Below is a short piece which demonstrates just how much of an imbecile and ignorant buffoon Lord Freud is. That’s me being personal you think reader? Just read on and you will see how over generous I have been in those comments.
The issue is Freud’s latest hare-brained scheme concerning the payment of Housing Benefit which is now paid direct to landlords. In October this will start getting paid directly to the tenant and monthly in arrears (yes what a great idea that is!) and managed payments – the new announcement last week – is when a tenant goes into arrears as is inevitable given the stupidity of direct and monthly payments and the government allow landlords to have HB paid direct to them again.
Lord Freud speech at the CIH conference on managed payments last week. He said:
We have decided to provide additional protection for landlords by accelerating the rate at which we recover the arrears for those switched back to managed payments. Typically, if a claimant is not repaying other debts we would expect to recoup the rent arrears from tenants hitting the two month trigger point within six to nine months. This will help ensure that landlords’ cash flows are protected.
What does this mean?
- If we assume the social rent is £85 per week then two months or 8.66 weeks in arrears becomes £708 before the DWP will pay direct to the landlord instead of direct to the tenant.
- Recouping these £708 arrears means direct deductions from other benefits over a six to nine month period, or over 26 to 39 weeks.
- £708 arrears over 9 months or 39 weeks is a direct deduction of £18.16 per week and over 6 months or 26 weeks is a weekly deduction of £27.24
- The standard deduction today is £3.60 per week.
Can a tenant afford a deduction of £18.16 per week or a minimum 5 times higher than the current £3.60 per week deduction?
That is a serious question that becomes rhetorical as of course they cannot afford such a deduction.
Note too that if the social rent is £150 per week as it can be in London then the deduction at source will be £50 per week and a London tenant with an ‘affordable rent’ tenancy may have a weekly rent deduction from welfare benefits of £106.58 for 26 weeks!
That is almost 30 times the current rate of £3.60 per week which is the amount that judges think a tenant can afford from their other welfare benefits yet Lord Freud promised social landlords he will increase that by 2936%
What this shows, yet again, is that this is a back of a fag packet policy from Lord Freud that has not been thought through and, yet again, the great and the good of social housing took the imbecile Freud at his word.
Yet this ill thought through plan from the buffoon Freud may have far more sinister aspects for the social tenant.
The social landlord typically takes court action ahead of two months arrears and gets, again typically, a suspended possession order plus £3.60 per week off the arrears. However, Freud’s plan would make that a stupid arrears policy for any social landlord.
Instead the landlord does not seek a possession order until after 9 weeks of arrears have accrued and rather applies for a deduction at source for the arrears. So instead of the social tenant having £3.60 per week deducted from other welfare benefits at source the tenant will have at least £18 per week deducted from benefit and the landlord gets arrears reduced far more quickly. If the tenant is also hit by the bedroom tax then presumably the landlord can ask for the deduction to be £18 per week plus the bedroom tax of say £14 per week, making a total of £32 per week and mitigating the financial risk of the bedroom tax at the same time!
This delay in seeking a possession order makes economic sense for the landlord and also reduces social landlord’s costs of chasing former tenant arrears.
Given the total absence of any reconsideration of even the most hare-brained policy from the coalition and the fact that the financial bean counters who rule the roost at social landlords will be rubbing their hands with glee at this, then the ‘managed payments’ policy is overtly sinister and any tenant that allows two months of arrears to build up is well and truly f –UC –ked by this policy.
So was I being critical of the noble Lord David Anthony Freud, Tory – or Lord DAFT dear reader?
I wasn’t was I?