Stark rises in rent arrears coincide with Universal Credit sign-ups, says DWP

A Department for Work and Pensions (DWP) study of one unnamed housing association found rent arrears rise “starkly” as claimants wait for their first payment of Universal Credit, which rolls up six previous payments, including housing benefit.

Arrears tended to level off for 10 to 12 weeks and then decrease as tenants caught up with payments.

The DWP did not conduct a national survey to see how rent arrears affected local authorities and housing associations, but said it will look at another five housing associations.

The department has told the National Audit Office (NAO) that it “wants to gain a greater understanding of the impact of Universal Credit on rent arrears”.

The NAO found that local authorities are also taking on additional costs in dealing with rent arrears, for which the DWP has set aside £170m.

The report said the DWP has acknowledged this and compensated local authorities for some additional costs. It told the NAO that it will pay for additional costs if authorities can prove them.

The removal of ‘implicit consent’, which allows third-party organisations to act on a claimant’s behalf without express consent, has led to an increased reliance on those organisations, which include local authorities and housing associations, the report found.

The government allocated the £170m over Universal Credit’s implementation period to local authorities to help tenants use computers and plan their budgets.

The report is heavily critical of the Universal Credit project, which started in 2010, was “reset” in 2013 and has been subject to lengthy implementation delays since. The latest expected date for full deployment is 2023.

The NAO said that the project is still at a “relatively early stage of its process” and that in spite of its delays, it “has no realistic option but to continue”.

The DWP was contacted for comment.