The Department for Work and Pensions responds to the Work and Pensions Committee’s report on Universal Credit.
5 February 2013
The Government has today responded to the Work and Pensions Committee’s recent report on Universal Credit by issuing a “command paper” setting out plans to support vulnerable claimants.
The Government is right that there is deep concern among housing associations and others about how vulnerable tenants will manage under Universal Credit - in the research commissioned by the National Housing Federation, 81% of landlords say direct payment to tenants will have a significant impact on their organisations and 89% say it is likely to lead to increased arrears.
The Government’s commitment to switch housing payments to the landlord once a tenant gets into trouble provides some reassurances, but we need to see the details of how this ‘trigger’ will work in practice. The decision not to define ‘vulnerability’ factors for the purposes of awarding direct payments to landlords is disappointing, because it suggests that conversations/debates will have to be had with Department of Work and Pensions (DWP) in the case of every tenant. However, it’s possible that many of these factors will be reproduced in the promised “full guidance” for DWP decision-makers. It is helpful that DWP includes “financial” (vulnerability) considerations in this. It is also helpful that landlords will be able to make the case for specific tenants to get payment exceptions as initially the DWP was reluctant to accept third party representations.
• Universal Credit payments will be switched to landlords “where claimants are in arrears or fall into arrears”. DWP says: “We are clear that Universal Credit must be designed in a way that protects the financial position of landlords.”
• DWP is refusing to define “vulnerability” for purposes of securing direct payments to landlords. Instead, “full guidance” - including financial and vulnerability factors that would trigger a conversation with a claimant about their budgeting needs (including whether they need an alternative payment) – will be made available to support staff handling these cases.
• Landlords will also be able to make a case for additional budgeting support for specific tenants. DWP is looking to work with housing associations to identify families who need this prior to the introduction of Universal Credit.
• DWP wants 50% of claims to be made online in October 2013; 45% will be made by telephone and 5% face-to-face, with a home visit where necessary in exceptional circumstances.
• Landlords will be able to help tenants claim Universal Credit
• Direct payment demo projects described as “encouraging”; despite 8% rent arrears recorded in first four months.
• DWP may review its refusal to exempt temporary accommodation from the benefit cap, once a review has been completed in 2014.
Key extracts for housing associations
Direct payment of housing costs
“The purpose of Universal Credit is to improve the quality of people’s lives by encouraging them into work and sustaining them in work. Government interference in people’s financial affairs can undermine individual responsibility and, by insulating claimants from the sorts of decisions made by those in work, create an additional barrier to work. The current benefit system pre-determines people’s ability to manage their own financial affairs based on whether they live in social housing or private-rented housing. This is an outdated and outmoded view of the world which creates a dependency culture and treats too many adults as supplicant children.” (p.13)
“We recognise that it is vital that the transition from paying rent direct to landlords to a single monthly payment to claimants is responsibly and carefully managed.” (p.13)
“The Department will, alongside this change, provide claimants help with monthly budgeting, and provision has been made within Regulations to make alternative payment arrangements in exceptional cases, such as paying rent direct to landlords. We are not, however, seeking to define "vulnerability" for the purposes of administering Universal Credit. Any attempt to do so would risk some people with complex needs falling outside of the prescribed definitions and then not receiving help that they may genuinely need. As a result full guidance, including financial and vulnerability factors that would trigger a conversation with a claimant about their budgeting needs (including whether they need an alternative payment), will be made available to support staff handling these cases. Third parties including caseworkers and landlords will also be able to make a case for additional budgeting support. We are already working with Housing Associations about how we can work together to identify these families prior to the introduction of Universal Credit.” (p.14)
Protecting for financial position of housing associations – arrears trigger
“We are clear that Universal Credit must be designed in a way that protects the financial position of landlords. In particular, we believe it is important to get the safeguards right, including triggers for moving to direct payments to landlords, and the need to put in place an effective process to ensure arrears don’t build up. Where claimants are in arrears or fall into arrears they will be switched back so that payment is made direct to their landlord. This will give landlords the security of knowing that payments will be made, and that the long-term accumulation of arrears is not an option under this system. Equally, it will enable us to identify which claimants need help with money advice and debt management, and protect claimants by preventing them from falling into significant debt.” (p.14)