Direct payments: Council no longer fearing dramatic increase in arrears

Published by 24publishing for 24dash.com in Housing and also in Central Government, Communities, Local Government

One of the councils involved in the Government’s housing benefit demonstration projects says it no longer fears a dramatic increase in arrears but has urged social landlords to update their financial inclusion strategies to support tenants ahead of Universal Credit.

Tim Power, landlord services manager for 8,000-home Oxford City Council – which is taking part in the demonstration projects alongside GreenSquare housing association – also warned that time, resource, staff and investment in the process had been more than it anticipated.

The demonstration projects - set up by the Government - see six councils and their housing association partners road test direct housing benefit payments to a sample of some 2,000 tenants over the course of the next year.

At the end of this month the first wave of Oxford’s 1,600 tenant sample will be placed on to the new system – receiving their direct payment four weeks in arrears, with the money hitting their account late July. The payment will be made by BACS and recovered by the council through a direct debit on the same day.

“In the main that has been the case - the majority of people are wanting to do it by direct debit,” says Power. "That seems to be the way people want it to be. It’s easier for us, easier for tenants and certainly reassuring for them as well."

The council – which receives 53% of its income from housing benefit – says it first went about the project by notifying all tenants that they were on the demonstration project inviting them to discuss any concerns they had.

Then it wrote again to find out if they had a bank account and if they had any support needs the council should be aware of. If they were “good to go” the council obtained a direct debit mandate from them.

“To date we’ve had 1,000 replies in a period of about seven to eight weeks," says Power. "More than half have been straightforward and have provided bank details and asked to go on direct debit.”

The reminder, he says, will now go through a process of assessment.

“The pilot areas have agreed an assessment matrix – a process for assessing cases. “Through that assessment, there are three outcomes:

“1) They’ll be straight forward and go through the process

“2) They’ll be needing further support and their entry on to the process will be delayed or phased. Around 600 Oxford tenants will be going on to the new system this month, with further going on in later months.

“3) In some cases – and we’re talking low numbers – they're removed from the demonstration."

He said one of the biggest reasons for people refusing to take part was around budgeting fears. In line with how the policy will function when Universal Credit kicks in, pensioners were excluded from the demonstration.

“We feared arrears would increase quite dramatically as a result of this process," he says. “Having been through the process so far, in terms of the response from tenants, we no longer have such fears. We no longer fear arrears will increase as dramatically as we first thought.”

He said the council also had to make sure its IT system was up to scratch. “We’ve made a few changes to that. Within the pilot areas we’re running the Capita system of housing benefits, the other areas are using Northgate – so changes were made to that system to enable it to work.”

He warned landlords of the number of financial barriers e.g. access to bank accounts, not having a bank account and not being able to open a bank account as key issues they need to be aware of.

He said: “We have started the process of writing a new financial inclusion strategy – that’s the biggest lesson I’d like to pass on. It’s essential. We also found time, resource, staff and investment in the process has been more than we anticipated.”