Homelessness and Universal Credit: research report

6. Conclusion

The evidence is clear that certain features of UC can lead to homelessness by contributing to financial, relationship, and mental health problems. The five-week wait and increased sanctions have been shown to be particularly detrimental, with policies such as the Benefit Cap, the Bedroom Tax, and recent decisions around Local Housing Allowance rates also implicated. Other aspects of Universal Credit may also contribute to homelessness. For example, a range of organisations have raised concerns that the joint payment made to couples under UC may cause relationship issues and enable domestic abuse – both of which, in turn, can lead to homelessness.^[32] It is also possible that the design of UC contributes to homelessness indirectly by deterring or excluding individuals who require support.

Quantifying these impacts is a challenge: the causes of homelessness are complex, and data which could link homelessness and UC are limited. In some cases the issues are also present in legacy benefits, and in some cases the impacts are mitigated through policies such as Discretionary Housing Payments. Nevertheless, there are indications in the data that UC is part of the mix of factors which increase the risk of homelessness, particularly for certain groups. In addition, the financial toll is clearly widespread and profound. For example, our estimate is that the five-week wait will have reduced UC expenditure in Scotland by over £200 million in 2020/21.

Beyond specific features of UC and the welfare system, the overall generosity of benefits is relevant insofar as homelessness is associated with poverty and deprivation.^[33] While the UK Government increased the generosity of UC and tax credits in March 2020, in April 2021 it decided to retain the uplift for only six additional months, despite widespread calls for it to be made permanent. The UK welfare system remains ungenerous by international standards,^[34] not least due to the legacy of the UK Government's austerity agenda which coincided with the introduction of Universal Credit.^[35]

Ending and preventing homelessness is a key objective of the Scottish Government, as set out in the updated Ending Homelessness Together Action Plan.^[36] Local authorities also play a significant role in preventing homelessness, including through housing options, rapid rehousing transition plans, and delivering policies such as DHPs and the Scottish Welfare Fund. As part of its emergency response to the Covid-19 pandemic, Scottish Government has legislated to minimise the risk of evictions into homelessness. This has included temporarily extending notice to leave periods ensuring that tenants have time to access available support; introducing new rent arrear pre-action requirements for private rented sector landlords; increasing funding to local authorities for Crisis Grants and Discretionary Housing Payments; investing more in money advice services; and introducing a £10 million hardship loan fund for tenants to help manage Covid-related arrears.

Nevertheless, the impacts of UC on homelessness have become increasingly important during the Covid-19 pandemic. The UC caseload has nearly doubled since the beginning of 2020, meaning more people than ever are at risk of being affected. Meanwhile there is evidence that arrears have mounted,^[37] as have mental health and relationship problems.^[38] Amid broader debates on the future of UC, it is therefore crucial that the impacts on homelessness are recognised and addressed.