The members of our welfare reform focus group are preparing for the next round of welfare changes: universal credit. Jess McCabe and Gene Robertson find out how they are coping.
‘Be prepared.’ It is the motto of the global Scouts movement, and one that the 10 social landlords in our welfare reform focus group have taken to heart.
We have been following them since April 2013, when they were readying themselves for the impact of the bedroom tax. Now, we can see how well those preparations have paid off – and see how they are gearing up for round two: Universal credit.
The Girl Guides’ manual goes further: ‘You have to be prepared at any moment to face difficulties and even dangers by knowing what to do and how to do it.’
Exactly what universal credit will look like and when it will be finally introduced has also been shifting, compounding the difficulties in predicting the impacts. The resulting danger is that large numbers of tenants do not pay their rent and arrears mount up.
From a tenant’s perspective, the situation is even more precarious: not being able to afford their home, a spiral of debt and, in the most extreme cases, the choice between eating and paying the rent.
It is difficult to judge how well prepared our 10 landlords are for the next phase. But in this snapshot of their current situation, we look at the steps they are taking, and how they are coping with the welfare reforms that have already been implemented, most significantly the bedroom tax.
Spiralling into debt
One measure that shows how tenants and landlords are handling welfare reforms is the percentage of tenants who are subject to the bedroom tax and in arrears.
Out of our focus group of 10 (or 11 if Tristar and Hartlepool, both part of Thirteen Group, are counted separately), nine report that a higher proportion of bedroom tax tenants are in arrears now than at the start of the focus group 18 months ago.
Only Riverside has fewer tenants in arrears now than at the start. Link Group did not supply this figure at the beginning of the focus group.
Yet the picture of what has happened in between is less clear. Four of our 10 landlords have seen the percentage of bedroom tax tenants in arrears rise since our last check-in in April 2014, and five have seen a decrease.
So landlords and tenants may be getting bedroom tax arrears under control.
Paul Nicholson is head of business performance at Hastoe, where the percentage of bedroom tax tenants in arrears has risen from 35% in April 2013, to nearly 80% at present.
The landlord has managed to reduce overall arrears to 4% in August, down 0.5% on the same time last year (he explains the figures wrongly give the impression that arrears have risen because of the time of the month the data was collected).
But, he adds, ‘the overall improvement is in spite of the bedroom tax.
‘We are monitoring the position closely but the arrears of those subject to the under-occupancy charge appear to be rising. This may well be down to the cumulative effect of the deduction since April 2013.’
Several landlords report that the impact of the bedroom tax is being compounded by other factors, such as fewer benefits available, difficulties in tenants finding work, and lack of security and low pay if they do find jobs.
Link Group in Scotland has had a reduction in the number of bedroom tax tenants. And, thanks to the intervention of the Scottish government to offset the bedroom tax, most tenants can apply for funding to cover the shortfall in housing benefit.
Yet the landlord has fewer options than before to help tenants who are struggling.
Link’s advice services co-ordinator, Rhona Penman, explains: ‘Although we’re helping people, the outcomes are maybe not as successful as they would have been in the past.’
Dave Pickard, group director of operations at Thirteen Group, adds: ‘Where some customers were borrowing to pay bills and debts, this is getting more difficult with resulting increases in debt generally, including the rent.
‘We have also seen a rise in debt from customers on fluctuating contracts at work that result in hard-to-manage household accounts impacted on by a different wage each week.
‘We are also picking up more cases with sanctions [when benefits are suspended for failing to comply with requirements set by the job centre] have been applied.’
One concern is that discretionary housing payments (DHPs) from local authorities have helped tenants cover their bedroom tax payments for a while – but this will run out. What then?
We spoke to one tenant of United Welsh (see case study) who is weeks away from finding out. He feels he has no choice but to try to manage. Or, as he puts it, ‘suffer’.
United Welsh’s figures are a case in point. Emma Howells, neighbourhood and participation manager for the 3,105-home landlord, says that it has 234 tenants who are under-occupying and affected by the bedroom tax.Between them, they are £80,841.67 in arrears.
‘One of the interesting things we have found out through our profiling information is that the majority [of total] arrears we have are attributed to working age people who either do not claim housing benefit or are on partial housing benefit,’ she explains.
‘Although we have not done any analysis on this yet, I would assume that this is related to a tightening in eligibility for in-work benefits, unstable work – including zero-hours contracts – and generally low wages.’
Arrears view arrears
The bedroom tax is just one factor affecting the picture of overall arrears.
Seven of our 10 landlords’ arrears have fallen since we last touched base with them in April. For the other three, arrears have risen.
However, arrears remain higher than at the start of the focus group in April 2013 for six of our 10.
Thirteen Group’s Hartlepool and Tristar have seen total arrears rise both since April 2013 and April 2014.
Mr Pickard says that arrears would have been higher still if not for DHPs: ‘Without this help, the arrears would have increased more with a corresponding increase in legal action to recover the debt. This would have potentially increased the number of vacant homes.’
And so we come to universal credit. The date at which it rolls out might have been set back – when first announced, it was going to start in October 2013. Now it will be completed by 2017.
And the details have been changing. As Inside Housing reported last month, Labour may scrap it if it comes to power.
Once, or if it does come in, a range of benefits will be replaced by one, single monthly payment.
Housing benefit, until now paid by the government directly to social landlords, will be gone: instead, a component of the universal credit will be calculated to cover housing costs. Tenants will have to budget for themselves, and take responsibility for paying their rent.
Some of the changes since universal credit was proposed should be beneficial for landlords – such as allowing rent to be paid directly to landlords if the tenant is vulnerable.
But Link’s Ms Penman explains that pushing back the date and changing the regime only makes it harder to prepare.
Landlords will have the responsibility for applying for vulnerable tenants to be taken off of direct payment on their behalf, she notes, and extra staff will be needed with different skills, to assess vulnerability and try and work out if tenants’ circumstances change.
‘We need to do it, because it is our income stream that we are protecting. But by doing it we’ll only be maintaining our income stream,’ she points out – more resources required, just to generate the same income, in other words.
Changes to the roll-out date also make it harder to know when the extra staff will be needed, and what exactly to do. In other words – landlords may be hard at work preparing for what comes, but without these key details, there’s still a lot of risk ahead, especially relating to the universal credit.
As the Girl Guides might put it: ‘Willingness to serve is not enough; you must know how to do the job well.’
End of the line
Tony is 52 and unemployed, and he has only two weeks left of discretionary housing payments. The United Welsh tenant of about 30 years lives in a three-bedroom house outside Caerphilly with his wife Debbie, 49.
Two of the bedrooms are empty as their three children, now in their late twenties, have grown up and flown the nest. The children didn’t fly very far – their daughter lives just next door – which comes in handy as Debbie is unable to work because of severe anxiety attacks and Tony has heart problems. The couple know their income – which largely is made up of employment support allowance at the couple’s rate – down to the penny.
Moving is not an option, Tony says, as they need to be close to family.
‘That would cause a ripple effect. Where would we go? It could be anywhere,’ he worries.
Until now the couple received discretionary housing payments from Caerphilly Council. But, speaking by phone from the Welsh town best known for the cheese of the same name, Tony says this support will run out in two weeks time.
A former warehouse worker, Tony was made redundant about seven years ago. ‘We couldn’t move anywhere else [because of] my wife’s condition. I said, “no, we’ll suffer and we’ll pay this as long as we can”. My hope is they scrap it,’ he concludes.
Training for work
Aspire Housing is one of many social landlords to hope that getting tenants into work is the answer to the pressures of the welfare reforms. Back in 2008, its parent group acquired PM Training, a local business that provided training for young people to get into jobs and apprenticeships.
Aspire has been building up its training business since then, building up the number of young people it helps from 100 to 500 a year. This June, Aspire decided to make a promise to offer training and a work placement to all its young residents aged between 19 to 25.
James Cartwright, 18, is one of the young people placed on apprenticeships by PM Training. He started on a work placement after secondary school, along with many of his school mates. Mr Cartwright hoped it would ‘help me get a job later in life’, he says.
After four weeks learning trade skills in a training centre, he recalls: ‘They put us out on the vans, caretaking and gardening. I did that for a couple of months and I got transferred over.’
Now he is four months from completing an apprenticeship and is waiting to hear if the firm will keep him on. He has mostly been digging driveways and laying bricks. ‘I love it,’ he says.
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