Lothians councils owed millions as Universal Credit takes hold

Cash-strapped local authorities across the Lothians are owed millions of pounds in rent arrears as Universal Credit claimants struggle to adapt to the UK government’s controversial new welfare system.

Wednesday, 29th May 2019, 4:31 pm
Campaigners outside the Royal Courts of Justice supporting a legal challenge against the UK Government's Universal Credit welfare scheme

With just weeks until thousands more people are due to be moved onto the replacement benefit, the Evening News can reveal it is pushing an ever-growing number of Scots into deep rent arrears.

Four councils across the Capital and the Lothians are owed a combined total of £4,040,802 in rent arrears from 4,662 tenants who rely on Universal Credit.

In Edinburgh, the council is owed £1,269,837 by 1,086 tenants, while the local authority in East Lothian is owed £1,098,763 by 1,414 tenants.

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East Lothian MSP said the UK Government had failed to learn lessons during the botched roll-out of Universal Credit

The total arrears owed in West Lothian is £916,163 and £756,039 in Midlothian.

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Edinburgh Council could lose £9m over Universal Credit policy

“If arrears keep increasing it will put a lot of pressure on the finances of local authorities,” said Rob Gowans of Citizens Advice Scotland. “We don’t know how long-term they will be able to manage this.”

As rent arrears are debt they are, in theory, recoverable. But in reality, many councils and housing associations are already struggling to recoup them.

Local authorities, who administered housing benefit before UK government welfare reforms, previously had the power to negotiate directly with tenants who had fallen behind with their rent.

But that ability was removed by the introduction of Universal Credit, which sees claimants given a lump sum payment instead of several individual benefits.

Now councils must complete a lengthy process with the Department for Work and Pensions (DWP) which could eventually lead to an individual’s benefits cut to pay some of the arrears back.

Labour MSP Iain Gray told the News that the UK government had failed to learn from its mistakes when rolling out welfare reforms.

“I was very clear over a year ago that East Lothian’s experience of Universal Credit should serve as a warning as the system was rolled out elsewhere,” he said.

“Its introduction here resulted in soaring rent arrears, with over 70 per cent of council tenants on Universal Credit going into arrears.

“Tragically, the UK government has refused to listen and learn from the pilot areas. It has simply pushed ahead with a failing system which is now driving ever increasing numbers of people into debt and rent arrears.

“Universal Credit is punishing the most vulnerable. It’s time for governments at UK and Scottish level to work together to find a way of stopping this damaging situation.”

Mr Gowans of Citizens Advice Scotland added that the problems faced by some Universal Credit claimants were made even worse if they stayed in the Capital.

“The additional issue in Edinburgh is the availability and cost of private accommodation,” he said.

“There is a huge demand for social housing which can’t be met. Those on Universal Crediot are struggling to find private accommodation they could afford.

“In a few cases, where there is something affordable, many landlords won’t let to benefit claimants.

“You do see ‘No DSS’ adverts. It’s extremely difficult, if not impossible, for Universal Credit claimants to find somewhere to live.”

The UK government originally claimed Universal Credit would save money, but the new system has faced repeated criticism for leaving many claimants worse off than under legacy benefits and for an error-prone system that can drive some to the brink of destitution.

COSLA, the national association of local authorities in Scotland, said it was “concerned” about the impact of Universal Credit.

“Councils are experiencing sharp increases in rent arrears and support costs as a result of this policy,” a spokeswoman said.

Shirley Anne-Somerville, the Scottish Government’s cabinet secretary for social security, said: “While Universal Credit is reserved to the UK government, Scottish ministers have used their limited powers in this area to enable people to pay their housing costs directly to landlords which should help prevent or reduce rent arrears and eviction proceedings, which will ultimately safeguard tenancies.”

The DWP said it was wrong to blame Universal Credit for rent arrears. “We completely disagree with this analysis which compares fundamentally different claimant groups,” a spokeswoman said.

“Many people claim Universal Credit after a significant life event and will join with pre-existing arrears, while those on legacy benefits are likely to have been claiming for a longer period, with arrears having reduced over time.”

She added the department had made various changes to Universal Credit to prevent people going into arrears.

A City of Edinburgh Council spokesperson said: “We are committed in Edinburgh to supporting our tenants through any changes to their circumstances and we began putting measures in place in 2015 to help us prepare for the roll out of Universal Credit.

“Our huge programme of support for all tenantshas involved more than 40 events in local communitiesto raise awareness of benefits. We have also held workshops with 80 organisations to support people as they transition to Universal Credit. To coordinate support to tenants, we appointed a dedicated Welfare Reform Manager and We continue to promote early intervention and offer crisis grants, free school meals and clothing grants to those who may find themselves falling into financial hardship.

“We have found thatthese measures, which are directed not only at those who are in receipt of universal credit but at all of our tenants, are really helping people. They are also starting to lead to a reduction in Edinburgh’s overall rent arrears – as of March 2019 our gross rent arrears have reduced by £0.45m and number of tenants in arrears has fallen by 1.6 per cent.”