Housing association warns sector after direct payments blow

Housing assocation warns sector after direct payment blow

Payment errors in the first two months of a project to pay tenants their housing benefit directly has seen a housing association warn the sector over the importance of communication with local authorities, residents and the Department for Work and Pensions (DWP).

GreenSquare Group – an amalgamation of Oxford Citizens Housing Association and Westlea  Housing – is one of the landlords taking part in the Government’s six direct payment demonstration projects, which sees samples of tenants paid their housing benefit directly for 12 months ahead of Universal Credit.

Each is working with their local authority partner on the project, despite housing benefit administration being dealt with centrally under Universal Credit with benefit payments made by the DWP. Currently – and on the demonstration projects – it is paid out by councils.

Over 400 of GreenSquare residents are currently involved in the project, which also involves Oxford City Council.

Speaking at the National Housing Federation (NHF) conference in Birmingham, Ann Cornelius, executive director of GreenSquare, said the first two months of the project, which kicked off in June, had seen direct debits coming out of accounts before the housing benefit was paid in by the local authority, leaving the tenants overdrawn.

She told delegates: “The first two payments went a bit wrong. We set up direct debits to come out on a particular date, but they [the local authority] pressed the button to send the money into the account on the wrong date so people’s accounts went overdrawn.

“That really upset our residents because they were really trusting us. £400 on average is a lot of money to hit your bank account and people didn’t have the money they expected when they expected it and also they had a lot of charges. It was an awful lot of hassle for them and us.”

Cornelius said staff had been working flat out to rebuild confidence with residents, with the third payment [September’s] seeing just 10% of the direct debits failing.

She said: “This could be because tenants circumstances changed and they hadn’t told us so benefit wasn’t paid and held back, it might be that the payment went in wrong, or that people had spent it and it hasn’t gone into our account. It could also be because other direct debits are going out which has pulled that money out of the account.”

Malcolm Whitehouse, Universal Credit programme director at the DWP, said: “In the future, the relationship will be different because the housing element of Universal Credit will come from the DWP. What we need to look at is the information we need to have available that we can share effectively to make the process work. We have data sharing protocols with local authorities but what we need to do collectively and where we want to work with the NHF is to understand what works best in the future.”

Whitehouse later added that the payment timing is going to be “critical”. He said: “Setting up the back-to-back arrangements in terms of credit the payment, make the debit is really important. I think there is something we can do in terms of working with the banking sector to make that work more effectively as we go forwards.”

Cornelius said that just six residents had spent the money and “disappeared” in cases where the landlord was not able to get hold of them.

She said the landlord’s arrears had increased during the project and warned of the importance of a disciplined approach to rent recovery.

“You’ve got to have a real tight arrears process,” she said. “We’re dealing with such large slugs of money we really have to have a tight arrears process for when those things go wrong.”

Tenancy support teams are also essential, she said, to support “high risk residents” and to deal with the “emotional fall out” following arrears cases.

“50% of the residents are fine with it – they’re paying it. However, the other 50% there are issues, and they are in touch with us – for e.g. they’ve paid us three weeks instead of four because their kids have gone back to school so they’ve had to have new shoes.”

She said out of the sample of GreenSquare tenants, the majority were identified as low or medium risk so were able to go straight on to the project, but 42 cases were held back and identified as higher risk. “They had complex needs,” she said. “We felt with some tenancy sustainment work we might get them onto the second wave of payments.”

She also revealed that of the initial sample 60% of people had bank accounts of some description and that a high number had signed up to direct debits quickly and were “responsive once they knew the issues”.

“Of that 60%, only 20% needed help sorting it out,” she said.

GreenSquare helped residents set up their own basic bank accounts and wrote to banks telling them it would come in with residents to help with the process. “Some only have tenancy agreements and not utility bills, so there was that fear they would struggle to get accounts,” she said. “Some banks were fantastic about it, some were quite hard nosed.”

She said bank accounts and direct debit options to pay rent have to be strongly encouraged from the outset and warned landlords about their IT systems and tenant profiling.

She said: “No matter how good you think your IT systems and profiling are – they’re not that good at the moment. You need an awful lot of information.”