Last week the Welfare Minister Lord Freud announced that if a tenant falls into arrears then the DWP will deduct 10% – 20% of the social tenants benefit at source, in addition to paying the full rent directly.
I have dwelt on this for a week to avoid the overuse of the word ‘f**k’ and ‘f**king’ ahead of any comment on what this means. It is a truly f**king outrageous idea with f**king horrendous impacts – ok you get the idea. And those expletives are not used for effect the use of the ‘f-word’ is very professional and surprisingly tactful to describe the horrors that will inevitably happen.
Like many in social housing I have worked in arrears. I put systems in place in a large housing association the best part of 20 years ago mainly to deal then with HB overpayments and underpayments and HB mistakes which then were a huge issue in landlord arrears with repeat and new claims often taking over 100 days.
HB operations have got better but still form a huge element of actual and theoretical arrears and as will always be the case 80% of tenants have never been in arrears and of the 20% about 80% are problematic only because of the vagaries of part-time, seasonal and zero hours work and HB getting sorted. The 80% of tenants who have never been in arrears is about to change dramatically and ALL of these will fall into arrears to which I will return.
To ensure the system changes worked I took many arrears case to the courts, the wont payers and never would payers of which a tiny percentage exist and always will. I too got frustrated at district judges awarding a suspended possession order on full rent plus (in todays terms) £3.65 per week off the arrears.
This negligible £3.65 per week is what the judiciary maintains the tenant can afford to have deducted at source from other welfare benefits. Take more and the tenant can’t afford and is likely to be back in court for breach of the SPO pretty damn quick.
Now let’s look at what Freud has announced by comparison and the horrors begin to emerge.
Between 10% and 20% will be deducted at source form other welfare benefits as well as the rent paid direct.
Take a single person on JSA or IS of £72 per week and that gives a deduction at source of £7.20 to £14.40 per week – double or quadruple what the judges think is affordable!
The UC system rapidly becomes non financially sustainable for the tenant or landlord and that is not only scary as hell for its inevitable consequences for the social tenant it is by definition unjust.
Now imagine the tenant is a couple with four children in receipt of the Universal Credit standard payment of £393.07 per week. They will have between £39.31 and £78.62 per week deducted at source. This is 11 to 22 times what a judge would have deducted and consider to be just and affordable.
Proverbial and fan anyone?
Social landlord lobbied hard on this alternative payment – which proves they can lobby when they put their mind to it!!! – yet the consequences for ‘their’ tenants, in that possessive way they like to describe ‘their’ tenants is horrendous. It is also horrendous for the social landlord in financial terms too.
Initially social landlords will get back more and get that direct from the DWP who administer Universal Credit (assuming the system works of course. Ahem!) Yet very quickly ‘their’ tenants will either be evicted or will, more likely, abandon the tenancy. As far as is known UC has no alternative payment system in place for former tenant arrears so the tenant getting these huge and unaffordable deductions at source will do a flit.
We can even project which tenants this will be namely those who receive the most in welfare benefits and soon to be UC standard payments.
- Those SRS households in the provinces from the single person to a couple with 4 children if the benefit cap remains at £500 per week, or
- Those SRS households up to a couple with 3 children if the benefit cap reduces to its proposed £440 per week level
These households types, and assuming UC does not have a former tenant arrears deduction at source, will abandon and be able to afford a private rent in the provinces (low rent areas)
In London and high rent areas of the South East this becomes all household sizes of a couple with 2 children and below.
The abandonment aspect is one possible scenario and here are more but (apologies for chopping and changing reader) let’s return to my view that the 80% of social tenants who have never been in arrears WILL, and definitively will reduce to next to zero%.
The transition to UC from the current system explains as it involves, at least, a 5 week period when the tenant receives no benefit payment. As a result ALL tenants WILL fall into arrears.
Let’s say 1 March 2015 is the date of the move from the current system to Universal Credit. On the 1 March an assessment period takes 4 weeks (again no comment on the likelihood of UC working correctly) and then a payment is made 1 week later. (I also ignore the fact a tenant can apply for a part payment in this time).
This 5-week period, the move to monthly payment of benefit, is a f**king joke and I need no further commentary as to why IDS and Freud expect the ‘benefit tenant’ can survive for 5 weeks on thin air! Yet in that time the social tenants rent will fall 4 weeks or more in arrears, which is the trigger point for social landlords to apply for (a) rent directly paid to them, and (b) deductions at source of 10% – 20%.
In that time some tenants may manage but many will go to Wonga et al, more correctly be forced to go to Wonga, Provident and the other legalised loan sharks as well as the definitively illegal loan sharks who pray on the social tenant – in other words building up debt upon even more unaffordable debt. Note too if the abandonment scenario happens, which it will, now is the time to get rid of your shares in catalogue companies!!
Landlords and especially finance directors of social landlords who do not live in the real world will see existing tenants in arrears and especially those with longstanding and high arrears have their arrears balances reduce sharply. £70 per week paid direct for the lone parent with 4 kids instead of £3.65 is a marked change after all.
Yet those without any arrears, the 4 out of 5 tenants never in real arrears, will now fall into arrears for the first time. And those tenants with ‘manageable’ or ‘acceptable’ levels of arrears will go far more into arrears and all because of the systemic fault in Universal Credit. The social landlord who is peeved (rightly) that the direct payment of UC sees no choice for the tenant and the tenant taking control away form the landlord of the payment of rent can simply instruct the computer system to automatically send alternate payment and 10% – 20% at source deductions requests to DWP.
Yet they would be mad to do so as this only guarantees a higher level of arrears and only guarantees their tenants will despise them with all of the consequences that flow from a broken landlord tenant relationship. Unfortunately, in many private conversations I have had social landlords are planning to do precisely that.
The social tenant who I have stated time after time is angry at what it perceives is the landlord abandoning them in the bedroom tax will simply abandon the social landlord who they will see not in the supportive, charitable light they always have been perceived, but as no different from the money grabbing private landlord perception they have. Repair requests will rocket. Claims over disrepair will rocket too with solicitors (and a few barristers) crawling out of the woodwork and seeking out the social tenant for legal claims on a contingency basis – I wonder how many social landlord FDs have factored the plethora of £10k+ disrepair claims into their financial plans?
The billions of pounds per year improvements that tenants make to social landlord properties at no cost to the social landlord will cease, as the social tenant can no longer afford to make their house a home.
As I have ‘banged on about’ for a few years now all of the welfare reforms are an attack and a radical and speedy attack on the social housing model. I have also ‘banged on’ about social landlords need to get their finger out and lobby as they are woeful at it. Yet the huge irony is that the one time the ‘sector; has successfully lobbied is in the one area that will see real arrears rocket and rocket far more than the 6.6% non payment of rent the direct payment pilots revealed – 13 times more not paid in rent then the current system.
The levels of actual poverty, however defined, will rocket amongst the social tenant because of what the social landlord has lobbied for here in alternate payment arrangements and the accompanying 10% – 20% deductions at source. All of the social landlords who see and take on extra ‘services’ such as is the current vogue for education, employment and training activities for ‘their’ tenants will not be able to afford them yet will have positioned themselves as being the best placed to carry this out. The HA as ‘community champion’ and providers of ‘housing plus’ services which is where they have placed themselves for a decade or more and increasingly so will (a) have to expand and (b) these HAs will not be able to afford current levels due to lower rental income – a double whammy of being well and truly shafted by the coalition which they stupidly will pass on and take out on their tenants.
Now imagine, and it is not hard to imagine, that in less than six months the Tories remain in power either alone or in coalition. The ‘welfare reforms’ – those that haven’t worked and are costing the UK taxpayer £7m more PER DAY, will be ramped up and brought online as quickly as possible. The Tories will say the electorate voted for these welfare cuts and will continue to introduce the detail of the UC operations on the fly just as this Freud plan for 10% – 20% deduction is the devil in the detail of a policy we were told was ready to go on 1 April 2013.
For the social housing model, for the social tenant and for the social landlord that is a truly F**KING scary scenario. It is the end of the social housing model. Doubtless there will be many HAs – more correctly termed PRIVATE Registered Providers – who will think this is a good idea. There will also be many ‘dinosaurs’ from social housing who believe any move towards greater commercial activity is wrong. Yet what is happening here is the old divide and conquer trick. Both of these diametrically opposed social housing views know the welfare reforms are not working and even the advocates of commercialisation who initially took the brown paper bag bung of AR to mitigate the bedroom tax and benefit cap cuts and have now abandoned it, realise the welfare reforms are ill conceived ill thought through and subject to even more political change on a whim to attack the ‘disease’ of social housing.
Yet instead of coming together as any ‘sector’ would they are duped into fighting one another and only coming together to challenge and lobby for the system outlined above which will shaft them anyway.
Dupes is too high a compliment for these incompetents who comprise the ‘great and the good’ of social housing as even when they do challenge they do not realise what a God almighty f**king nightmare they are lobbying for will mean.
Oh,in case you hadn’t realised it social tenant, you are well and truly f**cked over by this so get off your lazy arse and get a job!! Oh hang on don’t the FACTS show there are more in work claiming HB than White Dees on the dole claiming HB? Yes they do but its clear your f**king stupid and purportedly ‘social’ landlord does not know this and is not f**king clever enough to realise how such facts as this and facts such as how welfare reform (sic) isn’t working could help their real cause (and yes some even still call social housing a movement!) and work in a mutually financial interest way for tenant and landlord.