House of Commons Library

Housing costs in Universal Credit

Published Friday, June 9, 2017

This Commons Library briefing paper explains the key differences between assistance with housing costs under the Housing Benefit regime and under UC. The paper considers evidence of the impact of claiming housing costs under UC to date and the 2015 Government’s response.

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UC replaces several benefits with one payment

The Welfare Reform Act 2012 and associated regulations provide for the replacement of a number of benefits, including Housing Benefit, with a single payment of Universal Credit (UC). The roll-out of UC, having been delayed several times, is now due to be complete in 2022.

Detailed provisions setting out how housing costs will be calculated under UC were set out in the draft Universal Credit Regulations 2013 published in December 2012.  The regulations were considered by the Social Security Advisory Committee (SSAC) – the Committee’s report was published alongside the draft regulations in December 2012. The Regulations were subject to the affirmative resolution procedure, meaning that they had to be approved by both Houses of Parliament. The Universal Credit Regulations 2013. (SI 2013/376) came into force on 29 April 2013.

Comparisons with Housing Benefit

The calculation of entitlement to assistance with rent payments is similar to the current Housing Benefit system. However, there are some significant differences. The default position is that UC is paid direct to claimants as a single monthly sum – claimants are responsible for ensuring that the housing cost element is paid to the landlord to cover the rent due. This involves a behavioural change for most tenants of social landlords. Alternative Payment Arrangements and budgeting assistance may be available in certain circumstances where claimants struggle to adapt.  In addition, there is a one month assessment period meaning that claimants may have to wait at least 5-6 weeks before receiving a payment.

Implementation - evidence of impact

The roll-out of UC to date provides a basis on which the impact of claimants applying for UC can be assessed. In relation to the housing costs element, there are significant concerns about the impact of waiting periods and other delays on rent arrears, particularly in short-term temporary accommodation.

Following what it described as “compelling evidence of the problems in the rollout of Universal Credit in its recent follow ups” the Work and Pensions Select Committee re-launched its inquiry into UC in February 2017. The inquiry was not concluded before Parliament dissolved on 3 May 2017 but evidence submitted indicated issues around rent arrears and hardship experienced for those claiming UC. The then Employment Minister, Damien Hinds, responded to several issues raised in a letter of 1 March 2017. He pointed to the fact that some claimants had had rent arrears before claiming UC, and said that newly arising rent arrears were expected to be of a short duration.

The roll-out of UC was the subject of a Westminster Hall debate on 19 April 2017 led by Catherine McKinnell MP for Newcastle upon Tyne North.  Damien Hinds responded, again pointing to evidence of pre-existing arrears but acknowledging that there had been some delayed payments to claimants.

 

 

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