Mixed reaction to Universal Credit direct payment pilots

Published by Jon Land for 24dash.com in Housing and also in Bill Payments

The Chartered Institute of Housing (CIH) has welcomed the Government's decision to work with housing associations in trialling the implementation of direct payments under the new Universal Credit benefits system.

But the pilot projects have been slammed by the Residential Landlords Association (RLA), which claims tenants in the private rented sector have been "let down".

Earlier this week, the Department for Work and Pensions announced that the demomstration projects would take place for 12 months from June 2012. Five partnerships of local authorities and housing associations across England and Wales will be taking part.

The CIH says it is pleased that the Government is collaborating with the social housing sector to work through the impact of implementing direct payments. However, the CIH has expressed "surprise and concern" that no Scottish organisations will be involved in these demonstrations.

Grainia Long, Interim Chief Executive of CIH, said: “There is still a high level of anxiety across the housing sector about whether direct payments can be effective without causing problems for tenants and landlords, and in particular whether they will cause an increase in arrears.

"The demonstration projects provide an excellent opportunity to test the effects of direct payments, and for housing professionals to feed in to the plans. We will be working with government to make sure the findings of these projects are incorporated into the policy detail.

“However, we are keen to see administration of the housing part of universal credit carried out at a local level once the new system goes live. The demonstration projects will be using local administration of direct payments, when in reality under current proposals direct payments will be administered by people who are very remote from claimants and landlords. This is an ongoing concern for CIH, and one we will continue to explore with government.”

The RLA, meanwhile, claims the Government has "let down" tenants in the private rented sector by not including a "choice" option in the trials.

Despite calls from bodies including Shelter, Crisis, Citizens Advice Bureau and The Money Advice Trust for all tenants to be given a choice, the pilots will solely be in the social rented sector and will only explore the direct payment of benefits to tenants.

Alan Ward, Chairman of the RLA said: “It is disappointing that a Government committed to choice and personal responsibility is not allowing tenants themselves to make decisions about what is best for their own circumstances.

“Evidence clearly indicates that tenants on benefits want to be given the right to choose who receives their benefits, particularly those struggling to make ends meet in tough economic times.

"It is absurd therefore that despite being committed to evidence-based policy, Ministers are not even prepared to pilot the idea of tenant choice to ensure policy best supports tenants in the private sector.”

Minister for Welfare Reform Lord Freud said: “Direct monthly benefits payments are a key part of Universal Credit, allowing claimants to prepare for the financial responsibilities they will face when in work and to encourage them to move away from often costly weekly and fortnightly budgeting.

“However, we know that some families will need support to adapt to managing their finances in this way. The demonstration projects will help us to understand the demand for budgeting support and the best ways to deliver it.”