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Universal Credit: 'Carefully selected' tenants struggling to cope with direct payments

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Universal Credit: 'Carefully selected' tenants struggling to cope with direct payments

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

Universal Credit: 'Carefully selected' tenants struggling to cope with direct payments Universal Credit: 'Carefully selected' tenants struggling to cope with direct payments

By Neil Merrick

Tenants taking part in the Government’s ‘direct payment’ pilots are running up larger rent arrears than other families whose housing benefit is still paid straight to their landlord, according to one of the housing associations involved.

Figures from Bron Afon Community Housing show that tenants given responsibility for settling their rent using benefit paid to them direct by the Department for Work and Pensions owe an average of £100 more than other households at the association.

About 7,000 tenants outside the pilot owed an average of £183 at the end of January. This includes 5,400 eligible for housing benefit whose rent is paid to Bron Afon in the traditional way by Torfaen Council.

In contrast, 966 tenants taking part in the pilot owed an average of £282. As the DWP pays benefits to tenants four weeks in arrears, this figure only includes money outstanding at the end of that period.

Duncan Forbes, Bron Afon’s chief executive, said he was expecting arrears to rise for tenants in the demonstration project but not on such a scale. About half the tenants, who began piloting the new system last August, were carefully selected because they were unlikely to face problems managing money. “Some of these people will be in debt for the first time in their lives,” he said.

The extra arrears throws into doubt government assumptions that tenants will adapt their spending behaviour once they have more money at their disposal, said Forbes. “Some of them have next to nothing. They’re struggling to budget on a weekly basis, never mind on a four-weekly basis.”

Meanwhile, it is costing Bron Afron more to chase the extra debt and help tenants in difficulty. On average, one of its income recovery officers is responsible for every 187 tenants in the pilot who owes rent. This compares with one officer for every 363 tenants with rent arrears outside the pilot.

Each officer costs the association about £29,000 per year. “We were looking at it as a temporary cost,” said Forbes. “Now we’re looking at it as a permanent cost that is stemming the flow rather than solving the problem.”

Torfaen, in South Wales, is one of six demonstration project areas that are testing the new system ahead of October’s introduction of universal credit. A DWP report in December suggested that rent collection was not a major problem for pilot landlords with 92% being collected on time.

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