31 July 2018
68% of households in receipt of Universal Credit now in rent arrears
Greens have urged the Labour Council to commit to making debt collection fairer for those struggling on low incomes. 
Concerns about the impact of debt on vulnerable households have risen since the introduction of Universal Credit, a new welfare benefit change that has left many in the city struggling with debts. Council reports show that 68% of the households now in receipt of Universal Credit are in rent arrears, and that Universal Credit is ‘a key causal factor in homelessness in the city.’ 
Under Universal Credit, individuals falling into arrears could see their benefit reduced by up to 40% in order to pay off debts or bills such as Council Tax or rent, a change that Citizens Advice say has contributed to destitution amongst local claimants. Prior to the roll-out of Universal Credit, the amount that someone could see deducted from their benefit payment was capped at 5%. 
Amid fears that the further roll-out of Universal Credit could lead to greater numbers of evictions as residents struggle to manage their debts, Convenor of the Green Group, Councillor Phélim Mac Cafferty pushed the Council to consider signing up to a new ‘Council Tax Protocol’ developed by national organisation Citizens Advice. The protocol outlines 27 measures Councils can adopt to minimise the impact of debt collection, including reducing bailiff usage and developing clear policy on how to support residents in vulnerable circumstances. 
In response to the request from Councillor Mac Cafferty, Labour Council Finance Lead Councillor Les Hamilton confirmed that the Council would consider becoming a full signatory of the Council Tax Protocol.
Councillor Phélim Mac Cafferty commented:
“Relentless Conservative Government austerity is seeing our residents facing unprecedented levels of debt as they deal with cuts to welfare benefits, with many on low incomes really struggling. Greens warned two years ago that that the roll-out of Universal Credit would be a disaster leaving many in spiralling debt and we have sadly been right. The latest report to the Council on Universal Credit shows it is already a key factor in the rise in homelessness and food bank usage in the city. In the face of this it is clear that the Council has a responsibility to support those in difficulty.
“I have been shocked to learn that under the changes, people may see their benefit reduced by as much as 40% in order to pay off council tax bills arrears – a frightening outcome for those already living in poverty. I find it deeply concerning to think that letters about Council Tax debt collection could add to this distress, and lead to bailiffs, or worse. I welcome news that following my request, the Labour Council has indicated they will look in to adopting the Council Tax Protocol which has been written by Citizens Advice and the Local Government Association. The protocol is important because it sets out a number of ways our council could collect debt fairly from some of our most marginalised residents.
“Greens are also repeating our call for changes to the Council Tax Reduction scheme, so that those already in poverty have the option of a Council tax discount. The fallout from this cruel benefit change shows no sign of abating so the Labour Council needs to show it is prepared to stand up for those most severely affected and improve how it helps and approaches people in debt.”
 Question from Councillor Phélim Mac Cafferty –Full Council, 19th July, 2018
In areas where Universal Credit (UC) has been rolled out, demand for food banks has increased by 52%; while of the 498 Households on Universal Credit in the city 68% are in rent arrears.
Universal Credit (UC) is now live in Brighton and Hove. A person on UC can also claim Council tax Reduction separately, (CTR) and CTR entitlement is based on their UC award. However the nature of some of the language used in council tax collection letters can leave some of our residents afraid of engagement with the Council.
Council tax arrears are now the most common debt issue Citizens Advice help people with. Citizens Advice is calling on councils to commit to fair and effective debt collection around Council Tax and has set up a council tax protocol with the Local Government Association.
The protocol is already signed by 56 councils around the country and asks that Councils implement a range of proposals, including that they:
– do not use enforcement agents where a resident receives council tax support;
– publish their policy on residents in vulnerable circumstances;
Would the administration please consider signing up to the protocol also?
Reply from Councillor Hamilton – Deputy Chair (Finance) of the Policy, Resources & Growth Committee:
We had previously considered signing the protocol as our Council Tax collection principles and processes closely aligned to the protocol’s standard. However we held back pending the introduction of Universal Credit and a softening of some of the definitions around vulnerability which we could inhibit our approach to providing a full welfare support service. The recently updated protocol appears to go a considerable way towards addressing these concerns. It is being considered by the Corporate Debt Board, an officer group that covers all areas of debt collection in the Council, as part of the work to updates the council’s debt policies. The protocol actually states that councils should ‘consider matters carefully and determine whether to pass to Enforcement Agents, based on individual circumstances of case’. This is in keeping with the current approach of the council tax service where Enforcement Action is very much a last resort, but ultimately it does on occasion take place.
 Neighbourhoods, Inclusion, Communities & Equalities Committee, ‘Universal Credit Update,’ 2ND July 2018
“If your Universal Credit is reduced to pay off your debts.” Citizens Advice, https://www.citizensadvice.org.uk/benefits/universal-credit/problems-with-your-payment/if-your-payment-is-stopped-or-reduced/
“Deductions can only be made for:
· rent arrears and other housing costs like service charges – the deduction can be between 10% and 20% for rent arrears
· gas, electric or water arrears
· council tax bills arrears
· child support maintenance
· some loans
· some fines
Your Universal Credit will be reduced by 5% of your basic ‘standard allowance’ for most third party deductions – more money can be taken for some debts. For example, for rent arrears.
You’ll never get more than 3 third party deductions at a time and in most cases no more than 40% of your standard allowance can be taken.”
See also: https://www.huffingtonpost.co.uk/entry/thousands-of-universal-credit-claimants-suffer-40-cuts-to-pay-debts_uk_5acb133ee4b09d0a119541ae
 Citizens Advice Council Tax Protocol: https://www.citizensadvice.org.uk/Global/CitizensAdvice/campaigns/Council%20Tax/Citizens%20Advice%20Council%20Tax%20Protocol%202017.pdf
 Citizens Advice: ‘Councils need to rethink how they collect council tax.’ https://wearecitizensadvice.org.uk/councils-need-to-rethink-how-they-collect-council-tax-26e785b94aa1
32% of all people helped by the CAB with mental health problems also have Council tax issues.