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Direct payments housing association: 'Welfare reforms could cost us £10m a year’

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Direct payments housing association: 'Welfare reforms could cost us £10m a year’

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Published by Max Salsbury for 24dash.com in Housing and also in Central Government, Universal Credit

Kevin Dodd Kevin Dodd

One of the housing associations taking part in the Department for Work and Pensions’ Direct Payment demonstration projects says the Government’s welfare reforms could end up costing it £10million a year.

Wakefield and District Housing (WDH) has seen rent arrears shoot up by nine percent since it began trialling direct payments.

In an exclusive feature for next month's 24housing magazine, WDH's chief executive, Kevin Dodd, estimates that the combined effect of the Government’s welfare changes could wipe £300 million from his organisation’s business plan.

Part of the Government's forthcoming Universal Credit system will see rents paid to tenants rather than directly to landlords.

Mr Dodd writes: "The story so far is that arrears within our project have risen from two percent before the project started to 11 percent, a total of £180,000, with most tenants carrying some form of debt.

"Only half of the 2,000 WDH tenants in the project are receiving Direct Payments. These 1,000 tenants were introduced in phases, with those considered more likely to manage their money introduced first. Of these, around 800 still receive Direct Payments. The rest have had their housing benefit ‘switched back’ to us for non-payment, based on the switch back trigger we are testing, with the majority being those who have consistently underpaid.

"The phenomena of partial payments is a developing story and the learning is being fed back into the Universal Credit programme."

Mr Dodd explains that challenges for tenants have included banks and other creditors taking money from accounts before direct debits for rent can be paid.

The CEO told a House of Commons inquiry that more advertising went in to the digital switchover and promoting Right to Buy than making people aware of how welfare reform changes affect them, and asks in the article why this should be the case.

WDH has identified many tenants who are far more ‘vulnerable’ than was realised.

The HA believes that residents with low-level mental health problems and alcohol dependency may need greater support – not just to pay their rent but also to turn their lives around.

Mr Dodd argues: "If landlords are expected to increase what they already do, we need revised data-sharing agreements to define vulnerability at an earlier stage. Tenants should also have the choice of whether they accept Direct Payments or not. This is not about protecting the income streams, but the wellbeing of those who cannot cope with the increased pressure."

He concluded: “In short, we believe welfare reform could cost WDH up to £10 million each year – the equivalent of losing £300 million from our total business plan.”

Kevin Dodd’s exclusive article on the Direct Payment demonstration projects appears in the March edition of 24housing magazine.

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