Welfare reform and not paying the rent

block of flats

Government plans to change the way social housing tenants pay their rent, could have serious consequences for some of the poorest people in Britain - and their landlords. So why are they being kept secret from the public?

Government ministers talk a lot about the importance of transparency and openness in the way the state operates. So it is surprising and disappointing that on an issue that affects the lives of hundreds of thousands of the poorest and most vulnerable people in Britain they are being so secretive.

I am talking about the plans to force social housing tenants to pay their own rent rather than housing benefit going straight to landlords - a key part of the government's flagship welfare reforms.

The changes are due to come in next year, with all benefits rolled into one universal credit (UC) paid directly to the recipient. The government wants claimants to take responsibility for their budgets.

But the proposals are proving far from easy to introduce. Since July, the Department of Work and Pensions has been testing the changes in six areas. These pilots (described as "demonstration projects" by the DWP) are shrouded in secrecy.

Participants have had to promise not to reveal any of the results without express departmental approval. A website which aims to identify potential "issues" with the reforms - the Housing Benefit Direct Payments Network - is only accessible to people vetted by Whitehall. Journalists are not welcome.

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The government has seriously underestimated the challenge of getting claimants to start paying their monthly rent”

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However, I have managed to gain access to the secret site and it seems clear that the government has seriously underestimated the challenge of getting claimants to start paying their monthly rent.

Even people deemed at low risk of failing to pay their rent on time are "not managing as expected", the site reveals. Many social tenants have little or no experience of monthly budgets. They get their benefit in cash each week, and while they are often highly adept at managing to operate on a low income over seven days, they may not have a bank account or access to the internet.

I was given an insight to the challenge recently when a landlord explained how a single mum in a social-rented block was asked if she would like to give up the coin-in-the-slot electricity meter and pay for her power monthly through the housing association.

She explained that she wouldn't because, when things got really tight, she knew she could do one less wash a week and cut down on the heating to save the pound coins going into the meter. It was her way of keeping control of her budget.

The department is now committed to reviewing the support available to tenants. A slide show by the DWP manager of the demonstration projects, Vince Hughes, says "there have been surprises" in the way housing benefit claimants have coped with paying rent themselves.

"We need to review the support assessment matrix," he says.

The key question for landlords is whether they will be able to collect the rent. Many housing providers have borrowed money against a promise that they'll get 98% or more of what they are owed each month. Business plans are reliant on arrears of less than 2%.

When I asked the DWP what sort of rent collection figures the pilots had identified I was told the projects were "not about arrears but learning lessons".

Well, if the rumours are right, the lesson to be learned is that about 20-30% of tenants may well struggle to pay the rent on time when UC comes in. Such an outcome is a massive headache, not just for the housing providers and social landlords, but for the whole welfare reform project.

Block of flats

The DWP recognises that a minority of housing benefit recipients may never be able to manage their finances and there is a system for some tenants to have their housing benefit extracted from UC and paid directly to the landlord in the traditional way.

But the government doesn't want this to be more than about 10% of the total - very much the exception rather than the rule. There will obviously be additional cost and complexity in such a measure and the whole welfare reform package is built upon simplicity and cost-saving.

The DWP is to introduce a system called "switchback" where tenants whose arrears reach a certain level will have their housing benefit paid directly to the landlord while they receive support for organising their finances. As soon as the arrears are paid off, they supposedly go back on the UC scheme.

The trouble is that this idea poses as many questions as answers. How many weeks of arrears would be the trigger for switchback? Too few and it will capture large numbers of tenants; too many and the debts will be much harder to pay off.

How will the IT system cope with people moving on and off the main UC system? There are already concerns that the IT database is not going to be able to cope with the complexity required.

How will landlords survive if their income stream is disrupted by the welfare changes? I understand some housing providers are already reining back on home improvement and maintenance programmes to create a financial cushion. Others may go under.

It is for these reasons that the DWP select committee is warning ministers not to rush into the programme.

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About 20-30% of tenants may well struggle to pay the rent on time when UC comes in - a massive headache for the whole welfare reform project”

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"We believe that time needs to be allowed for a proper evaluation of the pilots which the Government is running on direct payments to tenants, followed by a phased implementation of direct payments, after appropriate safety net arrangements for vulnerable people have been developed and tested."

The committee says it is necessary to establish a robust process for identifying claimants who are struggling so they can be helped before they fall into arrears and face eviction.

The question of how some of Britain's poorest people are going to cope with welfare reform is an important one. It is critical there is informed public debate about the challenges and risks.

Rather than refusing to publish details of the publicly-funded pilots, there must be merit in talking about this now. The first tenants will be receiving their housing benefit in UC payments within a few months. It will be to nobody's advantage if we see very vulnerable people fall into extreme debt, being evicted and left homeless.

Update 10:12 GMT on 24 November

Since posting this story, a spokesman for the DWP has called to say that the non-collection rates on the pilots are not as high as suggested.

While not giving me the actual figures, the department says one of the demonstration projects had a rate "in the teens" rather than 20-30%. As soon as I have official data, I will publish it here.

Mark Easton Article written by Mark Easton Mark Easton Home editor

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  • rate this

    Comment number 264.

    What is going on? Someone tell me. It's diabolical that in today's society, people are abstaining food in order to keep warm. Yet we are a country sitting on coal that used to aid 'all'; back when 'all' had fireplaces. Now of course, it's a luxury for the wealthy. People need our help; not cuts, dodgy assessments right before Xmas, & Sky-Rocketing fuel prices. This is a hatred of the poor I say.

  • rate this

    Comment number 263.

    This government are setting people up to fail on purpose. Once there is an almighty mess in the system, the government will introduce vouchers claiming that this is the only way. They will get backing for it because of the job they have done in dividing and ruling people. Also I don't remember the BBC exposing the government over the Health & Social Care bill's passage - silence! Now look!

  • rate this

    Comment number 262.

    For 6 months my local council paid the rent directly to the landlord. I had no choice. About 6 months after moving for a new job the council contacted me and said that I owed them £199 in rent over payments. the landlord refused to pay it back and the council took me to court and got it from me. I hope the new system sorts out it's issues before going live!

  • rate this

    Comment number 261.

    Maybe the Government thinks they can get away with the secrecy around these things because of the free ride the media have been giving them over the changes. I don't remember much BBC coverage of the WRA's passage until they got excited of the prospect of defeats in the Lords.

  • rate this

    Comment number 260.

    I work for Citizen's Advice and we are seriously concerned about Welfare Reform. The change to monthly payment; the payment of rent direct to claimants; the benefit cap; the changes to the Community Care Grants, Crisis Loans, Housing Benefit and Council Tax benefit; the change from DLA to PIPs and the removal of Legal Aid for challenging decisions are a perfect storm waiting to happen in Apr 2013.

  • rate this

    Comment number 259.

    Welfare is what we have the State for. Not nearly enough of the Government's Budget is spent on it. There is no such thing as a "Lifestyle choice" to live on Benefits, Benefits are a Default position and not a Lifestyle choice. You can't "force" the "workshy" into Employment that isn't there, even if there was such a thing as "the workshy" and "force" would work if there was.

  • rate this

    Comment number 258.

    Why is Govt secrecy over Welfare Cuts a surprise? They shredded millions of Documents to do with Govt. Welfare frauds when the FOI was coming in, so no-one would ever know how badly they'd treayed the Poorest British Citizens. The BBC hasn't even asked a crucial question about 'UC', will the HB element be subject to inflation uprating (it isn't now)

  • rate this

    Comment number 257.

    We've just found out what's replacing benefits: YOUR front door, and any money the poor can get from you - be they honest & legit, or desperate with hungry kids, or merely dishonest:


    "Get on the knocker!" is the new call to action for those lazy feckless poor!

    Won't that be a wonderful return to Victorian hard-working values.

    What could POSSIBLY go wrong?

  • rate this

    Comment number 256.

    165.Alien Observer - "....I have never been to the moon or built a rocket, but if my taxes were paying for it, I would feel entitled to comment on its justification and challenge its validity !"

    The problem being that until you have made an effort to understand rocket science you are likely to make comments that are ill informed & dased on rhetoric, not fact......

  • rate this

    Comment number 255.

    How many measures has this govt taken to deal with errant landlords?. These landlords rent out slums with no insulation which are full of damp and mould and they make a mint out of the tax payer and the poor they are a captive audience with no where else to go. Cap rents and force landlords to take claimants as part of their wider social responsibility.

  • rate this

    Comment number 254.

    Most socialists are above poverty - they play the game.

    Nice bit of PR work for Mr Ed.

    Pity he cannot speak the language.

  • rate this

    Comment number 253.

    This shambolic Govt has idea of the tsunami they are unleashing on the nation.....

    .....want to bring rent down? 2 ways to do it in a market that had more demand than supply.....

    ......either build more houses (increase supply as a free market would do) or introduce rent controls.....

    ....instead the Govt thinks offering less cash will do.....incompentant idiots......

  • rate this

    Comment number 252.

    IT systems used by DWP, this is true, even reported on the BBC. A claimant received a letter stating it could not be processed without an NI number. They had addressed this with their ref number & guess what - the recipients NI number. I don't care which job you have, you & I doing similar would be sacked as incompetent.

  • rate this

    Comment number 251.

    248 Sophie1977
    "No, I wouldn't expect the IT systems to be able to cope"

    Effective IT Systems could easily cope...

    Problem is the same Idiots in charge of procurement for government contracts/ railway franchises/ government IT projects are incompetent & out of their depth. So you end up getting incredibly expensive failures

    As there's no comeback their free to get promoted & reek further havoc

  • rate this

    Comment number 250.

    I'm happy for the benefits system to be overhauled to some degree, it shouldn't be an alternative to earning a living. I just wish we could prioritise getting all that unpaid tax first, that's by far the larger issue yet it gets almost totally overlooked. Benefits claimants are too easy a target and they don't have enough power to bite back.

  • rate this

    Comment number 249.

    The issue is not how benefits are delivered it should be why and who has payed in to have the right to them.They have become an alternative instead of a fall back in hard times.

  • rate this

    Comment number 248.

    No, I wouldn't expect the IT systems to be able to cope. They can't cope with something as simple as supplying documentation in large print after agreeing to, and last week I received a perfectly addressed letter from the DWP in which they said that they couldn't process part of my claim because they didn't know my address. They're been dealing with me at this address for nine years.

  • rate this

    Comment number 247.

    244.Chris - understanding of IT - that is not remotely complex

    Just teasing you, but the Government of both sides with legions of think tanks & consultants. Have repeatedly introduced new IT frameworks that were disastrous, they ask each other, they never ask those who know.

  • rate this

    Comment number 246.

    In many cases it would be easier to pay the benefit money direct to the Off-licence and Tobacconist.

  • rate this

    Comment number 245.

    Bring back council housing so there is an option where people can pay a fair rent for a reasonable place to live and the housing benefit system is not subsidising wealthy leeches by providing them income and paying their mortgages for little risk!


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