Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, what steps he is taking to ensure that recipients of universal credit do not fall into rent arrears while waiting to receive payments.

Arrears are an important and complex issue. There are many factors at play and arrears can arise not only because of failure to pay rent but also through the charging policies of landlords that can create “book” arrears from the outset of a tenancy. Distinguishing between these two effects is not straightforward and we are undertaking work to investigate the issue of rent arrears in Universal Credit, aiming to understand the true level of rent arrears and what is causing them. It is also important to note that many people are coming into Universal Credit with pre-existing arrears. For example, recent research by the National Federation of ALMOs showed that over three-quarters of their tenants were already behind with their rent before their Universal Credit claim started.

We have taken a number of steps to support claimants from falling into arrears:

First, improving our processes for verifying housing costs so that claimants get their housing costs taken into account in their payments at the end of the first assessment period. We have centralised and streamlined the management of emails from Social Rented Sector Landlords to speed up the verification process and we continue to improve the support given to our work coaches so that they can identify and resolve housing issues as they arise in jobcentres.

Secondly, whilst Universal Credit promotes personal responsibility and expects the majority of tenants to manage their finances, including their own housing cost, we recognise that some people may need help with this, so we can provide budgeting advice and benefit advances if appropriate. Claimants can apply for an advance of up to 50 per cent of their indicative award (including housing costs). Once people have successfully transferred to Universal Credit direct payments, they do generally succeed in managing their finances effectively, paying their rent and reducing their arrears. In Universal Credit we increased the recovery rate for rent arrears, from a maximum of 5%, to 20% and our research shows that after four months, the proportion of UC claimants who were in arrears at the start of their claim, fell by a third.

Thirdly, we recognise that for some people, payment of rent is best made direct to the landlord and we have speeded up the process for Social Rented Sector landlords so that they can now apply for them at the same time as they verify rent and we have provided guidance to our work coaches to help them identify circumstances in which this would be appropriate.

We continue to work closely with landlords, Local Authorities and other organisations to identify further improvements to ensure claimants are fully supported.