Outcomes of the Impact of Universal Credit on Regions of the UK

Welfare reform has changed significantly due to political outcomes resulting in changing governments. The current government’s vison and objectives are to determine how best to provide affordable housing for everyone. 

Welfare Reform Act 2012

The Welfare Reform Act 2012 is an act of Parliament in the United Kingdom, makes changes to rules concerning a number of benefits offered within the British social security system. Among the provisions of the Act are changes to housing benefit, which came into force on 1st April 2013. These changes include an “under-occupancy penalty” which reduces the amount of benefit paid to claimants if deemed to have a spare bedroom, also known as the “Bedroom Tax”. The policy encourages tenants living in houses too big for their needs, to move to smaller properties, freeing places for large families to be suitably housed.

The Welfare Reform Act also introduced a new welfare benefit named Universal Credit. The coalition government, 2010 inherited a benefit sub-system which accounted for £67 billion in expenses across 13 million claims. They looked at the benefit system and announced Universal Credit (UC) in 2010. However, a number of problems in the implementation of the programme meant minimal take-up and late payments to recipients; resulting in Universal Credit being “reset” in February 2013. The national rollout originally planned for 2013 was delayed till 2017. 

Universal Credit 

It is a new benefit which replaced six of the main means-tested benefits and tax credits i.e. income-based Jobseekers Allowance (JSA), income-related Employment and Support Allowance, Income Support, Housing Benefit, Council Tax benefit and Child Tax Credits and Works tax credits. The aim is to operate a single payment to claimants, available to working people on a low income and/or unemployed. Setting out to improve the incentive to work by making it easier for people who have temporary, low paid work to move in and out of employment; without losing benefits. Simplifying the benefits system by bringing together several benefits into one single payment. This is being rolled out in October 2013 with a few pilot schemes, the rollout began with Manchester in 2013 and then expanded to 6 job centres in North-West England for just single claimants and couples in receipt of Jobseekers, with National roll-out from February 2015 The coalition government is planning to have the roll out completed by March 2022.

Impact of Universal Credit in the United Kingdom

Since Universal Credit was rolled out across Britain in October 2013, it has been reported that Universal Credit is causing debt and hardship for families within social housing. In 2018 a survey carried out by 118 housing associations across Britain, which revealed, Universal Credit tenants are in £24m of rent arrears resulting in The National Housing Federation, The Scottish Federation of Housing Associations and the North Irish Federation of Housing Associations joining together to warn the government that the universal credit system is “flawed” and causing debt, suffering and hardship for the families they house.

While tenants may have existing arrears before moving on to Universal Credit, the survey of English housing associations found that tenants on Universal Credit are more than twice as likely to be in debt compared to all other tenants. Nearly three quarters (73%) of Universal Credit tenants are in debt, compared to less than a third (29%) of all other tenants. This is also the case in Scotland, where two thirds (65%) of Universal Credit tenants are in arrears, compared to less than a third (32%) for all other tenants.

At the end of February 2019, over one million people across the UK claim the new benefit, a figure that will eventually rise to eight million. On average, Universal credit households were £662.56 in arrears compared to households on housing benefit £262.50. 

Since the roll out of Universal Credit, claimants are ‘six times more likely’ to fall into rent arrears despite government reforms. In 2018, the government introduced a series of measures to address concerns that universal credit was pushing tenants into arrears. These included more generous advance loans for new claimants and an additional two weeks of housing benefit while they wait for universal credit payments to start, these benefits came into effect on 8th May 2018. But these measures appear to have little effect with more that half universal credit claimants being at least one month behind on their rent and a third of claimants at least two months behind. Evidence shows claimants who are asking for advances are spending this money on basic essentials like toilet roll, food etc instead of paying their rent and other bills like council tax, electric, etc. 

Impact of Universal Credit in Scotland/North Ayrshire

The Scottish Government introduced ‘Scottish UC Choices’ in October 2017 this meant people on Universal Credit in Scotland can opt for Universal Credit Scottish Choices, which means they can choose to be paid twice monthly and for their rent to be paid direct to landlords, making it easier for people to manage their money. However, the Scottish Government does not have the power to fix the damage being inflicted by a five-week delay in receiving payments. The SNP have said they will continue to challenge the UK Government to stop ignoring the overwhelming evidence, Universal Credit is causing unnecessary hardship and failing thousands of families across the country.

In February 2019, Scotland had 147,611 households on universal credit, North Ayrshire having just under 8,000 households. The introduction of Welfare Reform resulted in North Ayrshire having the fourth largest income loss, off all Scotland’s 32 local authorities. As Welfare Reform continues to roll out, it will continue to have a disproportionate impact In North Ayrshire – given the higher than average number of sickness and unemployment benefit claimants in the area. North Ayrshire Council established a welfare reform, working group, to try and combat the impact universal credit may have. North Ayrshire Council reported in July 2018, their rent arrears had increased by 26 per cent since the roll out of Universal Credit increasing their arrears to £1,101,768.41 from £875,475.07.

As well as tenants incurring high rent arrears, North Ayrshire Council have also reported, welfare reform is now emerging as a driver for homelessness. Many households have reduced income or lack the skills to navigate the benefit system, or manage a budget. As the impact of Welfare Reform becomes more apparent, demand for homeless services are likely to significantly increase. Local organisations are also reporting that since the roll out in North Ayrshire there has been an increase of people seeking foodbank vouchers and crisis grant and/or loans.

Impact of Universal Credit on ANCHO Ltd

ANCHO have 672 tenants. At the end of March 2019, 162 tenants were in receipt of universal credit. Since the roll out in North Ayrshire on 22 November 2017, ANCHO have seen rent arrears increase 2.5% from March 2018 (£75K) to March 2019 (£106K), an increase of about £31k. This has had a big impact on ANCHO tenants as well as the organisation.

Tenants who transfer over to universal credit, have a minimum five week delay in receiving the first payment; resulting in them falling behind in their rent payments and unable to make payment to other bills like utility and increasingly relying on welfare support and foodbanks.

Many of ANCHO tenant’s also require help and assistant with completing the new universal credit claim form due to it being an online based system and they are not computer literate or do not have access to the internet.

ANCHO have recently restructured their staff, to create another housing officer post to cope with the added pressures of universal credit and importance of recovering rent arrears as high arrears will impact on future budgets. ANCHO also went into a working partnership with North Ayrshire Council and other local housing associations, where a monthly meeting is held and discussions are raised with regards to universal credit. Another working partnership called BONA (Better Off North Ayrshire) created a service for all North Ayrshire residents of working age support, to endeavour to improve their financial circumstances. i.e benefits advice, budgeting advice, reduce energy bills, access to affordable homes, managing debt and digital support.


Taking everything into account the arrears for ANCHO and most organisations have increased significantly but note that this is due to the sudden volume of tenants claiming universal credit and the impact of the 5 week delay.

However, I feel that once the intake of claimants signing up to universal credit slows down and the initiatives the Scottish Government are implementing, these arrears will start reducing. Housing officers maintain regular contact with their caseloads and offer assistance to any tenant requiring help applying for Discretionary Housing Payments and digital support. 

07 July 2022
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