Applications for ‘crisis loans’ to help struggling families in South Tyneside have jumped by 200% since the introduction of the new Universal Credit benefits system.
Councillors have been told that, since the controversial benefit started its ‘full service’ rollout in May, rent arrears for council tenants claiming it have also rocketed to more than £800,000.
A meeting also heard that only 10 per cent of claiments have taken advantage of a council support scheme and only two per cent have signed up for help with budgeting
Anna Milner, the council’s operations manager for housing strategy told the People Select Committee. “There’s been a significant increase in crisis loans.
“People are coming to us for crisis loans because there’s been no payment or a sanction, but the crisis loans pot is only so big.
“We want to support residents as much as we can, but we haven’t got funds to support everyone.”
Families in financial trouble can apply for ‘crisis expenses’ to cover food or utilities bills for up to seven days.
Those with exceptional needs can also be eligible to get help with the cost of home furnishings and even travel expenses.
Figures provided for the committee showed the extent to which some in South Tyneside are struggling to adapt to the new welfare regime - where money is now paid direct to claiments.
Households in council properties claiming UC owe £834,490 in unpaid rent – accounting for more than a third of total arrears currently owed to the council.
Of this, more than £650,000 was already owed when they switched, making UC responsible for about £185,000 of the backlog.
Ms Milner added: “There’s 286 of our tenants with over £1,000 in rent arrears and that’s very worrying.
“But we’re trying to be as proactive as we can and offer as much support as we can.”
The controversial benefit, which is supposed to replicate the ‘world of work’, has been dogged by problems since it was unveiled in 2010.
The council provides an support service to help claimants manage their funds, as well as a budgeting support service but, from April, responsibility for them is due to be handed over to the Citizens Advice Bureau.
Coun John McCabe, the panel’s chairman, said: “I fail to see why someone should be penalised for something which is not their fault.
“When you get into the penalty trap you get difficult decisions – do I put the heating on or do I have some food? It’s an absolute disgrace.
“I think it’s a complement to the council’s workforce that we have prepared ourselves as best we can, but it is with sadness that fellow councillors are asking if there’s more that we can do.”
What is Universal Credit:
One of the government’s flagship welfare reform policies, Universal Credit is supposed to combine a range of benefits, such as jobseekers’ allowance, income support and child tax credit.
The new scheme is intended to more closely replicate the ‘world of work’ for claimants, with cash transferred directly into claimants’ accounts every month.
This replaces previous systems, which paid out weekly or fortnightly and, in the case of Housing Benefit, may have been paid directly to a landlord.
James Harrison , Local Democracy Reporting Service