Landlord keen on credit union investment ahead of Universal Credit

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

A Merseyside-based housing association says it could invest in its local credit union to support its tenants under Universal Credit.

Helena Partnerships – which owns and manages 13,500 homes – works in partnership with two credit unions and provides £5 incentives for tenants and their families to join.

Its arrears manager Bob Newton (pictured) says the landlord is looking to ensure that its community-based union – St Helens Credit Union – where he sits on the board, offers tenants the facility to have benefits paid in and direct debits taken out.

He said: “It’s one of the things we’re looking at as part of the Universal Credit,” said Mr Newton.

From 2013, housing benefit will be rolled into the new Universal Credit, which, instead of being paid directly to the landlord, will be paid monthly to tenants.

New powers that came in this month free the credit unions to extend their services to community groups and social housing tenants.

Mr Newton said there was a commitment at the senior level of Helena to invest in the local union to ensure it can provide the new facilities.

He said: “I think we’d definitely look at it. Take the under-occupation benefit cuts – which will cut the housing benefit from tenants with spare rooms. The impact of that alone is around about £2.5m a year of extra income we’d have to collect. Universal Credit is a whole new ball game. It’s an unknown. From a business point of view, even if there are start-up costs to set up that account with our local credit union, it’s something that we’d look at very seriously.”

He said the landlord was concerned that many of its tenants have regular bank accounts with overdraft facilities where benefit money could be swallowed up by bank charges.

He said: “If you’re with a bank and go overdrawn there are daily charges which can be quite high. With the credit union there would be an admin charge for going over but it would be small. And it’s certainly not a daily charge either.”

There are some 30 credit unions in Britain now operating “full blown” current accounts – from which direct debits and standing orders can be set up from.

There are question marks over the sector’s infrastructure and capacity to deal with increased caseloads come Universal Credit, but the Government has pumped investment into the sector as it sees it playing a key role in its welfare reform.

New credit union powers mean:

• Housing associations can now assist their local credit unions to increase the supply of affordable credit in a community or increase the capital of the credit union by depositing money.

• Credit unions can choose to pay interest on deposits, instead of a dividend.  This could make saving in a credit union more attractive, and help credit unions to mobilise savings.

• Credit unions can now provide services to all the employees and tenants of a housing provider, even if many of these people live outside the area currently served by the credit union.