Universal Credit is turning into a cautionary tale for policy wonks to be careful what they wish for. Shelter, like many organisations, welcomed the promise of increased simplicity and improved work incentives. This enthusiasm was a reaction to seeing at first hand the difficulty many housing benefit recipients have in navigating the present system.
But it is becoming increasingly clear that the Department of Work and Pension’s (DWP) definition of simplicity is designed with their own needs in mind and not those of real people, and risks overlooking the complexities of many claimant’s lives. One result of this is the increased risk that job loss could result in the loss of a home.
Universal Credit will include support for housing costs for both renters and homeowners. The way this support will be calculated replicates many features of the existing housing benefit system, but with some crucial differences. The vital protection against rent arrears for new claimants has been stripped out in a crude attempt to create a “one size fits all” system. This will put people at risk of arrears and debt, and could mean the loss of a job spirals into the loss of a home.
Currently, housing benefit is subject to a number of restrictions which mean awards do not always cover the full cost of someone’s housing. But people who could previously afford their rent are exempt from such limits for the first 13 weeks of a new claim. This rule is known as 13 week protection. It provides crucial breathing space to give people time to get back into work or, if their circumstances are unlikely to improve, make a planned move somewhere cheaper.
Without it many people will find the support they receive is less than their rent: People renting a typical family home in one in four local authorities will be at least £100 a month worse off because of the loss of 13 week protection under Universal Credit.
The risk is that many people will struggle to make up this shortfall and will run up arrears and debt. Research by Shelter found that the majority of renters (61%) said they would struggle to find an extra £100 a month towards their rent. High rents mean that many people in employment may struggle to put away money to cushion them through an unexpected drop in income. Nearly half (46%) of private renters have less than £500 in savings or investments to buffer them through tough times. Without their own savings and with inadequate support from the safety net, there is a very real risk that an unexpected drop in income could cause people to lose their home, making it even harder to get back on their feet.
The abolition of 13 week protection was never fully discussed during parliamentary debates on Universal Credit. Scrutiny since has focused on IT systems and the DWP’s ability to deliver the ambitious Universal Credit project. Amid this, the important loss of a vital feature of the safety net has been overlooked. Universal Credit cannot and should not aim to replicate all aspects of the current housing benefit system. But it should set out to provide adequate support for all claimants and prevent a short-term setback spiralling into something more permanent.