By April 2020 12,000 Guinness customers will claim Universal Credit. Rent arrears are high compared to the legacy system and customers need more support with claims

This guest blog post was kindly written by Michelle Birley, Customer Support Manager at The Guinness Partnership.

The Guinness Partnership was founded in 1890 to improve people’s lives and create possibilities for them. Today, we provide 66,000 homes to 140,000 customers across England. As an organisation our purpose hasn’t changed but major changes in policy, including changes in benefits, inevitably have an effect on us and our customers.

It’s difficult to find fault with the original objectives of Universal Credit (UC) – making the benefits system fairer and less complex, reducing poverty, and making work pay. However, the introduction of UC has been a real challenge for both our customers and for us as an organisation.

So far almost 8,000 Guinness customers have moved onto UC, and we expect that to increase to 12,000 by April 2020. Our initial experience is that rent-arrears for those claiming UC are high compared with legacy benefits, and our customers need more support than ever with their claims.

In spite of the extensive support we provide, many of our customers claiming UC have found the new system challenging and are experiencing poverty and deprivation.

Our customers’ experience

In keeping with the original design objectives, there’s no doubt that some customers have appreciated UC’s simplicity and regular monthly payments. Others have struggled. And UC hasn’t been rolling out in isolation of other major changes which include the benefit cap and a four-year freeze on most working-age benefits and tax credits.

One customer with a positive experience increased her monthly income by £400 per month by moving onto UC. She was in full-time work and in receipt of partial housing benefit but did not qualify for tax credits under the legacy system. With our support, she recognised she would be better off on UC.

For others, however, UC has been a less positive experience. For example, one self-employed customer was left £400 a month worse off after moving onto UC. She cares for her son who has learning difficulties and suffers from seizures. Prior to moving onto UC she was earning £60 a week and in receipt of full housing benefit. Following a change in circumstances, she moved onto UC and the minimum income floor was applied; it was this that left her worse off than under legacy benefits.

Some customers have had positive experiences on Universal Credit whilst others have not. Guinness sees little evidence that sanctions are effective

Sanctions have been unhelpful for some of our customers and we see little evidence that they are effective. In one case, a customer had a zero-hours contract and worked up to 20 hours per week. He was expected to look for additional hours. His work coach contacted him at work to ask what he had done to look for a job. Because our customer was at work he couldn’t give a full update and his work coach judged that he should be sanctioned for three months.

The outcome was that our customer built up rent arrears and lost his job as he could not afford to travel to work. The decision was overturned by a tribunal but by this point, our customer’s mental health had deteriorated and he had lived in poverty for months.

And there remains a major reputational issue at the heart of the new system which has left some customers reluctant to claim UC. In one case, a customer was so worried about the impact of UC that she stayed in an abusive relationship to avoid it.

Impact on Guinness

Our experience so far is that it takes an average of 26 weeks for a UC rent account to stabilise, much longer than with housing benefit. When we apply for an Alternative Payment Arrangement to have the rent element of UC paid directly to us, it takes an average of nine weeks for the payment to reach us.

Average arrears for a customer claiming UC continue to be much higher than arrears across all of our tenancies, although we have reduced the gap significantly over the last year. It has taken considerable effort and resource to achieve this reduction. 

Supporting our customers

In 2018 40% of cases handled by Guinness’ dedicated support officers related to Universal Credit

Guinness has a team of 19 dedicated support officers who provide additional advice and support to customers who need it. Last year the team supported 7,995 customers with 40% of those cases relating to UC claims.

We provide intense support to customers claiming UC in the first three months of their claim. With around 750 customers moving onto UC per month, the resource requirement from Guinness is substantial.

On top of our support and advice, Guinness has a hardship fund for customers which we use to provide emergency food, gas and electricity during customers’ five-week waiting period.

We recently used the hardship fund to support one of our customers who was claiming UC and lost his job. This change left him facing a three-week period with just £3. He was not entitled to the short-term budgeting loan. With no food or money to heat his home, we were able to help him with emergency food and heating.

Five challenges and solutions

The government has made a number of recent changes to UC, including increasing work allowances for some groups from April 2019, and we are working to understand the impact of those improvements. However, if UC is to deliver on its original objectives, further changes will be needed.

From our experience of helping our customers claim UC, we have identified five potential improvements to the system:

  1. Consistency and consolidation. There are 637 JobCentres across the UK each with their own Partnership Manager. There are also 26 DWP service centres that we understand from our customers are providing inconsistent advice. A single point of contact for Job Centres would help national organisations like Guinness resolve issues. Consistency across the DWP service centres would help our customers.
  2. Faster processing of Alternative Payment Arrangements. This would prevent our customers from falling into rent arrears whilst waiting for the APA to start.
  3. Improved data sharing between the DWP and social landlords. Landlords need to know in advance which customers are moving onto UC in order to provide timely advice. Continued improvement to the Landlord Portal for two-way communications will be key.
  4. Reduce or end the five-week wait at the start of a claim. The wait causes our customers hardship and poverty in some cases. While the advance payment helps, it means people fall into debt before they have even received their first payment.
  5. Evaluate the effectiveness of sanctions. Sanctions have caused hardship for some of our customers. We support the recommendation from the Work and Pensions’ Committee that evaluation of the impact sanctions have on UC claimants’ financial and personal well-being should be carried out.

Overhauling the benefits system and introducing UC was always going to be a major policy challenge. The Government has listened and made changes, and it must continue with that approach to address outstanding issues and concerns. Only then will it work for our customers who most need the system to succeed.

Find out how Guinness uses Policy in Practice’s Benefit and Budgeting Calculator to prepare customers for Universal Credit in this case study. You can also listen to Michelle’s colleague, Marie Hardeman, Customer Accounts Manager at The Guinness Partnership, talking about how our software helps them create consistent, helpful conversations with customers nationwide, here.

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