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By Dan Santy Wednesday 30 January 2013 Updated: 30/01 15:59
FEARS have been voiced over changes to housing benefits which could leave council tenants behind on their rents and even at risk of homelessness.
A task group set up in Rugby to assess the impact Government welfare reforms will have on the borough council's housing income found some tenants will struggle to cope when the staged introduction of the system begins in October.
The Government's welfare reforms will see current benefits merged into Universal Credit, a one monthly payment designed to act as a 'surrogate wage' in a bid to simplify the system, cut back on fraud, and encourage the unemployed to find work, according to the Department for Work and Pensions.
How housing benefits will change is that payments will go to tenants rather than straight to their landlords - these being councils or housing associations.
Where tenants are vulnerable, rents may still be paid directly to the landlord, and a trigger will also be put in place to try and prevent persistent failure by people to pay.
While designed to combat worklessness, concerns have been raised - in Rugby and nationally - it could see people fall behind on their rents.
Rugby's housing income protection task group, headed up by Coun Jerry Roodhouse, said in a report: "Tenants who are faced with restricted or reduced income as a result of the welfare reforms are likely to struggle to meet their rent and council tax demands, and there is likely to be an increase in rent arrears and, potentially, homelessness as a result.
"People in receipt of benefits often do not have any savings, and so are unable to cope with gaps or delays in benefits payments. People turn to loan sharks if they run out of other options and there is concern communities could become targeted by high cost credit providers and loan sharks.
"Submissions to the task group also highlighted the wider social impact of increased poverty – for example the mental health issues arising from stress and anxiety about housing and financial pressures."
Concerns were also raised those out of work and on benefits would, in some cases, lack the budgeting skills to cope with monthly, instead of weekly, payments, while some do not even have access to basic banking facilities.
In 2011/12, Rugby Borough Council collected nearly 100 per cent of its housing income - almost £14 million - with 60 per cent of this received directly by way of housing benefit payments.
And with housing benefit payments to be scrapped, some national forecasts predict councils being left with a shortfall of around 60 per cent on the rents they are owed under the new system.
The report concluded: "The impact of the welfare reforms is a serious issue and tenants needed to be informed about the changes. Currently there is considerable unawareness."
Earlier this year, David Gooding, chair of Rugby Citizens Advice Bureau (CAB), told the Observer of his fears over the impact the welfare reforms could have.
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