Universal credit is proving its worth and revealing not all landlords know as much as they think, says Lord David Freud
What do you know?
Universal credit has started. Claimants in Manchester are receiving payments right now. But the work to establish strong support for claimants and protection for landlords must still continue.
Twelve months into the demonstration projects, I am encouraged to learn from their findings about the best way to support tenants and landlords make the move to direct payments and universal credit.
The pilot projects are showing the majority of claimants are managing their own rent - even through Christmas when budgets can be tight for people. A minority of tenants need help and we are gaining detailed insight into what support they need and how it can be provided so that the financial position of landlords is protected.
Again and again, I have been struck by some of the specific cases that have been found by landlords taking part in the demonstration projects.
For example, it was shocking to learn of a family that was living in appalling conditions because their father was a lone parent of four children and struggling to cope with a heroin addiction - and they were not getting the help they needed because they were not on the radar of the relevant authorities.
This example only came to light because the tenant and the landlord had a changed relationship because of direct payment. In fact, one of the first things we learned from the demonstration project was that landlords did not know as much as they might have thought about their tenants.
This may seem a dry, academic point, but it means that people with complex issues are not getting the help they need.
We also found during the projects that it is not straightforward to predict who might struggle with direct payment and who would find it easy. Many tenants who landlords thought might be ‘high risk’ have managed very well.
Turning lives around
For example, one social landlord had a tenant with previous drug and alcohol issues who was also an ex-offender and did not have a bank account. However, he felt he had done much to turn his life around, to deal with his issues and to try to find work.
After an initial meeting with a welfare reform officer, this man quickly opened a bank account and moved on to direct payment. Again, once the landlord got to know more about the tenant, it was better able to help them.
We know the areas taking part in the project have put extra resources in to manage the extra tenant engagement required. This was needed as the demonstration projects started in mid-2012 before other support was available. We have now published details of our Local Support Services Framework, which will help landlords and their tenants who may require extra support to access universal credit.
We will continue to work with social landlords and other partners to make sure that the support tenants need to make the change to direct payment is in place. Social landlords will need to make decisions about how they will collect the rent once tenants move on to direct payment.
We have learned a lot about how to support the gradual roll-out of universal credit. There are still key decisions to take around the issue of when we would switch back a tenant to managed payments to the landlord and we are considering this matter carefully.
But it is not simply a case of setting this ‘arrears trigger’ and then moving on. There is still information and knowledge we want to gain from the demonstration projects that we can share with landlords, for example, on communication with tenants.
I understand the concerns of landlords as we progress with universal credit. We know some people will need extra support to manage their own rent payment, and we are committed to ensuring people do not fall through the cracks.
But the overall prize of welfare reform is helping more people into work so they can improve the lives of their families. Universal credit will prepare people for the world of work by getting them to manage their money in the same way people in work budget. Breaking this behavioural barrier is an important step in helping people move towards financial independence.
The role of landlords is important to this, and while we will ensure the landlord’s financial position is protected we will encourage social landlords to help their tenants move towards financial independence.
The demonstration projects are helping us do this and I am certain landlords will welcome the fact we are continuing them for a further six months.
Lord Freud is minister for welfare reform