Tuesday, 03 March 2015

Direct payment pilots extended to test bedroom tax

The Department for Work and Pensions has extended pilots testing the direct payment of housing benefit to tenants to assess the impact of the bedroom tax.

The six schemes that are assessing the effect of paying housing benefit to tenants rather than landlords under universal credit will now run until the end of the year, extending the timeframe from a year to 18 months.

Welfare reform minister Lord Freud said extending the pilots would help the government understand what measures are needed to ensure rents get paid.

However, Lee Sugden, executive director of resources at Wakefield and District Housing, told Social Housing’s finance conference today that the housing association’s pilot had been extended because of the bedroom tax and other welfare reforms.

The latest results from the pilots, which have been released today, show the rent collection rate among the 6,168 tenants involved in the schemes was 94 per cent. This is up slightly from 92 per cent after the first four months of the pilots, but rates vary between the pilots from 91 per cent to 97 per cent.

The figures also show payments for 1,258 tenants have been switched back to landlords.

One of the key points the government wants to understand is at what point payments should switch to landlords. The DWP recently announced that wider universal credit pathfinders would switch payments if a tenant runs up two months of arrears, but the department said this would not necessarily be adopted more widely.

The bedroom tax, which reduces housing benefit payments for working age social tenants who are deemed to be under-occupying their homes, was introduced at the start of April, and some housing associations have already raised concerns about increasing arrears resulting from the penalty.

South Yorkshire Housing Association has said around half its affected tenants are not paying the penalty, and yesterday Nick Atkin, chief executive of Halton Housing Trust, said around 18 per cent of its 920 tenants who are under-occupying have not paid.

Lord Freud said: ‘The demonstration projects show the majority of claimants are managing their own rent – even through Christmas when budgets can be tight.

‘But we have always been clear that there needs to be protection for both tenants and landlords if people build up arrears and to target help at those people who should not be placed on direct payments.

‘The projects are helping us to develop and set this protection and that is why we are extending them for six months.’

Readers' comments (23)

  • What madness!

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  • sounds like they got the wrong answer so are going to ask a different question till they get told what they want to hear

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  • Trevor Galley

    Message to David Cameron & Co. Your "spare room subsidy", will not encourage people to move to smaller properties and it will not make the savings you hope to the spiraling housing benefit bill. Your policy of pruning back welfare benefits and social could set this country back even further" in terms of child poverty and child wellbeing, with the very poorest in society hit hardest.

    And so with no real modelling you introduce something as controversial as this! And then decide to extend your pilots to test it! What is there to test - the controversial bedroom tax as bad policy and bad economics that risks pushing up the £23bn annual housing benefit bill and like the Poll tax before it - its just wrong and one can only speculate on who the policy advisers are - because clearly you are talking/listening to the wrong people and this will cost you the next election?

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  • michael barratt

    If the DWP writes to you stating this is the amount the law says you need to live on and then the bedroom tax is deducted from this amount you dont need a direct payment pilot to know what the result will be.

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  • FREUD (if you are listening ?): Governments have tried direct to tenant payments before and it DOES NOT WORK. What is it you don't understand about tenants having other higher priorities other than rent. This is taxpayers money you are WASTING.

    A heard a great example last week of an LHA tenant calling her landlord asking if the LHA benefit can go directly to her. When asked why, she told him that her friend had the benefit paid directly and she was delaying the rent payment so she could go to Benidorm and she wanted to do the same and travel with her friend.......

    You need to speak to the people on the ground dealing with recovery of LHA. You are blind on this issue. A perfect system of people paying their bills on time every time does not exist.

    Taxpayers money Lord Freud

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  • More interest free 'landlord loans'. Good times.

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  • Chris

    The best way to beat the bedroom tax is to use a bed-settee!

    Absolutely, dropped from a height on Tories it could prove highly effective; a modern take on carpet bombing even!

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  • Joe Halewood

    Read page 2 of this hilarious fairy story that has been authored by Hans Christian Andersen

    "Projects are operating within existing processes and support structures they are not providing a pathfinder for direct payments"

    So if something is not a pathfinder or pilot then how can a non-pilot be extended?

    Goebbels himself would be proud of such sophistry Lord DAFT (David Anthony Freud Tory)

    Lord Daft extols and lauds that average rent take is 94% overall - which of course is 6% non-payment compared to less than 2% normally under the current system. Hence arrears from these carefully selected tenants have more than TRIPLED ob average. Yet Lord Daft lauds them

    Goebbels would be especially proud of that one!

    Lord Daft has two that are not very small - in fact he has huge cojones

    The (non) pilot is being extended is lauded too. In plain English Oh s**t we need more time and its not going to be ready

    What a clever clever man Lord Daft is !! Yes this report is a load of b*****ks isnt it!

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  • Joe Halewood

    Yes just realised ive confused Goebbels with Goerring re cojones - still didnt they have something in common?

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  • Perhaps I can assist Lord Flawed on measures needed to ensure rents get paid - RENT CONTROL. Simples.

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