The city council expects to lose £9 million in unpaid rent in the next five years as Universal Credit – labelled “cruel” by the Capital’s housing chief, is rolled out next month.
The controversial policy will start to be rolled out in Edinburgh on November 28 – with the council now putting together a contingency plan for loss of income and raising fears the authority’s house-building plan could be derailed by the policy.
The council’s Housing and Economy Committee will discuss plans to mitigate the “significant risk to rental income collection and delivery of the house building programme and wider investment strategy” on Thursday.
Cllr Kate Campbell, housing and economy convener, said: “We know that where we’ve seen Universal Credit Full Service (UCFS) already rolled out, the impact on people’s lives has been damaging.
“The assumed loss of £9m of income through rent arrears demonstrates that Tory welfare reform is transferring costs from central government in Westminster onto local authorities.”
She added: “There is a danger that high levels of rent arrears could impact on our housebuilding programme or the level of investment in existing homes. We are doing everything possible to make sure this does not happen.
“But we also know that when people go into rent arrears it causes stress and anxiety. We’re absolutely determined to make sure that we have the right support in place for all tenants affected by this cruel policy.”
The council anticipates that 10,500 council tenants will move onto Universal Credit by 2023. The initial roll-out next month will affect tenants who make new claims or have a change in circumstances which will trigger a move to the new system.
A business plan by the council’s housing revenue account is assuming a loss of income of around £9m over the five years of 2018/2019 to 2022/2023 and has “established a ring-fenced contingency reserve to ensure that the investment programme could continue, even with an unexpected reduction in income or increase in unplanned expenditure”.
The contingency fund of £3m will be built up by the end of this financial year with a planed rise to £15m by 2027.