£360m Covid rent debt crisis will only get worse with Universal Credit cut, charity warns

Calls for government to introduce ‘dedicated financial support’ to help renters pay off debts

Imminent cuts to Universal Credit are set to worsen a £360m rental debt crisis across the UK that has emerged during the Covid-19 pandemic, a charity has warned.

Calculations by StepChange Debt Charity, which offers free debt advice, showed that about half a million private tenants are now trying to stay on top of £360m in rent arrears across the country, with private renters in arrears of just under £800 on average.

The charity warned on Friday that the government’s planned £20-per-week cut to Universal Credit would make the crisis worse by escalating entrenched difficulties.

“Covid support schemes, while a lifeline for many, haven't been able to help renters address their arrears and with cuts to Universal Credit and the end of furlough imminent, there is a real danger of thousands losing their homes,” Phil Andrew, chief executive of StepChange, said.

Mr Andrew added that his charity was calling for “dedicated financial support” to help renters safely bring down their rent debts and keep their homes.

“By establishing a dedicated rent debt fund, and by scrapping the planned Universal Credit cut, the government can avert the threat of a rise in evictions, problem debt and homelessness that will compound financial and social problems and hamper economic recovery,” he said.

StepChange's research, which included responses from more than 8,600 people, also suggested that around one in 10 renters who were in work expected to be evicted from their homes as a result of their debts within the next 12 months.

The charity highlighted the case of one woman who works for a travel company and has found herself in £2,000 of rent arrears during the pandemic.

“My husband is suffering with long Covid and although he is at work, the stress of not hitting his targets is really affecting his mental health,” she said.

“He is just about earning enough to pay the rent, but not enough to be able to contribute towards the arrears.”

Earlier this month, the Financial Times reported that internal government modelling showed that the Universal Credit cut would lead to soaring homelessness and food bank use, with a Whitehall official telling the newspaper that the impact could be “catastrophic”.

However, a spokesperson for the Department for Work and Pensions insisted last week that no formal impact assessment had been carried out for the decision.

On Monday, work and pensions secretary Thérèse Coffey sparked anger by suggesting that Universal Credit claimants should simply work more hours to make up the £20-a-week cut.

“We will be seeing what we can do to help people perhaps secure those extra hours, but ideally also to make sure they’re also in a place to get better paid jobs as well,” Ms Coffey told BBC Breakfast.

This suggestion was later challenged as Universal Credit payments are designed in order to adjust automatically to reflect someone’s level of earnings, meaning someone earning an extra £20-a-week would also lose part of their benefit.

Additional reporting by PA