Universal Credit direct payments: lessons from the demonstration projects
August 29, 2013
After presenting at a welfare reform workshop in Birmingham this month on payment methods for Universal Credit, I thought I’d pass on some of the key findings from one of the other speakers, Chris Shepherd, Neighbourhoods Manager at Shropshire Towns and Rural (STAR) Housing, to share best practice.
- Chris advised that the Government’s direct payment demonstration projects – which STAR Housing is involved in – have been extended for six months to test the impact of the bedroom tax.
- The ALMO currently has 600 residents on direct payments, with 1,100 originally in scope for the project. Chris warned that when Universal Credit comes in, there will be sanctions for non-participation.
- As the ALMO has many rural properties, with oil-fired heating, some of the residents had used their direct payment of housing benefit to pay for heating.
- He warned that on the project, residents are getting paid their housing benefit on the same day every four weeks, but under UC, tenants won’t receive it on the same day. He said the ALMO was currently looking at expanding the number of days it collects direct debits on, as currently it only offers one collection date. Despite this, Chris advised that 60% of those on the project are paying by a direct debit, but that this method wasn’t going to suit everybody under UC.
- STAR Housing currently sends out text reminders to residents when their rent payment is due and warned landlords to 'block out' days to call and remind residents to pay their rent.
- Interestingly, STAR managed to safeguard 40 to 50 residents – those it felt who wouldn’t be able to manage direct payments – out of the original 150 it had requested to be safeguarded. In future, Chris advised that in order to safeguard residents 'hard evidence' needed to be supplied to make the case and that in future, landlords might have to let residents ‘fail’ first before being allowed to switch them back to payments to the landlord.
- There have currently been 60 switchbacks on the project and Chris warned that the ALMO is thinking about taking physical cash payments again. He also advised it had had no issue with the courts in securing suspended possession orders for arrears on the project
- He said a third of tenants on the pilot hadn’t grasped that the rent is their responsibility – ‘there isn’t that appreciation’, he said.
- Unsurprisingly, he said it was bedroom tax claimants struggling most with direct payments
During our presentation - where we stressed the importance of offering a variety of payment methods and flexible collection dates for direct debits - we also revealed exclusive research from landlords around the impacts of Universal Credit. Notably this included:
- Housing professionals believe more than 40% of their residents will be paying via a direct debit by the finished roll-out of Universal Credit - a big increase on the 17% currently utilising this method, as cited by the Department for Work and Pensions' baseline survey of partial housing benefit recipients.
- Nearly a quarter believe door-to-door payments will form part of their collection strategy by 2017.
- Half of survey respondents believe more than 4 in 10 residents will be able to make a rent payment via their smartphone by 2017.
We also touched on the FSA guidance landlords can use to promote preferred providers and products.
On the day I quoted from the CIH’s excellent ‘Rent Payment and Collection under Universal Credit' report, which references the guidance with a link.
The guidance states: "Social housing landlords are permitted to promote basic banking products. A transactional bank account is not a regulated product in the way that insurance, investment or credit products are and hence there is no problem in providing general information or even signposting or referring to a specific provider or product. The Financial Services Authority produced guidance for social landlords in 2010 and many social landlords may already reference this guidance in their financial inclusion strategies: http://www.fsa.gov.uk/pubs/guidance/guidance9.pdf"
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