Stephen Lloyd MP: Without reform, Universal credit will drive up homelessness

Posted On: 
9th January 2018

If further urgent changes are not made to the Government’s new benefit, Universal Credit, homelessness will skyrocket and the private rental sector will prove even more resistant to tenants on benefits, says Lib Dem Welfare spokesman Stephen Lloyd MP.

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Under Universal Credit, all claimants are paid the housing element of their benefit directly into their bank account, making them solely responsible for paying the rent regardless of their, often challenging, circumstances. While that is also the default option under the legacy housing benefit system, it has been far easier for housing benefit claimants to switch automatic payments to their landlords, many of whom choose to do so.

On Universal Credit however, payments continue to be paid directly to claimants until they have built up hefty rent arrears, arrears which recent evidence shows will inevitably lead to a rise in Section 21 evictions, and yet another rise in homelessness (in the last 12 months, the RLA reports that 1 in 3 landlords have attempted to evict a tenant, 60% of which was due to rent arrears). Given that there are over 1.3 million housing benefit claimants in the private rental sector, the impact could be absolutely devastating.

In addition, the business model of most private landlords means they simply cannot go for long without a rental payment, let alone the 3 months it normally takes before a struggling claimant will be moved onto automatic payments.

A recent study carried out by the Residential Landlords Association shows that almost 87% of landlords would not be willing to let their properties to claimants of Universal Credit, while 38% have already experienced UC tenants going into arrears. A separate study commissioned by Crisis and the Joseph Rowntree Foundation found that 90% of local authorities were concerned that UC would increase homelessness. The government’s insistence on putting ideology ahead of the facts will ruin countless lives. 

I therefore am asking the DWP to make some further changes to the way they administer the housing element of Universal Credit before it is too late. I acknowledge that, thanks to considerable pressure from myself and others, there has been some progress over the last few months but it is not enough. 

In the Budget, it was announced that anyone currently having their housing benefit paid direct to the landlord under the legacy system will continue to do so on Universal Credit. But what about new claimants who are receiving housing benefit for the first time, or the tens of thousands of new recipients who moved onto UC before these changes were announced? It is my view that all Universal Credit claimants should have their housing benefit paid, by mutual agreement, to landlords as the default. No ifs, no buts. 

Another simple thing the Government could do to improve the situation is making the landlords web-portal genuinely accessible to private landlords, enabling them to easily check the status of a tenant’s Universal Credit claim. As it stands, housing associations, local authorities and social housing companies can use the portal but the government’s plan to provide private landlords access seems to be dead in the water. One local job centre recently told my casework staff in Eastbourne that it would be impossible to get all the area’s private landlords onto the system because there are “just too many”. 

This alludes to one of the biggest frustrations with Universal Credit in the private rental sector, namely the disconnect between the DWP and landlords compared to the close working relationships that landlords developed with local authorities under the legacy system. 

In today’s debate I will highlight how the government has the opportunity to - perhaps not solve - but certainly improve the chronic housing shortage across the country by making Universal Credit payments to landlords the default option. This could easily be done. Due to a past agreement between Whitehall and the Stormont Government, this is precisely what happens in Northern Ireland. If the Universal Credit ‘computer’ allows that to happen over there, then why not here?

Despite the chaos created by the shambolic rollout of Universal Credit, opportunities for positive action remain if the government actually listens to those trying to make the system work.

I include myself and the Liberal Democrats in this. We want people to be supported properly, and UC could be the positive reform of our welfare system all agree is necessary. But it needs improving, and without the changes I am asking for on behalf of private rental tenants on UC, we will deal a devastating blow to a housing market already on the ropes and drive people out of their homes. This cannot be right – and surely cannot be what the Government wants.

Stephen Lloyd is the Liberal Democrat member of parliament for Eastbourne