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27 January 2016

There’s still time for a government rethink on universal credit

The plans will put tenants and landlords alike on the brink.

By Alan Ward

Thousands of tenants whose rent is paid directly to their landlord are losing this safety net under Universal Credit – causing a huge jump in rent arrears.

A total of 16 per cent of Universal Credit claimants who rent found themselves owing money to their landlords after three months of claiming the payment, according to figures published by the Department for Work and Pensions in October.

Peers will today get the chance to re-introduce tenant choice with an amendment being moved to the Welfare Reform and Work Bill, proposed by Baroness Meacher. This would give tenants the opportunity to choose, where they would prefer it, to have the housing element of their Universal Credit paid directly to their landlord.

Ministers have argued that Universal Credit is about preparing claimants for the world of work and that those receiving it should be expected to manage their own finances as they would with a wage.

The RLA has no qualms with this. With the right support, tenants should rightly have the confidence to budget for themselves.

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But for a government committed to individual choice and responsibility, what can be more responsible than enabling tenants receiving Universal Credit to decide what is best for their own finances to secure the roof over their heads? Why does the Government feel it knows what is best for every claimant? Surely choosing to have the rent paid directly is a responsible choice and is just an alternative to setting up a direct debit.

Denying tenants this choice does not help those more vulnerable who may not be ready, or have the facility, to run their own finances.

While for many tenants with access to banks, direct debits effectively allow for payments to a landlord, this does little to support the 8 per cent of tenants living in private rented housing who do not have access to banking services because of their low income.

In March last year a joint report by Women’s Aid and the Trades Union Congress said that giving tenants the opportunity to choose to have the housing element of Universal Credit paid directly to their landlord would support women facing financial abuse.

Of the women responding to the research survey, 37 per cent agreed that housing element should be paid separately from Universal Credit and almost 60 per cent agreed that these costs should be paid direct to the landlord. It quoted one anonymous respondent as saying:

“Having rent paid directly to a landlord would prevent an abusive partner from

stealing it for their own purpose. It would also ensure that a family continues to have a roof over their head in spite of the abusive partner’s thefts or misuse of funds.”

The case was supported by the Work and Pensions Select Committee which, in 2014, recommended that the Government: “allow vulnerable tenants to opt in to having their housing costs support paid direct to their landlords if this is their preference.”

On the other side of the equation, many landlords need the assurance that those receiving Universal Credit will be able to make rent payments in full and on time. With the private rented sector being expected to take on more tenants who would once have been placed in social rented housing, landlords need greater encouragement and support to overcome concerns about rent arrears. This, in turn will encourage more landlords to take in benefit claimants, giving them more choice. 

Today’s proposal in the Lords will provide greater financial and housing security all round. The government should have the humility to admit that it has made a mistake on this and reverse its position.

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