Iain Duncan Smith and the Department of Work and Pensions have been warned again and again that their plans to pay Housing Benefit to claimants rather than straight to landlords, as part of the new Universal Credit, could be disastrous. Now news is emerging from the areas where this idea has been trialled that the disaster has begun. Rent arrears have soared and some are predicting mass evictions.
Six pilot schemes have been running since June 2012 – Edinburgh, Wakefield, Oxford, Shropshire, Cwmbran and Southwark (London). In Wakefield the average of 2% of tenants in arrears rose to 11%. Bron Afon Community Housing in Wales said it had seen a 50% increase in the number of tenants in arrears and it was 30% in other areas.
One woman in Shropshire said “I don’t know why they moved me onto the new scheme … I hardly have enough money to live day-to-day” (Buchanan & Vallance, bbc.co.uk, 12/03/13). She used some of the money to pay her gas and electricity bill, fell into arrears and now fears eviction. This is exactly the kind of situation I and many others warned would happen.
Andrea Thomas of the Citizens Advice Bureau in Cwmbran has heard many similar stories. According to her “The reality that we found is that the most vulnerable people in society … cannot cope with it” (ibid).
The pilot schemes have also shown a rise in the cost of actually collecting rent from tenants, especially from those who are unwilling to pay by direct debit. Everyone who is, or has ever been, on a low income knows the dangers of direct debit and the possibility of bank charges if money that you expect to be in your account isn’t there in time to cover a payment.
A National Housing Federation spokesperson said “Many residents on low incomes currently choose to have their benefit paid direct to their landlord as a rational choice to help them manage their finances,” (Jowit, The Guardian, 20/02/13).
Duncan Forbes, Chief Executive of Bron Afon Community Housing, said a large proportion of those now in arrears had never been in arrears before. “That was a group of people who had a good track record of payment and low levels of arrears, thrust into a position where they are now in significant arrears,” he said. (bbc.co.uk, 10/03/13).
The Government argues that “It wants to pay recipients directly as they think it will increase their sense of responsibility over their own lives and make them better able to cope should they move into a job” (Buchanan and Vallance).
Increasing costs and arrears could put some not for profit landlords out of business. At the very least it seems likely that housing associations will have less money to invest in new housing. The National Housing Federation said “More than a third of housing associations believe the shift … will make it harder for them to build new homes, as they have to deal with rising arrears” (Jowit).
All of this comes on top of the bedroom tax. Steve Clark of the Welsh Tenant’s Federation warned it could result in 4,000 social housing tenants being put at risk of eviction in Wales even before Universal Credit and payment of Housing Benefit to tenants comes in (bbc.co.uk, 10/03/13).
Government minister Steven Webb said “We currently pay housing benefit directly to one million in the private sector and that works pretty well.
“We are trying to treat people in council houses the same way, we want to get it right” (Buchanan and Vallance).
What Steven Webb fails to recognise is that people in private rented accommodation can choose (for now) to receive the money themselves or have it paid directly to the landlord. If Mr Webb and his government colleagues genuinely want to “get it right” they have to listen to what they are being told. Steven Webb claims it works and he’s right it does work – for those who feel comfortable with it, for others the pit falls are too great. The government wants people to be responsible for themselves – they are being responsible for themselves by asking for their housing benefit money to be paid directly to their landlord.
