A few days ago there was an article in the Independent about the first year of Universal Credit in Warrington entitled Universal Credit isn’t working. The reason I am commenting here is that I suspect THE major issue has been missed although stated in the article – the cost to landlords of about £1300 per tenant per year.
Yes I did say £1300 per tenant per year!…oUCh! oUCh! oUCh!
The article was well read and circulated and Peter Fitzhenry Director of Golden Gates Housing – the former council housing department – was rightfully scathing over the policy and the article featured:-
Payments have been so haphazard that 92 per cent of those on Golden Gate’s books using the new benefit are in rent arrears, and two have been evicted since moving on to it. A further 13 are on suspended possession orders or notices seeking possession. Typically, around half of housing association tenants on housing benefit are in rent arrears, according to the Department for Work and Pensions (DWP). “The problem seems to be that the scheme is running but they’re making it up as they go along”, said Mr Fitzhenry
The above was the focus of attention across Twitter, Facebook other social media and also reported in Inside Housing and 24Dash and the ‘usual suspects’ retweeting and disseminating the horrendous figures as you would expect with 92% in arrears and a further 13 on SPOs etc.
Yet one later comment stood out for me which has received scant discussion or comment: –
Because of the small scale of the pilot, only 40 of Golden Gate’s 8,700 tenants are on universal credit, but the housing trust has had to dedicate two full-time staff to chasing DWP payments for those on it.
Whoa!….40 tenants on UC (and even set aside only the simplest cases of single people are piloted here on UC) yet the landlord has needed to take on TWO ADDITIONAL FULL TIME MEMBERS OF STAFF TO DEAL WITH THIS.
Two full-time members of staff including on-costs is a cost to the landlord of £50k+ per year for 40 tenants so about £1300 per tenant per year or about £26 per week per UC tenant collecting rent!
That can only have one of two outcomes. Either the landlord goes bust or rents will need to increase by £26 per week to cover the landlord’s increased expenditure in collecting rent – and specifically in chasing the DWP who ‘make it up as they go along’ says Peter Fitzhenry.
oUCh! oUCh! oUCh!
Ok collection costs would have to come down over time (excuse that reader I am assuming some form of rational thought has gone into UC) but there will be no doubt that landlord’s rent collection costs will increase significantly…as will the Housing Benefit bill as landlord’s will have no option but to recover their costs through increased rent levels and likely have to reduce services too.
Many have strongly suspected UC and housing payment (the replacement for HB) was drawn up on the back of the same fag packet as the bedroom tax yet here we have the first inkling of what that additional cost is going to be. And it is a bloody huge cost and threatens the viability of all social landlords and especially those social landlords in the new areas of the North West announced recently by Freud, who of course said that UC is a wonderful success story blah blah blah!
Yet the figures and particularly the huge added costs to landlords will rightly frighten the hell out of social landlords in the North West and especially the transferred former council housing landlords in Halton, Sefton, Wirral, St Helens, Bolton, Knowsley and the other 7 local authorities in the North West who are in discussions with DWP over this next phase.
Peter Fitzhenry has started the ball rolling in being highly critical of this particular welfare reform and many social landlords have now learned they were too quiet and they would admit (privately of course) they didn’t challenge enough over the bedroom tax in public at least. They all now need to be highly vociferous over Universal Credit as this is a business survival issue and that is not hyperbole yet social housing is notoriously quiet in the public arena and really need to up their game.
The rest of the UK social landlords will be looking to the NW landlords to make some noise as social landlords elsewhere will know they will be next. For its own sake they can’t leave this to individual NW social landlords or the Northern Housing Consortium to do alone, the whole of social housing, that claimed ‘sector’ which is all too often a chimera needs to act and act quickly.
The fact that few if any of this claimed ‘sector’ have commented on the unsustainable excessive and additional costs UC will cause is not a good sign is it? Is there a housing ‘sector?’ Does it have any balls? – These are the two questions that SHOULD headline the upcoming CIH conference yet I suspect it will be the usual junket and jamboree instead with more comments on who has got the latest IT kit and best social media strategy rather than this business survival issue for the social housing model and how woeful social landlords and their umbrella groups have been at challenging them in the past – The claimed ‘sector’ does not do fault reader!
We shall soon find out and I for one don’t hold out much hope that they will given past performance on welfare reforms!
Yet it is a case of touch paper lit chaps time to place the rockets!
PS – The disaster in waiting that is UC that forces a £26 per week or 30% rent increase on average for the social tenant would only increase the current HB bill by about £4.5bn per year. What a clever man that IDS is eh reader…and the Telegraph has the nerve to call Osborne the incompetent innumerate!!