Housing associations ‘out of comfort zone’ over welfare reform

Published on Friday, 07 February 2014 15:53
Written by Daniel Mason

Adjusting to the government's changes to the welfare system has taken social housing providers out of their comfort zone, and uncertainties about the introduction of universal credit are delaying decision-making, according to an industry expert.

Hold ups affecting Iain Duncan Smith's reforms meant organisations "know they need to do something, but they're not quite sure what it is – it's a little bit fluid", said Jeff Hewitt, Civica's managing director, in an interview with Govtoday. Civica is a provider of IT systems and business services to the public sector.

The universal credit project, combining a number of welfare payments including housing benefit into a single payment, has suffered a series of setbacks. The latest figures showed it had cost £612m between 2010 and 2014 – or £225,000 for each person so far signed up.

Ministers previously admitted that the target of having all new and existing claimants signed up by 2017 would be missed. Duncan Smith had claimed one million people would be receiving the payments by April this year, but with only six months to go there were fewer than 3,000 on board.

Universal credit had "taken a lot of housing organisations out of their comfort zone", Hewitt said. Whereas housing benefit is paid direct to landlords, universal credit will go to claimants themselves, who will then be responsible for paying their own rent.

"The shift is a challenge and the major risk at the moment is that no-one quite knows what effect this is going to have. There have been quite big pilot schemes run and there are stories of arrears increasing as a result.

"Suddenly you're empowering tenants to pay for their rent, and probably some of them have never had to manage that level of funds before, because the state has done that for them through the housing benefit system."

Hewitt said effective revenue collection and tenancy management would be the "key challenges" for social housing organisations under the new system. "One thing a lot of housing associations are talking to us about is trying to find innovative ways of collecting the revenue," he added.

Direct debt was not necessarily the solution, he said, because of the charges tenants would face if they were unable to make a payment. "So it's things like mobile devices for collecting revenue on the door step through chip and pin – things like that – that they are starting to switch on to."

Among the other big changes in the sector were shifting management systems to the cloud, and introducing more 24-hour online services for tenants, Hewitt said. "We all take internet banking for granted, we can log in any time and see our balance – well, a tenant may want to see their rent balance at 11 at night, or log a repair."

The move towards online services meant some staff could redeployed from contact centres to the field visiting tenants. "It's much more proactive tenancy management that they are looking for," according to Hewitt.

Amid the uncertainties around universal credit, housing organisations were "delaying decisions" but also "looking for tactical solutions," he added. "They're not quite sure of the overall effect because, while there have been pilot sites, this is a change of such magnitude that you need the scheme to switch over for a longer period of time to look at the effects."

The main problem, though, is that the "housing stock does not match the profile of the families" who need it. "There is way too much demand and not enough properties in the country, and that's the big crux.

"The building programme really has just slowed to a standstill because of the recession that we are now climbing out of. We need to get our stock up, but the stock we're building needs to be the right stock. There's no point building three, four, five bedroom houses and placing couples in them."

The mismatch between supply and demand was why people were finding themselves penalised as a result of the so-called bedroom tax, said Hewitt.

"To have a couple with a baby in a three bedroom house being penalised and there not be a two bedroom house for that couple – it jars and I think that's where all the challenges are coming from at the moment."

"It has been delayed," he said, referring to the government's welfare reform programme as a whole. "It may be delayed again. The only surety we have is that it will come. It's the 'when' that everybody's waiting on."

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