Wednesday, 22 October 2014

Wakefield District Housing would have to borrow extra £20m if plan proceeds

Direct payment to cost pilot landlord £8 million a year

The Department for Work and Pensions has insisted its plans for direct payment of benefit will proceed despite a landlord on a pilot project claiming the policy will cost it £8 million a year.

Wakefield District Housing is running one of six projects to test the direct payment of universal credit to tenants. The policy aims to encourage people to take responsibility for their finances.

WDH has calculated the reforms will lead it to lose £8 million annually in bad debts. It will have to borrow an extra £20 million to shore up its business plan.

Speaking at the Northern Housing Consortium’s northern summit last week, Kevin Dodd, chief executive of WDH, warned the reforms would mean it and other landlords would struggle to continue to deliver community services, such as helping people into work. He calculated WDH’s total social benefit to the community since 2005 to be worth £1.4 billion.

Mr Dodd said: ‘We are into the third month of our pilot and people are now stopping to pay [their rent] at all. They’re spending the money on something else and I’ve got to find £5 million each year to plug a hole my budget due to rising bad debts.’

He added that WDH would also have to spend a further £3.5 million each year on collecting rent.

Direct payment pilots are also taking place in London, the west midlands, the south of England, Scotland and Wales. Brendan Sarsfield, chief executive of Family Mosaic, which is running the London pilot, said rent arrears stood at 5 per cent, which is lower than he expected at this stage of the pilot. ‘It is too early to say whether direct payments will be a success or not a success,’ he added.

It is understood the DWP will publish details of rent arrears from the pilots before the end of the year. The department was criticised for holding back findings last month.

A DWP spokesperson said the findings from one area do not represent the likely success of direct payments and that the policy will proceed. He said: ‘We have always been clear there are some people direct payment would not be for.’

Readers' comments (25)

  • Rick Campbell

    " A DWP spokesperson said the findings from one area do not represent the likely success of direct payments and that the policy will proceed. He said: ‘We have always been clear there are some people direct payment would not be for.’ "

    The current default position in social housing is that the tenant chooses whether the HB is paid to them or to the landlord.

    It appears to work reasonably well.

    There has to be a system in place to allow for the vulnerable to have their HB to their social landlords -- so why not revert to the current default system and let the tenants choose?

    Dogma wins over anything else.

    OR perhaps the government wants to actually punish social housing renters by ensuring their landlords have less to spend on services and standards of service because huge wadges of dosh is used up chasing the rent? --

    -- BUT THAT WOULD JUST BE SPITEFUL WOULDN'T IT?

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  • Rick Campbell your comment is spot on. There is no logical reason for this other than to make life more difficult for both social housing tenants and landlords. I'm a tenant and I like the fact that my HB can go straight to my landlord, as I suffer from complex health problems and do not have a bank account with access to a standing order or direct debit facility I worry about physically being able to pay my rent on time. I am truly terrified about next year and the introduction of Universal Credit. If the government cared about the effect of its policy it would listen to what Housing Associations and Councils are saying. It seems all their social security reforms are actually costing more money for worse and more unstable results. It can only be ideologically motivated as their fiscal arguments do not add up.

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  • @pipins

    If the government cared about the effect of its policy it would listen to what Housing Associations and Councils are saying.

    Indeed, but as we've seen throughout the WRB's progress through parliament, and with the NHS and LASPRO bills, these corrupt megalomaniacs listen to nobody, and once IDS get an idea stuck in his head, no matter how insane it might be, nothing short of dynamite will shift it.

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  • Why are IDS and Freud the only people in the country insisting on this totally unworkable system. In an ideal world a single payment, as a 'wage' is a good idea. Our world is far from ideal. The prospects for SL's and PSL's are very poor due to the direct to tenant LHA issue.

    The cost for the government to honour their election pledge and allow choice for the landlord and tenant to be paid the LHA, directly to the landlord is NOTHING. Yet the cost of them pursuing this immoral, what will be a 'waste' of taxpayers money is massive. The LHA element that is specifically to be used for housing will be spent by the tenant on other 'things'. Homelessness will increase more than is forecast. Landlords will simply not rent to these tenants and their will be mass evictions. Trying to paper over the cracks with 'jam jar Credit Union accounts', simply masks the problem.

    If Labour want to get the vote of the few million landlords there now are, a simple promise to reverse this travesty will swing it for most.

    100's of organisations and the 'man' in the street, know what the result of so many tenants getting the LHA directly will result in.

    IDS and Freud, the regulations aren't set in stone yet, so it wont be a U turn. We all know what the pilots are saying.

    DO THE RIGHT THING AND GIVE THE TENANTS AND LANDLORDS THE CHOICE.

    There is an e-petition that has close to 3,000 signatures that can be copied, signed and distributed to many. We wont get to the 100,000 needed for a debate, but its currently the best we can do to appeal against this madness.

    http://epetitions.direct.gov.uk/petitions/35479

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  • The whole issue of direct payments and UC is clouded in fog, it will most likely be an unmitigated disaster, with only Capita, Equita, and other bailiffs benefitting form the debacle. And of course the almost manic IDS who will cut things further if he can.

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  • Joe Halewood

    Cant pay, wont pay then dont stay anyone?

    The direct payment issue will shortly become a debate on whether and how much quicker social landlords will evict for arrears; about Ground 8; about Pinnock...and about whether evicted social tenants will be deemed intentionally homeless.

    I disagree with RR that this is clouded in fog at all; rather it is yet another nightmare and car crash waiting to happen.

    Will tenants expect social landlords not to evict? Is that in the governments thinking? If SRS landlords do evict they are heartless b*****ds in tenant eyes, if they dont they are inefficient in governments.

    This is a huge debate waiting to happen and a very serious one, the most serious one in fact. Given the above figures it cant be avoided any longer

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  • Ernie Gray

    There is no difference in reality between somebody in work setting up a direct debit mandate or a standing order to pay thier rent or mortgage. Why do people do this, firstly to manage their resources and to remove the temptation to use the money for other uses. Rent Direct would appear to provide the same requirements for people who are benefits.

    WHAT IS THE DIFFERENCE...........................

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  • Alex Brown

    Thank you Kevin Dodds for speaking out, tenants and landlords have known from day 1 that this lunatic system could not work, now at least someone in the pilots is coming into the open with some facts and figures.
    Ernie Gray misses a point assuming that all benefit recipients have workable bank accounts, in some areas the % able to use direct debit is around 16%, either through having a "Basic" bank account without this facility or after some time on benefits having an overdraft which would swallow any payment in.
    Add into the mix the fact that the Autumn statement will over time reduce quite dramatically the income of claimants mixed with the huge hikes in all daily overheads then I rather suspect that WDH have underestimated the long term deficit they face.

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  • Electric Monk

    Just one more step along the road to full privatisation.

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  • JLPicard

    I completely understand the logic of direct payments to tenants. The employers of those who are in work and earn enough not to receive a subsidy do not pay their employees rent to the employees landlord so why should it be any different for the state? The simple fact is that many social landlords do not feel that tenants who are out of work can be trusted to manage their finances as well as those in work. This has to change and the discipline needed to secure and hold down a job is clearly linked to this. Of course there must be a mechanism to protect those who, for reasons beyond their control, are unable to manage their finances but for the majority this surely cannot be the role of the state. The changes will be painful and difficult but they are necessary.

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