Council rent arrears in Luton rocketed to over £1.5m last year

Council rent arrears in Luton rocketed to a high of £1,528,492 in September 2020, partly because of the pandemic.

The figure represented an increase of over £400,000 from £1,117,299 arrears recorded at the end of the previous financial year.

It was also because some tenants moved to Universal Credit (UC), according to a report to the borough council's scrutiny health and social care review group.

Households faced a culture change having to pay the council after receiving the housing element with their other benefits, said the report.

"This was also at a time when many residents were being financially affected by Covid.

"The situation had improved by the end of 2020/21 with current tenant rent arrears falling to £1,098,187.

"This was £19,112 lower than at the end of the previous financial year, and a drop of £430,305 from the high in September 2020.

"Some of the improvement was because payments were made to the council at the same time as the UC payment was made to the tenant."

The managed migration of cases is still estimated to start in the summer of 2023.

"With the impact of the Covid-19 pandemic, the natural migration of claimants from housing benefit has been accelerating," explained the report.

"All legacy working age housing benefit claims are expected to have migrated to UC by December 2023, with the exception of pensioners and people in temporary or supported accommodation.

"If all these claimants were to switch to UC today about two thirds or 5,168 households would be better off, while just under a third or 2,432 households would be worse off."

The council's head of revenues and benefits Nigel Robinson told the meeting: "The impact on rent arrears has been quite volatile.

"But the changes made to alternative payment arrangements and the timing of them being paid has improved the situation going forward," he said.

The latest figures from the Department for Work and Pensions (DWP) show the rate of UC take up since Covid-19 started has been continually rising.

"Council tax collection rates have been negatively impacted significantly by the Covid-19 pandemic, although it's impossible to split out the impact of UC alone," added the report.

"The council tax collection 2020/21 target was 96.5 per cent and this target was reduced to take into account the UC rollout.

"The previous year’s target was 97 per cent and 90.94 per cent was collected, or 5.56 per cent behind the revised target.

"The council tax collection 2021/22 target was 11.51 per cent at the end of the first month of the current financial year and 11.08 per cent has been collected or 0.43 per cent behind target.

"At the end of May 2021, just under £3.8m of the income from housing benefit has been lost and this has transferred over to UC.

"This has meant that the housing element of the UC payment is now paid direct to the tenants and they're expected to pay their rent.

"This is a change for many of our tenants and has resulted in an increase in our rent arrears," warned the report.

"A number of tenants are going on to alternative payment arrangements, which are put in place where tenants have high arrears and where they are vulnerable.

"The critical indicators that have currently been gathered at the end of May 2021 show that broadly Luton is coping with UC as expected, with most indicators being near or better than the national average."