HA's universal credit experiment records 99% rent collection rate
Published by Max Salsbury for 24dash.com in Universal Credit and also in Communities, Finance, Housing
HA's universal credit experiment records 99% rent collection rateImage: Money Arrow via Shutterstock
A Salford housing association says its experiment with direct housing benefit payments to tenants has been very successful.
With universal credit (UC), the government's flagship reform of the welfare system, set to fully roll out across the North West of England this year, City West Housing Trust decided to set up the trial to see how direct payments to tenants, a major element of UC, would affect its own residents.
At the end of the trial, City West saw rent arrears among its 54 volunteer tenants drop, with rent collection standing at more than 99%
Remarkably, 43 of the 54 tenants selected for the experiment had been hit by the coalition's controversial bedroom tax.
The social landlord's trial yielded far greater results than many of the Department for Work and Pensions’ own pilot schemes designed to test direct payments to tenants.
A pilot last year in south Wales by Bron Afon Community Housing led to a 50% increase in arrears, while other projects in Edinburgh, Oxford and Southwark showed increases of around 30%.
And also last year, a report by Ipsos MORI and the University of Cambridge for the National Housing Federation revealed 8 out of 10 housing associations feared their rent arrears would jump by an average of 51%.
Justin Freeman, City West's head of income management, said: “The results are a stark contrast to what we have seen across the sector in the other direct payment pilots and the experience of housing providers in the Universal Credit pathfinder areas.
“We’d seen a lot of reports on the impact that direct payments are going to have on social housing tenants with people struggling to manage their budgets. There has also been plenty of research about what that would mean for housing associations as they tried to keep rent collections high and manage their finances.
“We wanted to pull it all together and carry out our own research to show how it would impact in our communities, with our staff and our customers.”
Almost 75% of the tenants who took part told City West they felt able to cope with the change to managing their own budget - and the mass majority of them (52) opted to remain on direct payments after the trial had finished.
City West says it made a "significant investment" in making sure that its tenants received all the support they needed to begin paying their bills and balance their budgets during the pilot project.
The total costs associated with supporting customers rose from £14.91 per case per month for those outside the pilot to £60.51 per case per month for those taking part. The vast majority of the large cost increases related to staff time, the landlord said.
Justin Freeman said: “We wanted to make sure that we left no stone unturned. We gave customers all the support possible to cope with the change and manage their bills and budgets.
“It meant that the vast majority of the customers taking part, even those not used to paying their own rent, were able to take control of their own finances at an early stage.
"We helped them manage their income and outgoings so they could manage any debts and rent arrears, while still making sure they had enough money for day-to-day living costs.
"For those who were unable to take control of their finances effectively, we’ve learnt a huge amount and this will help us to seek appropriate Alternative Payment Arrangements under UC."
Mr Freeman said that City West's projections estimate it would cost in excess of £1.2 million to deliver such a level of report on an ongoing basis.
However, he added that the trial showed that not all tenants would need such an intensive level of support.
Following the pilot, City West has now developed plans to:
- Move customers on housing benefit who are already managing their finances well on to direct payment early, ensuring that the maximum level of staff resource is available to support those with the greatest need at the ‘peak’ transition point.
- Create ‘heat maps’ to show where additional staff and support services will need to be deployed.
- Look at options for additional staff and resources to make sure people get the right support at the start of their switch to direct payment, before problems arise.
- Boost support programmes aimed at getting customers back to work before the switch to UC.
- Seek partnership opportunities to co-deliver, co-locate or co-commission services such as good-quality money, debt and welfare advice.