Should Universal Credit Payments be Weekly?

Universal Credit

Universal Credit

Recently, we have heard from the Residential Landlords Association (RLA) that landlords are finding tenants on Universal Credit are increasingly going into rent arrears.

With the BBC reporting yesterday that weekly instalments of the benefit should be considered, rather than monthly, do you think this could help to solve the issue?

Since most people are paid their salary monthly, it has been established so that Universal Credit payments are distributed the same. The idea behind this is to create a similar budgeting environment for those out of work, to keep them in the same habits.

Long-term, this could be seen as a good idea for when those who later find work come off benefits, resulting in a smoother transition in this change of lifestyle.

According to data gathered by the BBC, 85% of all employee jobs across the UK had monthly or four weekly pay cycles in April 2017. However, not all occupations follow such a pattern. Lower-income sectors, such as retail and hospitality, tend to pay employees in shorter cycles, mostly weekly or fortnightly.

There is also conflicting data, from the Lloyds Banking Group, showing that of the seven million bank accounts it looked at, 58% of those belonging to new universal credit claimants had received weekly or fortnightly payments in their last job in 2016-17.

Overall, it could be considered that this difference in routine for renters receiving Universal Credit is contributing to the resulting rent arrears. A sudden change in how and when they receive their income can take time to adjust to, meaning that some will have to get better at budgeting.

Going from receiving funds weekly or fortnightly, to monthly, can be a challenge. With all the money a claimant is entitled to being transferred into their account in one go, once a month, they will have to organise expected payments in advance. This includes rent payments.

It is up to the tenant to make sure that rent is paid on time, but, understandably, some landlords fear them going into rent arrears. There are currently no financial implications for a tenant who is late paying rent, so when it comes to prioritising bills, it can often be put behind other payments.

This is changing, however, as there are now ways for landlords and tenants to benefit from systems that ensure punctual rent payments contribute to credit scores. This will work both ways, with rent arrears damaging a tenant’s credit score.

So, would it be beneficial for Universal Credit to be distributed weekly or even fortnightly? Perhaps giving individuals this choice could make a difference, as it should be taken into consideration that one person’s situation can vary to another’s.

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