Plaid Cymru Councillor Ian Johnson has warned that the Vale of Glamorgan Council could lose £1.2m this year due to the roll out of Universal Credit in the county, as thousands of claimants go into council rent debt.
2019 saw a substantial increase the Vale of Glamorgan Council in council rent arrears, rising by nearly £140,000 to just over £350,000.
However, with Universal Credit being rolled out across the county in the new year, the Vale Council is anticipating a far bigger rise in council rent bad debts, to more than £1.2m in 2020/21.
Plaid Cymru Councillor Ian Johnson said:
“New Universal Credit claimants have to wait five weeks for their first payments, and most people don’t have five weeks of money to hand. That brings them into a cycle of debt as they have to choose priorities, and often have to use the Foodbank to get by.
“One of the impacts of that is that council rent arrears are expected to increase quickly.
“Estimates for the new financial year’s Housing Revenue Account is that the Council will not get 6% of council house rent payments, so they have made provision of £1.2m for bad debts.
“This is money that will have to be found elsewhere within the budget – and comes as a direct result of the mess made the Tory Government of Universal Credit.
“The average debt of a resident on Universal Credit is £498 while a resident on existing benefits is only £147.
“I have asked the Vale Council to confirm that they will not make evictions due to non-payment of council rent as a result of Universal Credit.”
A Vale of Glamorgan Council spokesperson told Bro Radio: “To cope with the shift from weekly benefits to Universal Credit, which is paid monthly in arears, tenants can claim an advance payment. This is then deducted from benefit payments over the next 12 months, helping to reduce the risk of tenants falling into debt.
“Vulnerable tenants and those requiring additional support are further protected from debt through the direct payments system. Currently around 15 per cent of tenants have this system in place, which allows a portion of Universal Credit payments to be made directly to the Council to cover rent costs.
“All tenants moving onto Universal Credit are contacted by a member of the Council’s Income team and given extra information and advice about the benefit. They may also receive assistance to open bank accounts or get online.
“So far this year, the Council’s Housing Team has been able to secure over £120,000 of additional income for tenants by helping them backdate claims, ensuring the correct benefits are being received, by assisting with appeals and helping secure the best tariffs for utilities.
“Though it is anticipated that Council rent arears will increase as more tenants migrate to Universal Credit, provision has been made for this within the Housing Revenue Account business plan and evidence suggests arrears will fall back to acceptable levels once tenants adjust to the new system.
“Eviction is only ever considered as a very last resort for rent arrears after a range of support, including the measures listed above, have proved unsuccessful.”