One of the housing associations taking part in the Direct Payment pilot scheme says the reforms could end up costing it £10 million a year.
Wakefield and District Housing (WDH) has seen rent arrears rise by 9% since it began trialling direct payments.
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 says that the arrears have risen from 2% before the project started to 11%, which is a total of £180,000.
With their individual project, only half of their 2,000 tenants have been gradually introduced to the project, starting with those most likely to be able to manage their money.
200 out of the 1,000 tenants have already been changed back to the previous payment method, as they were consistently underpaying, and the programme has shown up many more ‘vulnerable’ tenants than was previously realised.
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.
WDH believe 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.
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.”
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.
Source: 24 Dash