Soaring council payouts to prevent families on Universal Credit from becoming homeless have led to Croydon asking the Government for urgent extra funding.
Last year Croydon Council gave a total of £2m in emergency rent money to families on benefits who would otherwise have risked losing their homes – by next March that figure is set to be £3.1m.
Croydon Council uses the discretionary housing payments (DHP) fund to help by reducing arrears, paying deposits for those moving into the private sector, and topping up residents’ rent while the council’s Gateway service provides employment training and budgeting support.
Now the council has written to ask the Secretary of State in charge of Universal Credit for extra money to manage these “unsustainable” costs. In her letter to David Gauke MP, Secretary of State for Work and Pensions, Croydon Council’s deputy leader Councillor Alison Butler highlighted her concerns about the impact of Universal Credit and related current pressures on the council’s DHP contributions, including:
• Clearing each Croydon resident’s arrears costs £800 more this year because Universal Credit has caused higher rent debts through its six-week payment delay
• Croydon has helped 494 more customers than last year – an 84% rise. Of these 494, 370 are on Universal Credit
• From April to August this year the council made 958 extra DHP awards, up from 529 for the same period last year
• Croydon has 1,782 residents on Universal Credit living in temporary accommodation with unpaid rent totalling over £2.5m.
In 2016-17, DWP gave £1.5m towards helping struggling Croydon families and the council topped that up with £500,000 from its own reserves. For 2017/2018, the DWP contribution rose by £200,000 to £1.7m, while the council’s rose by £900,000 to £1.4m.
As little as £1,500 per household over three months can help a household avoid homelessness. In contrast, it costs councils an average of £6,750 to accommodate a homeless household.
Since being set up in 2015, the council’s Gateway service has helped more than 1,300 families avoid homelessness through dedicated advisers providing financial support with rent arrears, budgeting advice and job training. This has also led to a 15% reduction in the number of people applying as homeless.
“For the last three years we have had to contribute additional money to the DHP fund and this year we have an unprecedented pressure as a direct result of the roll out of Universal Credit. Therefore we are requesting a further DHP funding release from Government to help us to minimise the impact on our residents.
“Without this extra DHP support, Croydon Council’s costs will continue to increase at an unsustainable rate. This would both affect the vital support we give Croydon residents at risk of homelessness and further highlight the flaws requiring urgent fixing in the Universal Credit policy.”
Councillor Alison Butler, deputy leader and cabinet member for homes, regeneration and planning