The rollout of universal credit will have a “major impact” on the level of rent arrears in Fife, a council finance chief has warned.
Les Robertson, Fife Council’s head of revenue and commercial services, said the impact of welfare reform was already being seen in the amount of bad debts being written off by the local authority.
“This can only get worse in the forthcoming years with universal credit being rolled out in Fife from December 2017, and a number of other welfare cuts having already hit, and will continue in the coming years,” he said.
Of the 700 council tenants already in receipt of universal credit, 568 have seen their rent arrears increase to a total of more than £300,000.
Mr Robertson said: “This does not bode well for the future as, in the coming years, we have nearly 14,000 working age tenants who currently rely on housing benefit to meet their rental liability.
“These tenants will at some point transfer onto universal credit. This, in all probability, will have a huge impact on rent collection.”
He said if the impact on the first 700 tenants moving to universal credit was replicated across the 14,000 working age tenants, rent arrears would increase by nearly £6 million.
More than 200 staff from the council’s housing and finance services are now working on a project with the sole aim of improving rent collection rates.
“The widely important goal is to increase net rent collection to over 100% of the charge levied,” said Mr Robertson.
“This will be a major challenge with the negative impacts of universal credit and other welfare cuts such as the benefit cap already being felt.”
Among the reasons for the increase in arrears are that tenants claiming universal credit have to wait at least six weeks for their first payment, meaning they do not have funds to pay rent.
Fife Council wrote off £1.04m in rent arrears in 2016/17, an increase of £342,000 on the previous year.
Mr Robertson said this was the equivalent of less than 2% of the total rent due.
“There can be no disputing the cuts in housing benefit and universal credit introduction is increasing the overall write off position,” he added.
A DWP spokesperson said: “The best way to help people pay their rent is to support them into employment, and under Universal Credit people are moving into work faster and staying in work longer than the old system.
“Universal Credit gives people control over their finances, and paying their own rent is an important part of this – just like someone in work would do. The majority are comfortable managing their money but advances are available for anyone who needs extra help, and arrangements can be made to pay rent direct to landlords if needed.”
