped to manage their finances and are not thrown in at the deep end.

The pilots do unfortunately seem to confirm the predictions that there will be a dramatic increase in the level of rent arrears for housing providers.

In the South Wales pilot 50 percent of the people in rent arrears have never been in debt in this way before, which indicates that many tenants are simply not ready for the transition.

With the shortfall estimated to be around £14 million in some areas, this change will have a serious impact, not only on individuals but also across whole communities.

Housing providers have been planning for these changes since the concept of Universal Credit was introduced and liaising with tenants to minimise the impact of the changes where possible.

However, the conclusions of the pilot scheme suggest that only once the changes are fully implemented, with the ‘bedroom tax’ taking effect on April 1 and Universal Credit starting from October, will tenants and housing providers start to see the real impact.

Perhaps the challenge is greater than feared.