From 6 October, 6.2 million people in receipt of Universal Credit will have their benefit cut by £20 per week, an uplift which was introduced by the Government at the start of the pandemic in March 2020. This will not only see many people plunged into further poverty and struggle to pay basic bills such as rent and electricity, but also cut the amount of any Third-Party Deductions being made to repay debt such as rent arrears. This could potentially leave more people at risk of eviction, says Caridon Landlord Solutions.
The Universal Credit scheme became heavily relied upon by many during the pandemic as unemployment levels rose. Reduced hours of work, redundancies and the furlough scheme resulted in many people falling into poverty.
The £20 weekly increase in payments for those claiming Universal Credit (and Working Tax Credit) at the start of lockdown in 2020 was a welcome lifeline for millions, and for some has helped keep a roof over their heads.
At his Spring Budget on 3rd March 2021, Rishi Sunak announced that the increase would remain in place for a further six months, until the end of September 2021. Despite calls for the uplift to be made permanent, the Government has said there will be no further extension because there needs to be shift to getting people back to work as the economy opens up.
Critics have branded the decision to cut the uplift as the ‘biggest overnight social security cut since World War Two’.
Caridon Landlord Solutions, an organisation which provides specialist advice on Universal Credit and Housing Benefit to private landlords, letting agencies and housing associations, says this will have a significant impact on thousands of tenants’ ability to meet their rental payments and pay back existing arrears, plunging them into further debt and putting them at risk of eviction.
Sherrelle Collman, Managing Director of Caridon Landlord Solutions says:
“The government took an important step to support people’s finances during the pandemic. The uplift in Universal Credit, combined with the ban on evictions and longer notice periods, has kept people in their homes.
Many landlords who had no previous experience of housing tenants in receipt of Universal Credit had to learn the system quickly to understand how best to support their tenant, sustain the tenancy but also try to protect their own finances.
As we emerge from the onerous restrictions imposed, many landlords have agreed to keep their existing tenants and set up payment plans via Third Party Deductions, which is an amount taken from a claimant’s Universal Credit award to help repay debt such as rent. This is based on a percentage of their Standard Allowance. When the £20 uplift is removed, this will mean the amount of Third-Party Deductions to landlords will also drop. Not only will individuals be worse off financially, increasing their chances of defaulting on rent, but they won’t be repaying as much to recover debt they may have built as a result of the pandemic.
Until now, we have not seen the mass surge of evictions that many predicted, and much of that is because of the financial support offered by the Government and the cooperation of landlords in such difficult circumstances. Taking away the uplift in UC now is pedaling backwards and will put those who have been impacted the most, in even greater financial hardship.”
When will UC claimants first see the drop?
From the Monthly Assessment Period (MAP) which ends on or after 6th October 2021 claimants' UC awards will include the normal, lower, standard allowance of:
£257.33 - single claimant under 25
£324.84 - single claimant age 25+
£403.93 - couple both under 25
£509.91 - couple one or both age 25+.