Viewpoint

The cost of living crisis has befallen us at the worst possible moment. Almost 30 torrid months of a global pandemic – and the economic and social restraints required to tackle it – left households struggling to cope financially long before the price of energy, food, oil and other essential goods began to soar. Now many are sinking into destitution.

Among the poorest communities, hard data tracks this process. A survey of housing associations recently found the number of their social tenants claiming universal credit to help with rents increased by 83 per cent between June 2019 and September 2020: more than a quarter (28 per cent) of tenancies are supported by what used to be called housing benefit. Of those tenants, 60 per cent have now fallen behind with payments. The average amount owed by a household on benefits in rent arrears is £609 – that’s more than six weeks rent for the average home.

£400 in the pockets of the well-insulated middle class will shore up the Conservative vote

Why am I mentioning this now? Because the plight of social tenants on universal credit is a fair indicator of the truth of the old saying that the devil’s in the detail. Some of that devilishness will soon be unearthed in the detail of Rishi Sunak’s cost of living support payments.

In late May, the chancellor responded to a crescendo of voices calling for urgent help by announcing a one-off payment for all households of £400, to offset the sharp rise in energy costs. That payment will be credited by the government to the energy accounts of anyone who pays by direct debit or cash, and applied to meters or distributed as vouchers for anyone using prepayment meters. But those struggling hardest with rising costs will be granted an extra £250, a bonus available only to those claiming means-tested benefits. That payment will be distributed directly into recipients’ bank accounts along with their benefits.

What could possibly go wrong? Well, the government ought to know. It should remember the chequered history of its own flagship benefits overhaul. Before the introduction of universal credit, housing benefit used to be paid directly to the landlord without the tenant having to play any role in making sure they paid their rent. A core purpose of the reform was to make benefit payments feel more like taking home a salary, easing the transition into work, and encouraging personal financial responsibility. A laudable aim and one that has on balance been successful. But it hasn’t come without its stumbling blocks – and the primary one was, and is, unpaid rent.

When universal credit was first tested in pilot areas, default on rent was so high that a short circuit had to be built into the system. Now a landlord can demand to be paid directly by the government if a tenant on universal credit builds up eight weeks of rental arrears; in reality, landlords are encouraged not to wait eight weeks at all but instead ask councils to consider granting the right to direct payment as soon as a default occurs.

At that time, the unthinking discussion in Westminster swung into the territory of “feckless benefit claimants”, throwing up the old Victorian values of deserving and undeserving poor. We’re about to see the same thing play out all over again, because Sunak and his party have apparently learned nothing from universal credit about the visceral realities of living in poverty.

For those on the breadline, it didn’t matter if the money entering their bank account was supposed to be spent on rent. As soon as it landed it was swallowed up by debtors and overdrafts, energy costs and food shopping. Now we’re in a cost of living crisis and that new money arriving into accounts is specifically intended to heat the house, but it won’t; it will be spent on debt repayments (often to extremely high interest outfits or illegal loan sharks) and crucially on feeding the family, particularly children who may have been facing restricted calories at home. Meanwhile, energy bills continue to rise and still go unpaid. Not due to fecklessness, but due to the pragmatism of poverty.

With rent arrears, the biggest risk of default was the triggering of a long legal journey towards eviction, usually skirted by an intervention reverting the tenant’s benefits to direct payment to the landlord. The biggest risk now is much worse: households failing to pay their bills and being cut off by energy suppliers, living through a freezing winter with no access to heating and without the ability to cook hot food. I’m not resorting to hyperbole to state that some of the most vulnerable, financially and physically – let’s say, pensioners in receipt of pension credit – could risk death due to cold exposure. Suddenly the big free money pick-me-up doesn’t seem so well contrived.

And there are more omissions: disabled people who rely on a personal independence payment (which is not a means-tested benefit but allocated based on claimants’ physical and social needs) only receive an extra £150 from Sunak. Why? There is a stack of evidence that disabled people have much higher energy costs than the average. It’s more proof that Sunak’s plan was designed as last in part as a get-out clause for his beleaguered prime minister than with the reality of the cost of living crisis, and its dangers, in mind.

Does it matter? A nice little £400 in the pockets of the well-insulated middle class will shore up the Conservative vote even as a floundering cabinet is inexplicably, at the time of writing, backing Johnson as PM. This is short-termist electioneering, not evidence-based policy. It can’t stand a change of government or shift in fiscal climate, which is another reason why the chancellor refuses to say it will be paid for by a “windfall tax” on the profits of energy giants.

But pragmatism never triumphs when there’s politicking to be done. After all, the full rollout of universal credit will complete in 2026 and housing associations are already preparing for rent arrears of £330m.

Hannah Fearn is a journalist and columnist specialising in social affairs. She was comment editor of the Independent for seven years and writes a weekly column for that title. Her journalism also appears in the i Newspaper, Guardian, Financial Times, HuffPost UK and others. She has also worked as an editor and reporter for the Guardian, Times Higher Education and Inside Housing magazine