Homelessness and Universal Credit

A new report reveals how the introduction of Universal Credit has contributed to homelessness in Scotland.

The report highlights how people can lose their homes due to problems with the five-week wait to receive the first payment, and sanctions which lead to payments being withdrawn if claimants don’t meet certain conditions.

Scottish Government analysis in the report, titled Homelessness and Universal Credit, shows:

• Universal Credit has resulted in some tenants being forced into rent arrears and evictions, and has contributed to relationship and mental health problems

• the Universal Credit caseload has nearly doubled since the beginning of 2020, meaning more people than ever are at risk of being negatively affected

Social Security Secretary Shirley-Anne Somerville said:

“While a variety of circumstances can contribute to homelessness, this report paints a stark picture of how people can be plunged into poverty by a poorly executed social security system.

“The UK welfare system must be made fit for purpose with damaging reforms reversed. It is disappointing the UK Government plans to cut the £20-per-week uplift in Universal Credit payments in six months’ time and that they have refused to expand it to legacy benefits.

“Despite predictions of an increase in unemployment of half a million across the UK, unemployment support is being cut to its lowest level since 1990, and the decision to freeze local housing allowance rates from April 2021 will push more people into poverty and put them at risk of homelessness.”

The five-week wait for Universal Credit can push many households into financial difficulties, particularly when a claim is likely to have followed job loss or another change of circumstance. Research published by the Joseph Rowntree Foundation in 2020 found a strong link between Universal Credit and destitution, with the five-week wait cited as the most problematic aspect. Analysis conducted by the charity Crisis found that homeless people are twice as likely to have had sanctions, where benefits are reduced or stopped when a claimant has broken conditions such as missing appointments, or not looking for work.

Background

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Universal Credit has been rolled out gradually from 2013 to replace six working-age ‘legacy benefits’: income support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, Housing Benefit, Child Tax Credit and Working Tax Credit. Homelessness rates in Scotland have increased since 2015, coinciding with the rollout of Universal Credit since 2013. Mental health in particular has grown as a reason for homelessness since 2013, after declining for five years.

Discretionary Housing Payment (DHP) spend is estimated at around £82 million in 2021/22 - including £71 million to mitigate in full the bedroom tax helping over 70,000 households in Scotland to sustain their tenancies. An additional £10.9 million mitigates against other UK Government welfare cuts including the benefit cap and changes to the Local Housing Allowance rates. The DHP fund is an important investment from the Scottish Government, used by councils to safeguard tenancies and prevent homelessness, providing a lifeline for anyone struggling to meet housing costs.

The Office for Budget Responsibility’s latest forecasts show that unemployment across the UK could increase by a further 500,000 people between now and the peak towards the end of the year. Despite that, the UK Government has chosen to cut the main rate of unemployment support by over £1,000 to its lowest level since 1990.

The Scottish Government has announced an additional £120 million for a Mental Health Recovery and Renewal Fund, which is the single largest investment in mental health in the history of devolution. This will prioritise ongoing work to improve specialist services, address long waiting times, and clear waiting list backlogs. The total £262.1 million budget for mental health and autism in the coming financial year takes total anticipated spend on mental health in 2021/22 to in excess of £1.2 billion. We are looking at ways to support people presenting in distress with more complex psychosocial needs – including those experiencing homelessness. As stated in our Programme for Government,  our aim will be to ensure they can benefit from a local response across the health, justice and social care systems, and that people in distress with complex needs will be quickly identified and supported.