Universal Credit Furthers Pressure on Local Budget

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  • #158715

    Matt
    Participant

    It’s astonishing when local budgets are so tight and we’re going to see vicious cuts and have to end up paying more council tax that the Universal Credit system has basically caused a massive debt of £600,000 in rent arrears.

    Whether or not you agree with the welfare state housing benefit means that WCBC receive that money directly in rent – this new system puts pressure on all of us as those in rent arrears are generally not contributing council tax either. It is most likely the case that those in arrears cannot be evicted as they have children and means that in any situation the council would be held responsible for putting them up in temporary or new housing.

    As a parent myself I know that the 1 thing I must pay for every month without fail above everything else is the money to keep a roof over our heads – goes without saying for almost all others too – mortgage and rent money comes first. I cannot comment on the personal situations of those in arrears as I don’t know what has caused them to build up a debt, but it is clearly a systemic problem if 1,000 are in the same situation.

    With all this in mind and seeing a glimpse of the eye watering debt with just a partial number of Wrexham converted to UC – one can only imagine this debt is going to snowball into multiple millions a few years down the line when all remaining housing benefit recipients are moved into it.

    Inevitably some people are also going to end up evicted and homeless because of this which will further increase the ongoing homelessness problem in town.

    This is going to be a massive issue. I cannot help but think that the Tories haven’t thought this one out if you translate the roll out across Wales and the UK – councils are going to be left with millions in unretrievable debt that will force them to make cuts elsewhere.

    It’s all very well and good Government ministers claiming that UC and its austerity driven whip will push people to seek work and become self sufficient. But as we’ve discussed here time and time again there’s x% of the most deprived in Wrexham who will never bother to seek meaningful employment – not even if you lit a fire below them. You couple that with the distinct lack of opportunities in the area and it’s just going to be a disaster.

    I will be very interested to see if our esteemed Lead Member for People – Youth Services and Anti-poverty will speak out against his own party’s bitter austerity measures that are worsening poverty in this town plus taking money from the ruling Executive he is involved in? Or if he has a plan to help deal with the myriad of problems that are going to fall into his remit.

    #158720

    TimRegency
    Participant

    It’ll affect many people who are working too. Plenty of people are already in in-work poverty and have to rely on foodbanks. They’ll lose up to £200 a month, maybe more.

    What I see ahead, and I’ve seen some examples already, is a sharp increase in homelessness, begging, anti-social behaviour and prison dependency. ‘No social security? I’ll send myself to prison, at least I’ll get food and shelter there.’ Not only will this make existing problems much worse, it’ll cost considerably more than any ‘savings.’

    And that’s before we talk about how disabled people will be affected. It’s a horror story beginning.

    #158721

    dagg
    Participant

    I have no problem people receiving benefits, but why should they receive more in benefits than someone who is working fulltime. I know a few people who are better off claiming benefits and have said why should they get a job.

    #158722

    wrexview
    Participant

    Paying the benefit monthly in arrears is a flawed system. Making Univesal Credit a fortnightly benefit and rental payments paid directly to landlords would ease the problem.

    #158723

    zinger
    Participant

    It would be better for landlords certainly but is it fair to treat people on benefits different to those in work? Working people with young families struggle too. As Matt said, paying for the roof over your head is your first priority.

    #158725

    TimRegency
    Participant

    It’ll affect people in work. UC also replaces working tax credits.

    Are some arguing that people should be made homeless because of some perceived advantage over another group of people who are also being treated harshly? It’s landlords who get most of the money that’s affected by the benefit cap. I can only guess the Tory ‘divide and rule’ ruse still works a treat.

    #158735

    bubble
    Participant

    I’m not sure what to think of UC. I’m aware the idea (or part of it) is to bring the frequency of payments into line with what people who are working receive – e.g. makes it easier to transition from unemployed to working, which in general pays monthly. Also to make people responsible for their own budgets, in particular budgeting for their housing. Both of these in principle I agree with.

    Many would be up in arms if their other (non-housing) benefits were paid differently to other people’s income, such as in food vouchers. People want the money and the freedom to budget and spend it as they wish – and they already pay their utilities out of that. So why should it be any different for rent? I think there are people who must have no idea that housing is often the single largest outgoing, because if they’ve never worked then their rent has always been paid direct to the landlord through Housing Benefit. I imagine it will make it harder still for those totally reliant on benefits to find private rented accommodation, even if they personally have every intention of paying fully and on time.

    If people in, say, social housing lose their home due to rent arrears but are then given alternative housing by the council, it’s still an upheaval for them. Sadly, I think that it may be the only way for some people to realise that not prioritising rent has consequences.

    What I do think is harsh is the one month wait before the first payment. It must be difficult, if you’re living on a breadline, to abruptly switch from weekly to monthly. I think it should have the option of some sort of phased introduction for each new applicant, building up to monthly payments – though for all I know such an arrangement might already exist.

    In principle it seems like a sensible idea that encourages personal responsibility and makes budgeting on benefits more akin to budgeting on a salary. But something does seem to be amiss in the rollout of it – e.g. have the council been providing budgeting advice to UC recipients from the outset, because surely this situation was foreseeable (I read somewhere several years ago that landlords were not happy with UC). Also, the LibDems are partly to blame for this as they were part of the coalition.

    #158798

    R T
    Keymaster

    Looking back – in 2012 issues in terms of local administration were being considered https://www.wrexham.com/news/councils-estates-respond-national-welfare-reform-timebomb-11693.html “Concern was voiced from the council that this could create “difficulty in collecting rent” , which could then impact wider as if rent is not paid it could increase homelessness.”

    In 2013 this was referred to as a timebomb https://www.wrexham.com/news/welfare-change-pilot-sees-council-rent-arrears-increase-by-600-29605.html

    Note the below is from that 2013 article and not current:

    Torfaen, a county borough close to Newport in South Wales, is one of six areas where the Department of Work and Pensions (DWP) is running what it calls “demonstration projects” ahead of wider introduction of the Welfare Reform changes. In the first group of Torfaen residents on the pilot scheme rental arrears grew from £20,000 to £140,000 in just seven months.

    A large proportion of this test group that incurred the 600% rise in arrears are said to have had ‘a good track record of payment before’ with ‘a pretty low level of arrears’.

    Wrexham.com attended an information session with Wrexham Council recently where we asked if they had a prediction of what percentage of arrears they were expecting, as the BBC had reported a DWP source stating “a rate ‘in the teens’ rather than 20-30% reported“. No figure was placed or indicated, however it was recognised it is likely to be a problem.

    The report to Wrexham Council from September 2012 stated “It is also clear that the workload of Officers managing rent arrears will increase with the proposed introduction of housing benefit payments direct to tenants, instead of electronically to landlords, as part of a claimant’s benefit entitlement. The local relationships built will be even more crucial in ensuring income streams are maintained and tenants can seek advice from a local officer that they trust. The proposed reduction in housing benefit payments to claimants will also impact dramatically on the Service, particularly on income collection, rent arrears recovery and consequential homelessness.”

    #158814

    WreX-iT
    Participant

    With UC you are given a great big pot of money each month and told to pay your rent and other bills. In other words they treat everybody like an adult.

    People who have been spoon fed all of their lives suddenly gain a pocket full of cash and i can guess that a lot (not all) will be down the shops buying items they couldnt normally afford, be off down the pub and bookies or paying off some of their own loans.

    They dont want to pay their rent because they know they Council will have to rehouse them.

    And they will have a Merry Christmas too!

    #158894

    TimRegency
    Participant

    Not really.

    The main issue is the fact that there’s a five week delay before you get your first payment. Not to mention that all those austerity cuts (and the cap) are built into the new system. In other words, UC is a Trojan horse for Osborne’s cuts.

    So people who are poor to begin with, with little or no savings, have nothing to pay for food, heating and rent for that period. So they have to borrow from people who are happy to take advantage with high interest rates. This all explains the sharp rise in the number of Foodbank users reported in the local press, it ties in with the introduction of UC.

    As Wrexham.com pointed out, experts warned us for years that UC would lead to serious debt and homelessness problems and now it has come to pass. This was very foreseeable.

    It’s also worth mentioning that many of the people affected are severely disabled and/or vulnerable in other ways eg victims of abuse. Like I said before, it’s a horror story beginning.

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