Switchback to the future

Chris Norris, Head of Policy at the NLA, reviews the DWP’s Direct Payment Demonstration Projects
Chris Norris, Head of Policy at the NLA, reviews the DWP’s Direct Payment Demonstration Projects

Chris Norris, Head of Policy at the NLA, reviews the DWP’s Direct Payment Demonstration Projects.

After a great deal of speculation, the Department for Work and Pensions (DWP) has finally published data concerning the Direct Payment Demonstration Projects (DPDP) which have been running in one form or another since May.

The Demonstration Projects are designed to test direct payment of housing support to tenants of social landlords ahead of the introduction of Universal Credit next year in six selected demonstration areas.

While direct payment is the norm for the majority of LHA recipients in the private sector, it is rare for social tenants to receive housing benefit and subsequently pass on the housing benefit to their landlord. This is why these projects are so important to registered social landlords (RSLs), and in turn why they are important to the rest of us who need the support of RSLs to convince the Government that more must be done to secure landlord income.

Today, the DWP published the results of The Demonstration Project so far. The information released is not exactly a complete picture of the pilot projects and, rather unhelpfully, the information is provided in a number of different formats throughout a short report entitled; ‘Direct Payment Demonstration Project: Payment Figures’. However, what is clear  from the figures to-date is that all is not running as smoothly as the Department may have hoped.

Over the first four months of the project, during which the participating landlords were able to select those tenants most appropriate for switching to direct payment and exclude those which were likely to be more problematic, 316 tenants were ‘switched-back’ to payment to landlord as a result of accrued arrears – even though the switch-back rules varied between local authorities and some permitted 12 weeks of arrears to accrue before taking action.

Perhaps more worrying is that the authorities noted that late payments have become an increasing problem, driving up collection costs. One of the demonstration areas even went so far as to indicate that, in respect of the October 2012 rental period, 50 per cent of payments were up to two weeks overdue when eventually made.

Overall the Department states that the average collection rate is 92 per cent (ranging from 88 to 97 per cent across the project areas). If this stat is applied across all benefit recipients, this would suggest that more than 300,000 households will slip into acute arrears once Universal Credit becomes the norm. In addition, almost two million may suffer chronic late payments, assuming that the general, non-cherry-picked population are no more susceptible to rent arrears than the pilot groups.

Of course, the difference between this project and the full roll-out of Universal Credit from 2013 is that this pilot allowed households to switch-back to payment-to-landlord if arrears start to build up – before they precipitate tenancy breakdown.

Even with these safeguards in place, Wakefield District Council reported that it had begun more than 100 possession proceedings during the pilot period.

Given that more comprehensive data from the project is not expected to be published until late 2013 – around the same time new claimants will begin to receive Universal Credit – only time will tell how many more tenancies will fail if the Government does not see fit to retain a backstop to trigger direct payment to the landlord.

It is no surprise that so many landlords tell the NLA that they will no-longer accept benefit recipients post-2013.

2 thoughts on “Switchback to the future

  1. The objective of a ‘pilot’ is to test whether something will work. I do hope that the Government receives the message loud and clear that a rethink is urgently needed.here

  2. The sad thing is that the government will manipulate any survey to get the answers they want. The government really have us over a barrel inasmuch as some of us landlords do have to take benefit tenants. Our local authorities are begging us to take them as they cannot house them. We are already hit by the bedroom tax and single under 35 year olds but not to have a safety net for direct payments is just another stab in the back. Does the government really want to kill off the rental market for all umemployed? Do we want to have cardboard city in every town up and down the land? And what does the tax payer think about giving these people a free hand out of rent allowance to spend on what they like?

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