New DWP proposals to protect landlords’ rental incomes are in danger of trapping people in their homes, creating a modern day version of a debtor’s prison.
Last year Lord Freud committed to protecting landlords’ rental incomes under Universal Credit. To do this, DWP propose that tenants in rent arrears have 40% of their core benefits deducted until rent arrears are cleared – that’s 40% taken from JSA, Income Support or Standard Allowance under Universal Credit.
DWP have not put forward a rationale for the 40% rate.
But the 40% rate should definitely ring a bell, because it’s the same punishing rate people are sanctioned by if Jobcentre Plus decide they aren’t trying hard enough to get a job. So is it the case that people in rent arrears simply aren’t trying hard enough to pay their rent?
Housing benefit claimants hit by the bedroom tax are expected to make up the shortfall from other income, but with JSA just £72 a week for a single claimant, this is a genuine struggle. Half of those hit by the bedroom tax are now in rent arrears.
People also move into arrears because of the welfare system’s inefficiency – many of the rent arrears cases Shelter see at the court desks are caused by housing benefit delays.
The proposed debt rules will take no account of household circumstance, which is risky both for the household and the landlord.
A parent with one child, in rent arrears because of the bedroom tax will be subject to an automatic £23 per week deduction until they have cleared their arrears. This will be on top of the £14 per week they are expected to pay for towards their rent due to the bedroom tax. After making their rent top up they will be left with around £100 to cover gas, electricity, food, travel costs, clothes and council tax.
If they struggle to pay their rent top-up to their landlord they risk more arrears and being evicted.
If they struggle to manage any personally arranged debts – like doorstep loans or credit card debt – things will be close to impossible.
New debts could be racked up as households borrow more.
No doubt families will try and maintain their fragile grip by minimising costs.
Things could be so tight that any additional costs will be avoided. Families will have to stay at home, with the only regular trip out being a visit to the local foodbank. Even paying bus fare to attend an interview may become difficult.
Clearly, our response to DWP is that we do not support a policy which perpetuates cycles of debt, leaving households trapped, with nowhere to go.
So what should they be doing?
Firstly, DWP should keep the existing 5% repayment rule in place. It’s a reasonable approximation of what is affordable for all and a demonstration to landlords that arrears will be repaid.
Secondly, DWP should also send a message that if tenants can afford to repay more they should enter voluntary repayments with their landlord.
More also needs to be done to prevent arrears building up:
- DWP have committed to reviewing a claimants’ circumstances once they hit 4 weeks arrears and this should be used to carry out a robust assessment to understand why the tenant is in arrears.
- If appropriate a tenant should be moved on to Alternative Payment Arrangements, guaranteeing housing benefit goes direct to landlord.
- Tenants should also are referred for Discretionary Housing Payments and budgeting advice to stop arrears building up again.
The proposed debt rules send an alarming signal about life under Universal Credit.
If we want people to flourish under Universal Credit, preventing debts not worsening debts must be the priority.