Welfare Reform – The tenants own October Revolution?

Forget the bedroom tax, the biggest impact of the welfare reforms on social housing has had very little discussion at all and this is direct payments of Housing Benefit to the social tenant.

Direct payment due October 2013 is one of the welfare reform policies and it fundamentally changes the control dynamic in the social landlord:social tenant relationship. It gives the tenant CONTROL of rent payments whereas historically the landlord has had control as HB was paid directly to the landlord and the tenant never saw the money. The social landlord gets between 55% and 63% (figures vary) of its income from the current way HB is paid directly to them.  The direct payment change is of huge and genuinely seismic proportions.

At a very simplistic level does the tenant pay rent or put food on the table? Is the school uniform more important than paying full rent? Do i pay for a birthday party for my daughter or pay my rent? This list is endless as to the emotive and practical decisions which will be imposed onto the tenant in the name of ‘choice’ and ‘responsibility.’   The social tenant on the lowest incomes and benefit must be the most rational decision maker of the lot in this theory and prioritise the roof over their head above everything else including letting their children go without.  The landlord is more important than the tenants children is the theory!!!

If direct payments was the only welfare reform change this year then Twitter and Facebook and Inside Housing and the Guardian and even the Daily Mail would be awash with thousands of articles on this instead of millions on the bedroom tax.  However, direct payment is coming in with the bedroom tax and the benefit cap which both reduce the social tenants income, and monthly payment of benefits that will test the money handling skills of the tenant to the full.  Bringing in tenant control of rent payment in this  context heightens the significance of direct payment of housing benefit to the social tenant.

Direct payment has been trialled or piloted in 8 areas of the country and even with carefully selected tenants on these trials we see in Torfaen in Wales that arrears have increased from 2% to 8% – a four fold increase – and in Wakefield in West Yorkshire arrears have risen from 2% to 11% – an increase of 5.5 times!

Specifically direct payment gives the social tenant economic and financial power and this is why the social landlord has been running around getting every tenant to sign up to a direct debit and even getting the social tenants basic bank accounts.  A natural and obvious reaction from social landlords to the direct payment change as was doubling their provision for bad debts which most did in anticipation of the welfare reforms.  Yet when benefit payments are delayed for whatever, and they will be as they always are, and the direct debit is not paid and the tenant gets hit by a £30 charge from their bank who will the tenant blame?  The DWP AND the landlord and such instances will see the tenant blaming the landlord for insisting on a DD in the first place.

As the direct payment trials show quadrupling the landlords original position on provision for bad debts is needed at least as the trial research to date suggests that is needed.  Note this excludes the bedroom tax and payments of council tax replacement and the overall benefit cap doesn’t come on stream until July and this substantiates my earlier point that even if direct payment was the only welfare reform change that it would be a highly significant one.

What direct payment does in simple terms is give more choice to the tenant not to pay rent.  Until now that choice has not been there and rent payments have been prioritised for the tenant with HB being paid direct to landlord.  Yet come October that choice lies with the tenant and note well the tenant cannot choose to keep the current arrangements and can’t simply say pay my landlord direct as you always have!

The social tenant has to choose how to prioritise all payments and the payment of rent needs to be seen in the round and in the context of the bedroom tax deductions, the overall benefit cap reductions (and 46% of those affected are social tenants); and with paying council tax for the first time, and with welfare benefits rising at below inflation and well below the cost of living as we see gas and electricity and food prices increase by 3 times inflation. A tricky task for the most thrifty and organised person.

What direct payment also does is force the tenant to become the customer.

Social landlords have started to call tenants ‘customers’ for years yet still treated them like a mere tenant – by that I mean a cash cow with direct HB – and most social landlord tenant consultation / involvement / participation has been largely top-show.  Yet with the financial and economic control of the payment of rent shifting dramatically with direct payment that will all have to change.

The tenant becomes the customer and the customer is king.  In operational terms the social landlord will have to be far more responsive to what tenants, these now customers want because TENANTS hold the purse strings and the landlord no longer does.

Tenants mobilisation and the risk to landlord reputation.

The use of social media to mobilise tenants is a stunning development that the social landlord does not fully see the risk of yet.  They need to as does the tenant.  The bedroom tax policy has seen hundreds of anti bedroom tax groups formed on Facebook and other social media and numbers of some exceed 10,000 in just a few short months.  The social landlord has been attacked ferociously on these SM sites – despite the welfare reforms being government policy – for the social landlords lack of challenge to the reforms.

It doesn’t matter how much validity there is in this perceived lack of challenge, the fact that perception is there is all that is needed.

The reputations of social landlords has been shot to pieces and of course not helped by many of them shooting themselves in the foot with alleged legal disclaimer letters and other heavy-handed tactics which confirm in the tenant perception (a) that social landlords are only worried about their bottom lines and ‘complicit’ in the reforms and (b) don’t give a damn about the lot of the social tenant.  In short the social landlord has kept faith with their traditional view that social housing is about bricks and mortar and not about people. Yet by giving control of rent payment to the tenant, the now customer, ALL the welfare reforms become about people and not about bricks and mortar.

A good reputation can take decades to achieve whereas a bad one can be achieved in five minutes.  The social landlord who has always been in control of the payment of rent has barely had to look at or consider risk to reputation before, at least from below with the tenant.  Yet the welfare reforms change all that and this is a huge seachange.

Come October the social tenant will consider how the social landlord appeared complicit in the welfare reforms and how they did in the tenants view little to challenge them and as a result of how tenants see them (the reputation) the tenant will de-prioritise the payment of rent.  This is on top of obvious de-prioritising of rent by the tenant when faced with paying rent or putting food on the table or their children’s new school uniforms or at other peak expenditure times such as Christmas.

The power of social media in the landlord:tenant dynamic is huge and now that the tenant is mobilised that cannot be reversed.  When you factor in far worse reforms than the bedroom tax such as the overall benefit cap have yet to receive the blanket media and public awareness of the bedroom tax as the policy has yet to roll out nationally then we see that such tenant mobilisation and tenant power can and will only increase! 

When in late January 2013 I stared writing about the bedroom tax and blog views increased massively I started getting hundreds of emails each week and hundreds of comments on blogs. This week for example these are all about tenants getting bedroom tax demand letters from their landlord and what tenants see is a distinctly heavy-handed approach from their landlords.  Many such letters have bold red ink saying DO NOT IGNORE THIS LETTER or we will start court proceedings and other such language which is angering tenants.  What do you think they will do Mr Social Landlord when direct payment comes in and the tenant has control of rent payment?  Yes, I don’t need to answer that question do I!

Social housing in operational terms is going to have to change massively and will become (tenant) customer driven as the tenant will hold all the aces from October.  There is also something ironic about October 2013 when direct payment hits at the same time that those who are hit with the 25% bedroom tax deduction will be hit with eviction proceedings as if they don’t pay they will be at the 4 full rent weeks arrears stage which tends to trigger the serving of Notices Seeking Possession.  With some unions now calling on members and neighbours to block evictions with sit-ins and the like, October 2013 could become the tenants October Revolution and heated argument and tensions really emerge between landlord and tenant just as the tenant takes control of rent payments.  The social landlord needs to very carefully consider the perceived heavy-handed and we hold all the aces approach it is doing now!

No longer will the social landlord be able to pay ‘lip service’ to tenant involvement and social housing becomes tenant directed, or more correctly customer driven.  The existing real power that the social landlord has, becomes neutered and massively diminished with direct payment and the landlord:tenant power struggle changes once and for all.  The tenant becomes the customer and that customer is king and sovereign.

The welfare reform policies shaft the landlord and the tenant.  The landlord for once is not and has not been four-square behind the tenants cause and instead has sought to pass the financial risks downwards to the tenant.  The tenant is fighting back and come October they will hold the aces as they take control of rent payments.  The risk to reputation that the social landlord has overlooked in not challenging the bedroom tax enough, the absolute dearth of any challenge to the overall benefit cap and monthly payments and the overall perception of caring only about its bottom line and not a jot for the tenant and now its heavy-handed approach to rent collection, will transform into even greater financial losses and indeed financial survival when direct payment comes online in October.

Direct payment as the tenants October Revolution anyone?

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12 thoughts on “Welfare Reform – The tenants own October Revolution?

  1. Within 30 seconds of reading about Universal Credit I knew it would not work. Government IT projects never work. Not ever. And UC is intended to connect multiple organizations and perform multiple interconnected tasks. I told my MP in January that it would not work. It’s basically a question of what combusts first – the bedroom tax or UC.

    Paying rent to tenants direct is just bonkers and requires no further comment.

  2. Hi Joe, I Chair the Midlands Network for Resident Involvement, a membership network for RI staff and involved tenants. We’ve recently established a lobbying group to try & draw attention to the raft of welfare reforms that are hitting tenants & their landlords with a view to having some impact on government policy. A long shot I know.

    We’re focussing on direct payments at the moment, which is why I’m particularly interested in your blog. A lot of the tenants that I speak to are very concerned about this and do not want the responsibility of having their housing benefit paid direct. They want DWP to give the option of having their HB paid either direct or to their landlord. They state this removes the temptation of spending the money on other things – children’s uniforms, parties, other creditors as you say.

    I do not see any harm in this as it still gives the tenant choice. I’m certainly not advocating that all tenants should have their HB paid to their landlord, just those who don’t want the responsibility. I’m aware that DWP are currently looking at groups of tenants who may be exempt from having their HB paid direct. I disagree with this blanket policy approach and would rather it was left up to the individual to decide (unless they didn’t have the mental capacity to do so).

    The flip side of this arguement is what action landlords can take against those tenants who choose to spend their HB on things other than rent. The demonstration projects have shown that there is a considerable financial risk to landlords, which is why many are looking at increasing the number of payment options available to tenants in addition to making more staff resources available to provide face to face welfare rights & budgeting advice. Many housing providers are also working with tenants to provide training & employment opportunities (where appropriate) to reduce benefit dependency. To protect tenants from evicition & landlords from going bust, I think it’s sensible to have a ‘switchback’ arrangement of 8 weeks or less.

    I’ve worked in the housing sector for 15 years and have come across very few social landlords that don’t want the best for their tenants. During that time, housing standards have improved drastically as have the opportunities for tenants to get involved in the management of their homes & communities. Anything that strengthens the position of tenants is a good thing as far as I’m concerned although I would not want that to be at the cost of social landlords losing their capacity to build new homes, develop new services or at the very worst, tenants losing their homes.

    There is a e-petition on the government’s website asking DWP to give tenants choice when Universal Credit is introduced later this year http://epetitions.direct.gov.uk/petitions/48000.I was wondering whether you;d be willing to sign and share amongst your other readers?

    Keep up the good work & best wishes.

    Chris.

  3. Not ALL tenants will have this right removed though IF social services and/or other services deem that tenant unable to perform this task, or extremely venerable in trying to DD will remain in the same way as UC can and will be paid to two members of a family if likes of severe hardship has been experienced due to one or others dependency etc so your NOT quite correct! however I’ve said on my BT group (FBs FIRST and second largest I believe still today) that UC was the far more damaging reform, I’ve been saying this since 2011 when we started advising but it’s been largely ignored but sadly this will always be the case when tenants do NOT fully understand the complexities with the BT fiasco being as it is and many not taking heed, branding those warning liars and of mere scaremongering maybe they will listen this time around ….. keep up the good works we can only try and keep trying

  4. My view as an ex TP officer is that Joe is highlighting a fundamental shift in power that will arrive with direct payments. And, from an experiential point of view he is right to state that some (many?) landlords do and have ALWAYS paid lip service to tenant participation.

    My only word of caution on the shift of power is that it could still come at a huge cost to the tenant if they withold their rent because of a poor service. Tenants will need sound advice about how to do this if they are to have such a power or if it is to be formalised. I suppose we’d better watch this space!

    I have been struck by the attitude of my own organisation towards UC and welfare reform. It’s been a mix of sticking their chests out over bedroom tax challenges (‘They shall not pass!!) to funding the membership of credit unions on behalf of tenants (so that it is of no or little cost to them), so that the tenant can have a jam-jar account. We are also putting more resources into helping tenants cope financially – enabling them to look at their current expenditure and adjusting it so that they can find extra money to cope. We are setting up a city-wide mutual exchange group with other RSLs as well – all laudable stuff that beneits us and the tenant. This mix is the result of trying to help tenants (who are increasingly those with more needs) and getting enough income to run the service. Never before have RSLs actually started to find meaningful data about the people they actually provide seervices to.Talk about being between a rock and a hard place!!

    To me, the only people who will benefit from welfare reform will be those in the legal system, who are likely to see more money coming in as possession proceedings (costs to landlords and tenants) increase. A big question is, will the Courts be able to cope and what will they do to make the case load manageable?

    There is also evidence that local judiciaries will expect landlords to do more to help their tenants, as well as tenants themselves expecting more help and a better service. Operationally, judges might start to limit possession proceedings based on tenants having spent longer times in arrears for example. So I see this as more of a double whammy for landlords. Landlords will have to do more for tenants in order to recover possession because the Courts will expect them to. That is a good thing in my opinion, as it will make the more laissez-faire landlords do more (and they should).

    Moving back to the TP angle (in particular, the colleague in the East Midlands) from experience I’ve always found those housing organisations who see TP as something that has to have huge structures & committees of tenants that look as though they are delivering customer involvement seldom actually do. These arrangements are wheeled out under the localism agenda as they were under the Audit Commission regime pre-2010 under the heading ‘We have all this structure so we must be good!’.

    If I was starting a TP system from scratch now to meet the highly possible change in the balance of power that Joe mentions, I would do what MHT and Fabrick Housing did and place the TP function in the Performance Team of any RSL – NOT the Housing Management Team (who do like their committees, groups and talking shops and also tend to like to like to deal with dips in performance er shall we say…more discretely).

    I also see no need for tenant Board members on RSLs because really, TP is all about listening to the customer’s feedback on their experience of the service. The landlord SHOULD learn from that and then improve the service from that point onwards. It’s simple but all to often over complicated by structures, committees, and then insisting that the tenants on these worthy bodies are made accountable to other tenants through voting people on and off and…….oh dear…..! The only accountablility here is the landlord’s accountability to the service user. OK? Landlords need to talk to tenants when something goes wrong or if a new service is being developed. Get the tenants in – listen, respond/improve and let them go home. Then do it ll again when you need to. It’s much cheaper and effective that way.

    Do private companies purposefully put their customers on their Boards of management just because they’ve bought their stuff?? Does Ford, Nikon, Toyota recruit people who buy their products onto their Boards? No, and they don’t because they ACTUALLY LISTEN to the customer’s experience of their products and use that info to deliver products that people want and to a certain standard. They co-create their products/services from listening – not from structures, committees, representative groups that go on and on etc. They do use short-life focus groups but also the free content on the web (reviews about their products) and REGULAR questionnaires and effective complaint handling The housing sector could save a lot of money by just making better use fo its performance staff who should be doing nothing else but talking to RSL customers. Because TP is all about performance – and it always has been and it always will be. Sure, there are fringe benefits especially to tenants, but performance is why TP exists.

    If the shift of power that Joe talks of materialises, this could also result in a shift towards more effective and authentic TP practice in the sector. Which – as by now you may have gathered – would also be a good thing IMHO!

  5. Hi I am concerned about not being able to have benefit paid direct to landlord. Had I had that responsibility whilst appealing my dwp claim I would have been very tempted to use it for food. I spent 3mths eating every other day and havent had the nutrition of fruit or veg for longer than that. when i was able to work rent and ct where first then my kids food clothes then bills and if anything left then me. But if it had meant no food for my kids i would have paid less for rent, School uniforms are a crippling expense that is also a must. No uniform no school followed by fines and possible prison. i received letter today about rent arrears but am waiting for letter from them with my end of tenancy date to give to Benefits who have put my claim on hold until they have this. I phoned them and they said well we can tell yo the date, as i then said I need it in writing and then they will get there money or at least most of it. I havent even been told how much i need to pay for the BT part yet. The guy I spoke to about ending my tenancy was rude and condescending and reduced me to tears and then they mess me about even more. This is how my social landlord takes care of there tenants.
    Whilst I am stuck here trying to get it all sorted I am unable to get to council to provide evidence to support my claim for my new home which is in another county and I do not drive. I refuse to send my passport in the post as I cannot afford to replace it. In meantime I risk losing my new home before ive even spent a night there. the current system sucks and the new one is just going to make it worse. I dont want to do DD to pay rent in case benefit stops and I get bank charges but because of my disability making it difficult most time to get out and impact public Transport has on my health I may not beable to pay on day due anyway. Its absolutely madness.

  6. Seems to me that by October the entire benefit system will be in meltdown, we all know how efficient and up to date are many of our council IT systems, last time I had to go in it took him half an hour just to get my details on screen, and was at a loss to explain why my rent had been withheld for the previous two months.
    My council, Pendle, didn’t even reply to my first BT enquiry, nor the second asking why not, so I had to put an appeal together entirely from Joe’s blog, many thanks Joe. So with BT appeals, confusion about new CT payments, nobody told me, I put it in the recycling thinking it was another council cock up, and myriad other changes, they simply won’t cope.
    I don’t understand why they want to make these payment changes, on top of everything else, unless to stir yet more confusion into the mix, call me cynical but to me it looks like a diversion, red herring to divert anger at the landlords and away from where it properly belongs, at the door of the mongrel govt.that coceived this ill begotten, bastard legislation.
    Am I alone on this one, seems created to cause division and in fighting, no other purpose far as I can see ?
    So lets just hope the whole sorry nonsense unravels and leaves IDS et al with summat much nastier than egg on their face!? I just fear for the casualties, I’m disabled, unable to speak now which is immensely frustrating when trying to sort this kind of nonsense, getting info etc. I manage best as I can, thankfully I get ok DLA so can afford to fund these changes, from money supposed to be for my care!
    Anyway that’s just a few personal thoughts, stay focussed people and together we may be able to see off this pernicious bullshit.

    1. I am worried about the divide and conquer strategy, too: strives v skivers, working-age benefits vs pensions, the unemployed vs the disabled. There are many groups online but they only see their bit of reality (just bedroom tax or just wrag). I think a more concentrated effort is required: everyone is getting shafted.

  7. Many, many people haven’t received a reply to the first letter yet. So, how can we lodge our actual APPEAL yet?? OR, those that have, have not been given the correct answers to the questions. In one way, this COULD be good as it proves they can’t cope. But WHERE does it leave us?? They are even combining a few answers in letters about the DHP. When the 2 are not related. It’s a complete mess!!…We only have a couple of days left, to start the Appeal process. So many people don’t even know they can appeal…. It’s hard to get the message out there. I belong to a Facebook group. Trying to help people appeal. If, people aren’t doing it on mass. It’s not going to work!! Too many people are frightened of losing their home due to arrears, that they are just paying it. Even though, they, CAN’T afford it.
    Many people have had unlawful letters dated in March. I’m personally so concerned this process is not going to work?? And we are going to be left with arrears to pay off.

    On the CT issue. I have already received a threatening letter. About court summons and adding £100 to my bill!! YET, they have not replied to the 2 letters I wrote to them!!

    I spoke to someone from the DWP this morning… DLA department. She was shocked when I told her, we are going to have to use our DLA to pay the rent shortfall and council Tax. She said it should be disregarded as income.
    So, they don’t even know this is going on!!
    But, what else are we supposed to pay for it with???

    I applied for a DHP. AS I am Disabled. 95% bed bound. House adapted. Was refused. As I can’t/won’t move. Nowhere to move to. Anyway. I have written to ask them to look at it again. Because, ‘apparently’ you can’t appeal. I asked them for a copy of their DHP policy. They have told me, it is still in draught form and is going for approval in May!! And yet, they are making decisions!!

  8. Systems getting bogged down by deliberate attempts to make them so are NOT helping by irresponsible pages and sites telling ALL to appeal appeal appeal to bring systems to their knees this is making all sectors find it far harder to deal appropriately with the real genuine cases that’s a fact shame on them appeal and apply if you have at least a chance of a win but NOT just to prove a point or cost more as that implication is what’s costing the absolute most vunerable dearly all costs have to be met from somewhere after all someone is and will suffer for all this

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