Some 130 Birmingham council house tenants a week are falling into rent arrears following the switch to Universal Credit, it has been revealed.
It marks a giant leap in numbers of people failing to pay their bills and has left the council housing department chasing £5 million of unpaid rent.
City council bosses say that if their tenants are falling behind, there are likely to be similar rates of rent default for private and social landlord properties – leaving some facing eviction.
Previously out-of-work tenants had received Housing Benefit which was paid direct to the council and social landlords. But under Universal Credit they receive the money and must pay the rent themselves.
Birmingham City Council has just over 63,000 council houses and about 7,000 tenants are on or applying for Universal Credit.
Labour council cabinet member for social inclusion Tristan Chatfield said: “I am shocked at the impact of the Universal Credit on our tenants, it presents a problem not only for those individuals but also for the city council as a landlord.
“The Universal Credit process means a delay in payment of entitlement of at least five weeks. Advance payments are possible and we encourage this where we can, these are loans deducted from future payments.
“The current arrears balance for council tenants on Universal Credit is over £5 million.”
Mr Chatfield said that while there are just 11 per cent of council tenants on Universal Credit, more than a third of those in rent arrears receive the new benefit.
“In order to mitigate the impact the council has set up a pilot exercise. This has involved council staff working closely with tenants at the start of their claim,” he said.
“Very close working with Jobcentre Plus staff has enabled us to engage with our tenants and put in place suitable payment arrangements to pay their rent.”
He said that they expect the total rent arrears to £700,000 lower than it would have been without the help and means that more people will be able to secure their property.
He added: “I would urge the Government to rethink the unnecessary and cruel waiting periods involved before yet more people fall into arrears.”
His comments come in the week that the Archbishop of Canterbury Justin Welby called for the rollout of Universal Credit to be halted, saying it has left people worse off.
Mr Welby said: “It was supposed to make it simpler and more efficient. It has not done that. It has left too many people worse off, putting them at risk of hunger, debt, rent arrears and food banks.
“When Universal Credit comes into a local area the number of people going to food banks goes up.
“What is clear is if they cannot get it right they need to stop rolling it out.”
A Department for Work and Pensions spokesman responded to the Archbishop’s comments and said: “Universal Credit (UC) replaces an out-of-date, complex benefits system with cliff edges that disincentivised work and often trapped people in unemployment.
“Under UC, evidence shows people are moving into work faster and staying in work longer than under the old system.
“Through our ‘test and learn’ approach, we have listened to feedback from stakeholders and claimants and made improvements, including increasing advances to 100%, removing the seven-day waiting period and paying people’s housing benefit for two weeks while they wait for the first UC payment.”