The Department for Work and Pensions (DWP) has been trialling the governments Universal Credit scheme in six areas, which the department has called ‘demonstration projects’, from July 2012 to January 2013, and the outcomes are not looking good.
In one of the trial areas in Wales, Torfaen, tenants rent arrears soared from a total in the region of £20,000 to an astonishing £140,000 during the seven months of the trial.
Landlords are warning that the number of evictions will increase in proportion to the seven fold increase in arrears, putting tenants and landlords in financial difficulty.
Under the current housing benefit system, recipients can opt to have their rent paid directly to their landlord – which is very useful for those with health problems who find coping with household finances difficult or confusing.
When the new Universal Credit system is implemented in the autumn, all benefits will be paid direct to the recipient in one lump sum each month.
Concerns about Universal Credit were raised by the Commons select committee in November. Its report said “We believe that time needs to be allowed for a proper evaluation of the pilots which the government is running on direct payments to tenants, followed by a phased implementation of direct payments, after appropriate safety net arrangements for vulnerable people have been developed and tested.”
But the government appear to be ignoring the concerns of their own government departments and of housing associations, and are determined to push Universal Credit into action at the planned time.
One of the largest housing associations in the Torfaen pilot area has criticised the Universal Credit system. Bron Afon Community Housing, the biggest social housing landlord in Torfaen with 8,000 properties, has 950 tenants receiving direct payment of their housing benefit.
The association has seen a dramatic rise in the number of its tenants in arrears, many of who have had a good track record and not been in arrears before.
Chief executive, Duncan Forbes, told the BBC “That was a group of people who had a good track record of payment and pretty low level of arrears, thrust into a position where they are now is significant arrears. At the same time we’ve increased our staff levels by about double what we would normally put into income recovery.”
Mr Forbes went on to say that if there is no long-term solution for paying the rent arrears it will mean the association will be unable to sustain business as a landlord. In addition to the arrears, the association’s costs have risen through having to employ more staff to administer the debt.
Steve Clarke, managing director of Welsh Tenants Federation, told Eye on Wales that direct payments are one of the two major causes of concern.
The other is the housing benefits changes – or so-called “bedroom tax” – that come into force next month, which Mr Clarke’s organisation has estimated could put 4,000 Welsh social housing tenants at risk of eviction even before Universal Credit begins.
Mr Clarke said “There are a lot of people out there that are finding it difficult on very small incomes to be able to manage their budgets. You only need a broken washing machine or cooker and suddenly you are in a real difficult bind in missing your rent.”
Again, it seems that the poor and vulnerable in society are being hit by an ill-conceived government policy which will be directly responsible for higher rents, more homeless, and a disenfranchised population with little hope.
The facility to make rent payments directly to landlords was introduced for very good reason. It provides a method where those who are unable to manage their budgets, for whatever reason, are assured that they at least have their basic need of somewhere to live met. It also means that landlords are able to function and provide further accommodation or develop accommodation initiatives because they can be sure of financial stability.
What will be created by Universal Credit is an ever decreasing circle of misery. Rent arrears will soar, housing providers will have higher costs though trying to recover arrears, and will have reduced income because of arrears, which will mean they are unable to maintain or provide adequate housing for those most in need. It is a no win situation.
Those on low incomes are already under immense financial pressure because of the ludicrous cost of energy and rising prices for basic needs. Instead of concentrating on doing something about the profiteering/racketeering of their business ‘colleagues’, the government are wasting taxpayer’s resources to make life miserable for the poor.
There is no point in operating pilot projects if the government has no intention of taking notice of the outcomes. Universal Credit is, and has been constantly predicted to be, a universal failure.