Delays in universal credit benefit payments for housing costs are leaving claimants unable to pay rent and pushing some deep into debt, a committee of MPs has heard.

Universal credit is a new monthly benefit being rolled out to replace six means-tested benefits – income support, income-based jobseeker's allowance, income-related employment support allowance, housing benefit, child tax credit and working tax credit. See our Universal Credit guide for full info.

The Work and Pensions Committee took evidence on Wednesday from the leaders of councils which have been using the new service, and those about to later this autumn.

Martin Lewis
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Rent arrears 'drop off a cliff'

MPs were told benefit claimants are more likely to have debt problems when claiming universal credit rather than housing benefit, because new claimants often have to wait six weeks for their first payment – and 10-12 week waits are not uncommon.

Fiona Colley, a councillor and the cabinet member for finance at Southwark Council, said initial delays in universal credit payments were resulting in many falling behind on their rent.

She said: "What we are particularly concerned about is the speed at which rent arrears are increasing after people claim universal credit. We see them drop off a cliff once the claim goes in and remain in free-fall for about three months thereafter until people start... [receiving the benefit]."

Southwark Council now has about 4,000 tenants using the full universal credit service and Colley said the council had not seen any improvement in the service in the two years it has been operating. Rent arrears in Southwark have gone up by £1.3 million since universal credit was introduced.

Previously housing benefit was normally paid direct to landlords – but with universal credit, tenants receive payments and it's their responsibility to pay their landlords.

MPs were warned of problems with the exchange of information between the Department for Work and Pensions and landlords which mean landlords think tenants have received the payments and then not paid them, when in fact delays mean the tenants have not yet been paid the benefit. This can lead to landlords wrongly trying to evict tenants.

Universal credit delays causing rent arrears to 'drop off a cliff', MPs warned
MPs have been warned that delays to universal credit payments are increasing debt problems for claimants

I'm still waiting for my universal credit payment – what can I do?

Universal credit is gradually being rolled out across the country. If you're eligible for help but can't get universal credit in your area yet, it may be worth claiming the old benefits now before universal credit comes to your area – see more in Who can get universal credit?

When you do sign up, universal credit payment is in arrears, so it'll take at least six weeks or so for your first payment to come through after you've made a claim – and in practice it appears it's often taking longer.

If you won't have enough money to live on while you wait for your first payment, call the universal credit helpline on 0345 600 0723 to ask for an advance payment. If you're making a new claim you can ask for up to 50% of your estimated monthly entitlement.

It's interest-free but you'll repay it through your regular universal credit payments – they'll be lower until you pay it back.

If you're struggling with debt, see our Debt Problems guide for what to do and where to get help.

Committee recommends improvements

Kayley Hignell, head of policy at Citizens Advice, told MPs the universal credit system is flawed because it takes too long to get money to tenants who then fall into debt – and the design of the system means it's subsequently harder to get out of debt because payments under universal credit are paid every four weeks. Under the old system, some benefits were paid weekly.

Those who gave evidence to the committee suggested the system could be overhauled with new claimants receiving their first payment within two weeks, more frequent and flexible payments, a quicker and simpler way to escalate problems and a more gradual roll-out.

Frank Field, the Labour MP who chairs the committee, warned the universal credit problems could result in a "human and political catastrophe".

He said: "We are hearing evidence of people being plunged into all sorts of vulnerability as a result of being migrated onto universal credit, with its in-built six-week delay in receiving a first payment and much longer waits for many people.

"People already on low incomes simply cannot cope without any income for such a long period of time."

What does the Government say?

A spokesperson for the Department for Work and Pensions said: "We are committed to helping people improve their lives and raise their incomes. Universal credit does that by providing additional, tailored support, including more help for those in work, and under universal credit, people are moving into work faster and staying in work longer than under the previous system.

"We are rolling out universal credit in a gradual, safe and secure way and the majority of people are confident about managing their money. However, advance payments are available for those who need extra help."

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