Labour: Universal Credit directly hitting councils

Labour’s shadow minister for employment has attacked the government’s Universal Credit policy, arguing it is forcing councils to “pick up the pieces” and prepare for further damage.

Margaret Greenwood said councils across the country are having to commit resources from their own budgets to provide additional rent arrears support and increase staffing, as well as working with their local food banks and Citizens Advice to offset the impact of the new welfare system.

The opposition claims some councils are spending huge amounts of money to cover these issues from increasingly strained budgets.

Newcastle City Council, for example, is spending around £400,000 from its own resources to support Universal Credit claimants, around a quarter of which is committed to additional rent arrears.

In the long term, authorities have been setting funds aside in anticipation for a future strain on resources, with Tower Hamlets Council putting £5m away for support over the next five years.

“Universal Credit is causing misery and hardship for thousands of families this Christmas, and councils are being expected to pick up the pieces,” Greenwood remarked.

“It is clear councils are committing their own valuable resources from already-stretched budgets to offset the impact of Universal Credit and to prepare for the damage its roll-out could cause.

“This is yet more evidence that the government should immediately pause the roll-out of Universal Credit so its fundamental flaws can be fixed.”

Universal Credit has been greeted with concern across the country, with Southwark Council, a pilot authority for the roll-out, reporting increasing rent arrears and rising foodbank usage due to the uptake of the controversial system.

Housing benefit has been a specific issue because the time taken for claimants to receive benefits has left a large number of tenants falling into rent arrears – or caused financial stress across other areas as people try to deal with the problem.

In response to Labour’s attack, the government has said that councils providing extra resources for welfare is not specific to the new system and has been happening for a long time.

A spokesperson from the DWP explained: “Councils have been providing welfare advice and housing payment top-ups as standard, since long before the introduction of Universal Credit.

“Universal Credit lies at the heart of our commitment to help people improve their lives and raise their incomes. It provides additional, tailored support to help people move into work and stop claiming benefits altogether.

“The majority of claimants 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.”

In September last year, the government changed its policy to allow councils to claim back over 80% of the money they spend on temporary accommodation as a result of Universal Credit.

This decision followed a major U-turn on the system, with a package of £1.5bn set aside by chancellor Philip Hammond to deal with issues created by the roll-out late last year.

Despite the spending, Hammond remained positive about Universal Credit at the time, saying it had encourage more people to move into work than the previous system but that the government would keep issues under review and “consider the case for further changes.”

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