The Government say that Universal Credit will help better tackle poverty while still supporting the most vulnerable people in society. However, while many organisations that work with and advocate for homeless people (such as Homeless Link, Crisis, Shelter, St Mungo’s, and the Joseph Rowntree Foundation) broadly support the principles behind Universal Credit, they are fearful of how the changes will affect homeless people.
Universal Credit Payments
One of the main concerns these organisations have is how Universal Credit will be paid out – directly to the service user in a monthly lump sum to imitate a monthly salary. Budgeting a monthly payment is going to be a daunting challenge for many homeless people who may have limited budgeting skills and who may not have had to budget in this way before. Many homelessness organisations and my own personal experience working at Centrepoint find that most homeless people will struggle to budget their monthly payment and will find themselves short of cash needed for essentials at the end of the month. Furthermore, the monthly payment fails to acknowledge that many jobs, predominantly low-paid jobs, are paid on a weekly or fortnightly basis.
Monthly payments are not only a budgeting issue but a safeguarding issue as well. Receiving a large amount of money each month (most likely in the form of cash through Simple Payment for homeless people without bank accounts) puts vulnerable people at risk of financial abuse and theft. Claimants with drug and alcohol misuse problems could also be put at serious risk.
Universal Credit will allow for exceptions to the monthly payment so that claimants can receive their money more frequently. At the time of writing, we know that an adviser will determine whether or not to change the frequency of payments, not the claimant. Their decision will be partly discretionary and partly based on a set of questions designed to determine the claimant’s level of vulnerability. It is yet to be seen how this will work in practice. Prepaid cards could be a useful tool for homeless people to address the issues of budgeting and safeguarding while still working within the Universal Credit regulations. They would allow service users to include self-restraint measures (e.g. a cap on weekly spending) and allow advisers to monitor card activity to prevent and monitor financial abuse. They would also have the additional benefit of including homeless people in financial mainstream habits without a full-fledged bank account.
The Housing Element
Homeless people in receipt of housing benefit usually have this paid directly to the landlord, thus eliminating responsibility and the risk of arrears. Universal Credit aims to put the responsibility of paying rent back into the hands of the service user. In the long-term, many homelessness organisations agree that this is desirable goal as it will increase independence and living skills. In the short-term, however, this is likely to create difficulty for people with poor budgeting skills and may put people at risk of losing their accommodation. There will be exemptions which will allow the housing support element of Universal Credit to be paid directly to landlords, but at the time of writing these provisions are unclear.
For people in ‘exempt accommodation’ (e.g. hostels, supported housing), the housing element will continue to be administered locally and paid directly to the landlord in the short-term. However, the definition of ‘exempt accommodation’ used by the Universal Credit regulations is outdated and does not accurately reflect reality. A national survey of 1655 supported housing units found that only 10% fit the technical definition in the regulations (source). Additionally, many people in exempt accommodation are liable for personal service charges which they choose to pay through direct deductions from their benefits. At present there is no facility to have personal service charges deducted from Universal Credit payments, thus putting people at risk of arrears and ultimately eviction.
For people in non-exempt accommodation, which could be homeless families in temporary accommodation or people who have recently left exempt accommodation, there is also a provision that will allow housing costs to be paid directly to the landlord after the person or family reaches a certain debt threshold. This has recently been specified as two months rent for the Pathfinders, but the threshold is yet to be determined for the national roll-out. The risk of rent arrears could not only put people’s accommodation at risk, but might also put off landlords from accepting Universal Credit claimants altogether, thus limiting the options for homeless people to move on into more settled accommodation. Even under the current system that allows direct payments to landlords from the start, many private landlords do not accept ‘DSS’ tenants (those receiving benefits).
The Universal Credit Claim Process
Universal Credit will simplify the claim process. Claimants will only have to make a single application for Universal Credit whereas in the past separate applications had to be put through to claim for different benefits individually, creating confusion and paperwork for claimants. Universal Credit’s single application is a positive development for homeless people since it makes things simpler and easier for claimants. However, Universal Credit claims will be ‘digital by default’ meaning that applications and claims are to be managed online. As with the current system, homeless people are likely to need support to make a claim due to lack of internet access, lack of IT skills, or literacy problems. Places that provide internet access to homeless people (e.g. day centres, libraries) also might be unable to provide a confidential environment for people to manage their claims.
Claimants will also only be able to backdate their claims for one month. Homeless people often have very chaotic lives and may struggle to claim when needed for a variety of reasons. Even those with professional support, such as those who live in supported housing, often fail to make a claim promptly due to lack of engagement with support staff. Backdating is often used in supported housing to recover arrears for these cases and if this option is limited to one month, this could put many homeless people’s accommodation at risk.
Making Work Pay?
The Government states that one of the chief purposes of welfare reform is to ‘make work pay’ so that people will always be better off in work than on benefits. However, the statistics indicate that there are many more factors at play than simply a lack of incentive to work: 77% of homeless people in one survey said that they wanted to work immediately while only 4% of hostel residents were in employment (source). Some of the barriers homeless people face when trying to enter work are social stigma, large time gaps on a CV, low confidence, lack of a permanent address or mobile number to be contacted by employers, or something as simple as not having adequate clothing for a job interview.
Homelessness organisations often work hard to help homeless people overcome these barriers (for example, putting on interview preparation workshops or providing suits to attend an interview) and they fear that if advisers lack this understanding, they could impose sanctions that further exclude and entrench homelessness. Universal Credit sanctions are also extreme: refusing three job offers within one year could mean a 100% reduction in standard allowance of UC for three years. This would no doubt lead to serious hardship and would not help the claimant get into work. It is more likely that a homeless person who has been sanctioned will become even more excluded and entrenched, thus increasing the barriers to employment.
The Claimant Commitment
Finally, all Universal Credit claimants will have to agree to a ‘claimant commitment’. This could help claimants better understand the mandatory conditions of their award. However many, including the JRF, suggest it would be more beneficial as an agreement between the DWP and the claimant. Instead of just the claimant committing to the DWP, the DWP should also commit to the claimant and set out what support they will offer the claimant in order to prepare for or return to work. A commitment to find work from a homeless person who has never been in work before would be futile unless the DWP also commits to offer them the support they will need to make this achievable.