Universal Credit and housing benefit: facing up to the challenge of change

by James Carson

English money

How are housing associations and their tenants preparing for Universal Credit?  It’s one of the big questions at the heart of the coalition government’s reform of the benefits system. Until recently, the answer was unclear, but we’re now starting to get a better picture of the likely impact of benefits reform on social housing.

In 2010, the coalition government embarked on a major programme of changes to the welfare system. The staged roll-out is intended to simplify the system, replacing five different benefits with a single payment, known as Universal Credit. One of the major changes will see social tenants who previously had their housing benefit paid to their landlord receiving a single monthly payment.

Right from the start, there have been concerns that tenants will have difficulties managing direct payments, and that rising numbers will struggle to pay their rents. Initially, it was difficult to assess whether these concerns were valid, but last month the Department for Work and Pensions published a package of reports evaluating a series of demonstration projects testing the direct payment of housing benefit to tenants living in social housing.

The demonstration projects took place in six local authority areas (Edinburgh; Oxford; Shropshire; Southwark; Torfaen; and Wakefield) between June 2012 and December 2013.

The evaluations are still ongoing, but already some interesting findings are emerging from the projects:

  • receiving direct payment of housing was found to reduce the average amount of rent which tenants paid each payment period by 6.6 percentage points;
  • being on direct payment was found to increase the likelihood of tenants falling into arrears, particularly in the first few months;
  • more than three-quarters of all tenants underpaid while on direct payment, with underpayment accounting for more than half of the total value of arrears that accrued in the first 12 months of the programme.

The reports noted that the impact of direct payment lessened significantly over time and suggested that providing more support to tenants, particularly at the start of direct payment, may have a positive impact on payment patterns. This echoes a call by the House of Commons Work and Pensions Committee to provide more support to vulnerable tenants. In its April 2014 report, the Committee welcomed the existing support in helping vulnerable people to adapt to Universal Credit, but suggested that more fundamental assistance is needed to help vulnerable claimants manage their rental payments.

The full impact of Universal Credit won’t be felt until 2017. But, for some social housing tenants, the changes are already being brought home. In the past week, The Observer has reported that some people on benefits are being instructed by their housing associations to make extra rent payments in advance to avoid ending up in financial difficulties, or in court.

The instructions are causing concern among agencies advising social housing tenants. Gillian Guy, Citizens Advice’s chief executive, said:

“It’s for householders to manage their finances, not landlords or housing associations. There’s a difference between advising people to be financially prepared and doing it for them, and it would be concerning if the latter were the case.”

And a comment from a reader, responding to The Observer’s report underlined the alarm generated by the instructions among housing benefits recipients:

“How can I pay extra rent up front in preparation when my life is a daily hand-to-mouth existence and I never know where my next meal is coming from?”

Of course, not all housing associations are adopting this approach. As the Joseph Rowntree Foundation found in its research on the impact of welfare reform, many housing associations are striving to provide information, advice on jobs and benefits, tackling fuel poverty and meeting crises through hardship funds and support for food banks. But the JRF report, published in June 2014, also noted that social landlords have doubts over whether Universal Credit will be implemented properly, or have a positive impact.

Three more DWP evaluation reports, including the demonstration projects’ final report, will be published later in 2014. But it’s already clear that reform of housing benefits, at least in the short term, will present major challenges both for social housing associations and their tenants.

 


The Idox Information Service has a wealth of research reports, articles, case studies and evaluations on social housing and wlfare reform. Items we’ve recently summarised for our database include:

Universal credit one year in: the experiences of housing associations

Direct Payment Demonstration Projects: 12 month stage reports

Housing associations and welfare reform: facing up to the realities

Learning curve (the impact of welfare reforms one year on) IN Inside Housing, Vol 31 No 15, 17 Apr 2014

Support for housing costs in the reformed welfare system: fourth report of session 2013-14 (HC 720)

Holding back the tide (increasing bad debt in the social housing sector IN Inside Housing (Mar 2014 Finance Supplement)

Summarising the experience from the Direct Payment Demonstration Project IN Housing Scotland, No 99 Mar 2014

Impact of welfare reforms on housing associations: early effects and responses by landlords and tenants

N.B. Abstracts and full text access to subscription journal articles are only available to members of the Idox Information Service. For more information on the service, click here.

2 thoughts on “Universal Credit and housing benefit: facing up to the challenge of change

  1. Pingback: Counting down to 2015 … a year in policy (part 2) | The Knowledge Exchange Blog

  2. Pingback: Taming the information jungle | The Knowledge Exchange Blog

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