Damning Universal Credit Report Reveals Direct Payments Threat to Finances

Housing associations will be put at financial risk from the direct payment of housing costs to tenants under universal credit, the DWP’s own research has revealed. The final report into the Direct Payment Demonstration Projects calls for "mitigating action to be taken" after analysis showed that tenant arrears had risen, on average, by 33% during the migration process onto the new benefit system.  While the amount of rent owed dramatically reduced over time, the report concluded that direct payments "did have a financial impact on landlords" with a total of £1.9 million of rent owed to the six participating landlords at the end of the 18-month study period. Download the report from the DWP website.

Universal Credit – Parliamentary Written Answer

Jim Dobbin: To ask the Secretary of State for Work and Pensions what assessment he has made of the effect of universal credit on landlords who have claimants as tenants; what the results were of the direct payment demonstration projects on the effect of paying housing benefit direct to tenants; and if he will reduce the two calendar month rent arrears trigger point before a landlord can go directly to his Department for direct payment. 

Steve Webb: Interim evaluation from the first six months of the Direct Payment Demonstration Projects was published in December 2013 and can be foundat: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/265257/direct-payment-demo-figures-dec-2013.pdf   

DWP has developed three levels of safeguards for tenants and landlords based on findings from the Direct Payment Demonstration Projects and continuous improvements through our test and learn approach in live service. We make an initial judgment on each claim as to whether the claimant is at risk of default and if so, we can put them on managed payments immediately. In the majority of cases Direct Payments will apply and we have two safeguards in place:

(1) We will review the initial decision if we are advised that arrears have reached the equivalent of one months rent.

(2) We will move to payment to the landlord if we are advised that arrears have reached the equivalent of two months rent.

Landlord's Arrears Rise by £241,000 during Direct Payment Pilot

A pilot of direct payments to 1,000 tenants led to a £241,000 rise in arrears, with an average debt of £130 per person, it has been revealed by Wakefield and District Housing.  Of the 1,000 tenants in the pilot, 400 were taken off direct payments before the end of the scheme because they hit eight weeks of arrears. Of the remaining 600, only 300 elected to continue with direct payments at the end of the pilot. Read more on Inside Housing.

Universal Credit - Parliamentary Written Answers

Baroness Lister of Burtersett: To ask Her Majesty’s Government what are their current working assumptions about the number and proportion of universal credit claimants who are likely to require personal budgeting support.

Lord Freud: All new Universal Credit claimants will be offered personal budgeting support if they require it. Of those that do require assistance, we know that a small proportion will require in-depth budgeting support and we have arrangements in place to ensure that they can receive this. This work will be informed by experience in the live service sites as well as the Direct Payment Demonstration Projects.

25% of Housing Benefit Payments Switched Back To Landlords

One in four tenants on the universal credit direct payment demonstration projects has had their benefit switched back to their social landlords due to rent arrears. The DWP has published the latest figures from its six projects to test the direct payment of benefit to tenants. The data, taken from the first 14 payments, reveals 1,647 of the 6,366 tenants to take part have had their payments switched back to the landlords. Just 107 tenants who had their benefit switched to the landlord have had their direct payment restored to them after repaying their rent. Each of the projects is testing different arrears ‘triggers’ to switch payment back for not-paying rent. Download the latest update on the projects from the DWP website.

Speaker's Hub: Direct Payment of Housing Benefit

Shropshire Towns and Rural Housing is one of the organisations taking part in the direct payment demonstration projects. Neighbourhoods manager Chris Shepherd tells CIH about the experience so far.  Read Chris’s informative answers to the following questions on the CIH website.

What benefits has your organisation seen as a result of taking part in the project?

What are your biggest concerns for the national roll out?

What are your top three tips for other housing providers preparing for universal credit?

Have you seen changes in the government's approach as a result of tenants and residents experiencing the system?

Universal Credit – Parliamentary Written Answer

Stephen Timms: To ask the Secretary of State for Work and Pensions with reference to his Department's publication, Direct Payment Demonstration Project: Learning and Payments figures-May 2013, what assessment he has made of the learning and payment figures published in that report.

Mr Hoban: The Direct Payment Demonstration projects have and continue to provide much valuable live learning about how best to design that aspect of universal credit for tenants and landlords.  To date, the learning has had a direct influence on the design for universal credit in the areas of personal budgeting support, the alternative payment arrangements and the rent arrears trigger. The figures contained in last month's release indicated that payment collection rates have increased and landlords have got better at managing rent arrears and the switchback process. The volume of tenants paid by direct payment has remained relatively constant but switchbacks have increased. These safeguards have helped contain arrears and lessons have been learnt about the support tenants who fall behind on their rent may need.

Read more on the Parliament website.

Freud 'We Are Listening To Social Landlords on Universal Credit'

In an exclusive interview with 24housing magazine, Lord Freud has defended the Universal Credit demonstration projects saying they are meeting Government objectives and are highlighting previously unforeseen problems.  Read the interview on the 24dash website.

Universal Credit 'Switchback' Details Published

The government has responded to a CLG Select Committee report with details about how it intends to 'switchback' direct payment to landlords when tenants have been in arrears for two months. The government's response confirms that the "DWP can make rent payments direct to the landlord if a claimant reaches a certain level of rent arrears". Currently this "will assume a two month arrears trigger point, subject to review pending the outcome of the [Direct Payment] projects". To pay back the arrears built up before the switchback, "Deductions of up to 5 per cent of the standard allowance....can be made ....under current regulations. The Government is considering whether this level is appropriate for Universal Credit, or if it should be increased in future." The report also states that the six month extension of the Direct Payment projects will "monitor persistent under payment by tenants and triggers, and will help further inform the structure/design of the support network being developed for Universal Credit claimants."  Download a copy of the response from the Gov.uk website.

Direct Payment Pilot Launches IT Scheme

A Scottish landlord piloting the direct payment of benefit to tenants has launched a scheme to provide IT access and computer training in community centres.  Edinburgh-based Dunedin Canmore is using nearly £200,000 of Scottish government funding to set up a scheme called Positive Pathways. Under the scheme, the 5,000-home association will work with community organisations to provide computer access and support to people who don’t have the digital skills to claim benefits or look for jobs online.  Read more on Inside Housing.

Direct Payment Demonstration Projects - Latest Findings

The DWP has published its latest report into the Universal Credit demonstration projects testing the payment of housing benefit direct to social housing tenants.  Among comments made by housing providers taking part in the projects were;

"Our experience shows that some of the triggers for arrears are: delays in payment, lifestyle changes, change of household and the impacts of welfare reform.” (Oxford City Council and Green Square)

"Having trialled the 12-week arrears level, we believe that 12 weeks has proved to be too long a timeline to trigger switchback, as it enables the rent arrears debt to escalate to a level which can become unmanageable, and difficult for the customer to recover from, particularly where other debts exist.”

(Shropshire Council, Bromford Group, Sanctuary and the Wrekin Housing Trust)

“The rent collection process demands considerably more effort for a lower rate of return.  Staffing levels are well above those for “business as usual” (Bron Afon Community Housing, Charter Housing and Torfaen County Borough Council)

Download a copy of the report from the DWP website.

Universal Credit Direct Payment Pilots Extended For Further Six Months

The Universal Credit direct payment demonstration projects will be extended for a further six months, Minister for Welfare Reform Lord Freud has announced, as new findings from the projects are published. The DWP says the extension will help to further develop the support needed for social housing tenants moving onto Universal Credit. The projects will now run until the end of the year.  The latest findings from the projects show a rise in the rent collection rate to an average of 94%, helped by more than 1,000 tenants who have had their payments 'switched back' to their landlord.  Read more on 24dash.

Are Local Authorities Prepared For Welfare Reform?

Councils are finding it difficult obtaining detailed information on welfare reform and feel unprepared.  The charity Homeless Link carried out research to find out if local authorities had made preparations to support vulnerable people affected by welfare changes. It interviewed 42 local authorities between November and December last year and found ‘many authorities described a lack of accurate information about welfare changes’.  Councils said it was difficult to find out information about the changes which made it hard to train staff and to prepare. They also expressed frustration at the lack of information shared from the six direct payment pilots. The report also found that although 28 of the 42 councils interviewed knew how many households in their area would be affected by the housing benefit size criteria, none had done research to predict the impact on tenants. Read more on the Homeless Link website.

Top Tips: Lessons From the Direct Payment Pilot Schemes

How can you prepare for the introduction of direct payment? A panel of experts involved in the government's pilot schemes share their advice.

The following is a very brief extract from a range of advice given by executives of organisations involved in the demonstration projects.

*Four times the level of staffing compared to normal arrears recovery: *Significant staff resources devoted to communication and making sure everyone understands the changes. One staff member for every 160 tenants.

*Arrears have risen from 2% to 11%.

*Tackle arrears at an earlier stage

*Extra exemptions: One of the main aims of the direct payment projects is to work out which circumstances should give rise to exemptions.

Read more on the Guardian website.

Rent Arrears Soar in Pilot Benefit Scheme

Rent arrears among tenants on a Direct Payment Demonstration Project have seen a big increase.  One area is predicting a £14m loss if the new system is implemented for all its tenants. Figures obtained by BBC News show that arrears among tenants of Wakefield and District Housing in West Yorkshire have increased from an average of 2% to 11% on the pilot projects. Bron Afon community housing in south Wales said it had seen a 50% increase in arrears, while pilot projects in Edinburgh, Oxford and Southwark are showing around 30% increases in arrears.   Southwark Council predicts it will incur £14m in arrears if direct payment is introduced to all their tenants. Read more on the BBC website.

Welfare Reform Workshops

To help landlords prepare for Welfare Reform changes, HouseMark is running 4 service improvement workshops covering a number of the key areas and issues for landlords.

28 February - Coventry

5 March - London

7 March - Manchester

19 March - Cardiff

 Content/Speakers

overview session from Sam Lister, CIH

a session on the impacts of the bedroom tax from Sharon Wheeler, CIH

speakers from credit unions, direct payment pilots & payment card providers

a closing workshop session where you can share and learn from your peers

Find more details on the HouseMark website.

Direct Payments Pilot: 'Welfare Reforms Could Cost Us £10m a Year’

One of the housing associations taking part in the Department for Work and Pensions’ Direct Payment demonstration projects says the Government’s welfare reforms could end up costing it £10million a year.  Wakefield and District Housing (WDH) has seen rent arrears shoot up by nine percent since it began trialling direct payments. WDH estimates that the combined effect of the Government’s welfare changes could wipe £300 million from the organisation’s business plan.  Read more on 24dash.

Universal Credit Local Support Services Framework

Ministers have announced the publication of the Universal Credit Local Support Services Framework.  The framework will be put in place for the introduction of Universal Credit in 2013, to help claimants who may require extra support to access Universal Credit. The framework explains:

    *who may need help

    *what services they may need

    *how these services will be provided through locally developed partnerships.

The framework applies to phase 2 of the Universal Credit programme from October 2013 to 2014. It will be refined and updated over the coming months to create a refreshed version for 2014/15.  Feedback from local authorities and other delivery partners, learning from the 12 local authority led pilots, the 6 demonstration projects and experience of the pathfinder operating in the North West will all inform the refresh.  Download a copy of the framework from the DWP website.

Universal Credit Demonstration Projects – Parliamentary Written Answer

Jessica Morden: To ask the Secretary of State for Work and Pensions how many people have been involved in universal credit pilot schemes to date; how participants in the pilot scheme were selected; what steps his Department took to ensure participants in the scheme were representative of people who will be claiming universal credit; how many have fallen into arrears in any form since being moved on to universal credit; and if he will make a statement.

Mr Hoban: The six areas selected for the Direct Payment Demonstration project volunteered to be part of the project to test direct payment under the current housing benefit regulations and were selected to broadly cover the range of types and circumstances of landlords in Great Britain (GB) meaning they are as representative as you can expect given the limitation that only 2000 tenants from each area are in the project. They cannot represent all social rented sector tenants in GB, although they are broadly comparable with the range of circumstances of tenants in the social rented sector. Figures for the total number of tenants who have fallen into arrears in the Direct Payment Demonstration project are not available. However the number of tenants who reached the arrears trigger point (variable across the areas) requiring reinstatement of their housing benefit payment to their landlord was 316 after the first four months of the project.

Social Rented Housing – Parliamentary Written Answer

Stephen Doughty: To ask the Secretary of State for Work and Pensions what guidance his Department has provided to registered social landlords on managing increases in rent arrears. 

Mr Prisk: DCLG and the DWP are working closely with a group of social landlords on the direct payment demonstration projects, which are testing the impact of the payment of housing benefit direct to tenants. A key aim of the demonstration projects is to explore how we can best protect social landlords, and tenants themselves, from the risk of increases in rent arrears. We intend to use the evidence gathered from the projects to inform the design of universal credit, including the safeguards to be put in place to protect the financial position of social landlords and prevent tenants from falling into significant debt. My Department and the DWP are also co-funding a learning network to capture the lessons from the demonstration projects, and encourage the sharing of best practice and information, to help social landlords prepare for direct payment.  We have also worked with the Chartered Institute for Housing on guidance for social landlords to prepare for the introduction of the social sector size criteria.  More generally, we would expect social landlords to work with their tenants to minimise the risk of rent arrears as far as possible.