Time to get rid of the Universal Credit catastrophe

Yesterday it emerged that a trial of the full digital implementation of Universal Credit in Croydon is taking 12 weeks for recipients to get any money.

Twelve weeks!

The source of this is credible as the director responsible for this in Croydon related it to the DWP committee in parliament.  That credible source is we must assume very credible and that evidentiary basis is important as it counters the I believe it to be so position vehemently adopted by Iain Duncan Smith at every turn these past 4 years.

It is also critical to note that Universal Credit today only covers about 3% of the numbers of claimants it was designed for and does NOT apply to 97%.  ]

As it is failing totally now and with such a tiny percentage and we are told these trials or pilots are a way to ‘suck it and see’ on a tiny staggered roll out basis it means that, at best, the government know it has huge problems, and more probably that the government know it is a catastrophic and expensive folly and failure.

Going without any money for 12 weeks has huge obvious impacts in every area and it directly creates debt and concerns for all recipients and in all areas of their lives.  What actions will the utility companies in gas, electric and water take? What actions will every local council take in terms of council tax payments? What actions will the banks take etc and of course how the hell will these families put food on the table and clothe their children!

Here I look at a tiny part of the consequences for housing tenants both private and social and the impacts are as horrendous as they get.

Private Rented Sector tenants

Let’s start with stating the bloody obvious points that;

  • NO private landlord is going to wait 12 weeks for their rent to be paid and nor should they.
  • This will inevitably lead to s8 and s21 eviction notices issued like confetti to all existing private tenants.
  • An inevitable and systemic path to homelessness ensues
  • This will inevitably lead to almost if not all private landlords refusing to accommodate new tenants who are on Universal Credit.

The financial risks of both existing and future Universal Credit tenants is simply too high.

Social Rented Sector tenants – The financial risks of both existing and future Universal Credit tenants is simply too high for all council and housing association landlords too!

I could easily leave the argument here as Universal Credit is a financial risk too far for every council and housing association tenant and every landlord.  Every social tenant whether existing or future in receipt of any of the benefits that will move into Universal Credit of which housing benefit is one.

Housing benefit recipients in social housing number 3,181,638 in the latest DWP official figures issued in November 2016 for August 2016.  Yes those pesky factual numbers again.  There will also be a much small number of social tenants already in receipt of the Universal Credit replacement for Housing Benefit who are not included in this figure and additional to it.  Let’s say 3.2 million social housing tenants receive housing benefit and there are 4.3 million social housing properties rented by councils and housing associations so 3.2 million out of 4.3 million social housing tenant households get housing benefit.

Therefore 74% of all social housing tenants receive Housing Benefit.

Therefore 3 in every 4 social tenants will be affected by Universal Credit and social landlords have to wait 12 weeks for the rent to be paid in three quarters of all of their properties. 

That will mean that ALL social landlords will incur huge cost of money problems and will ALL see every one of their bankers seek to increase the cost of interest on the money they lend to them and … etc, etc, etc, … see some of them go bust!

Will Councils go bust too? 

Yes they will as evictions will again soar as will homelessness as will every local councils costs of homelessness.

C’mon Joe you’re scaremongering again will be the all too typical and hugely errant response to social landlords and councils going bust.  Such suggestions are wildly speculative and so ridiculous to even be considered … surely …

Yet I don’t seen these same naysayers giving this scaremongering response to the auditors Grant Thornton or to the Tory Peer Gary Porter who chairs the LGA as reported in the Guardian here in November 2015 or as the BBC reported that councils could go bust in October 2015 here and only this week we read of the housing regulator putting provision in place for housing associations going bankrupt.

I strongly doubt any council will be allowed to go bust which is not the same thing as going bust, yet I do believe there is a strong chance of some housing associations, and I do mean more than one by the combination of Universal Credit, Benefit Cap, SAR, LA maxima cap and all of the aggregated impacts of the cuts in entitlement to housing benefit and I expect at least one high profile housing association to go bust and not be ‘rescued’ by 2018.

I will elaborate in huge detail in a separate piece why I believe some housing associations are too financially toxic to be ‘rescued’ by another larger one as in the Cosmopolitan example of a few years back.  All of the new conditions since the Cosmopolitan rescue in the cuts to HB entitlement to date and those known to be coming in mean there are much greater risks than the Cosmopolitan example and all housing peeps can anyone recall how many HAs actually rejected the Cosmopolitan rescue deal? Ah!

As long as 5 or 6 years ago there was universal consternation among social landlords as to the direct payment aspect of Universal Credit – the what is now housing benefit paid directly to social landlords becoming paid in housing payment direct to the tenant under UC – and that extremely warranted concern of social landlords was in the context of a seamless transition from the existing system to Universal Credit.  Now with this 12 week wait in the first trial of the full digital implementation that concern is a thousand times that of 2010/11 when UC was first mooted.

Make no mistake Universal Credit is another nail in the coffin of the social housing model and the wider welfare state and one put in place with a sledgehammer.  At every turn it is being found out to be the folly and catastrophe it always has been.  Each release of the facts of what it actually means counters the IDS mantra of “I believe it to be so” which has been so politically pervasive to date.

Nobody as yet has countered my posit that Universal Credit with its not a penny more not a penny less theory and 100% take up of entitlement will see by the governments own figures on the non take up of ‘welfare’ see an actual UC increase in the welfare spend by £24 billion per year.

They haven’t done so because they can’t as this is just another systemic flaw that the creators of the Universal Credit system totally forgot about in its design and the funding of supported housing being another example of what it failed to include in it design and has now led almost 7 years later to the current revised LHA Maxima cap policy that was first tried an abandoned in 2011.

Where this leaves scope to challenge the entirety of Universal Credit which is a chronic failure that should be abandoned immediately is a huge problem for social landlords and especially for housing associations given the very cosy getting into bed position they have taken with this government in the build build build and VRTB areas.  This is a problem for housing associations and I doubt they will challenge the Universal Credit charade that will see some of them go out of business because David Orr has driven the up a cul-de-sac with this cosy relationship.

No doubt the housing sheep who follow David Orr and will not have a word said against him will bleat about that.  The same David Orr who constantly tells us that ‘housing’ is now on the government agenda and how well it is perceived with vacuous unsubstantiated proclamations of how better placed all housing associations now are.  David Orr may believe it to be so just like IDS has always been with Universal Credit!

Do I need to continue with heavily fact-based arguments for the apathy and downplaying of and often not seeing and especially the inherent inability to challenge the so-called welfare reforms that are making housing associations a risk too far for their current financial backers?

How about the almost non-recognition by the NHF of the fact that the LHA Maxima Cap when that comes under Universal Credit will see over half a million general needs pensioner tenants get a cut in their housing benefit levels which adds to the 12 week wait as a financial risk too far?

More than 26% of all social housing tenancies (circa 1.12 million) are headed by a pensioner so this LHA Maxima cut under Universal Credit that will apply to all existing and not just new pensioner tenants in general needs social housing or to half of all social housing pensioner households is an increased financial risk to social landlords created by … Universal Credit!

Will social landlords finally wake up to the Universal Credit threat to their survival and finally grow a set and challenge the policy vigorously and publicly like any other sector would do?

Hahahaha – well I did tell you that this 12 week wait is funny reader …

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