Benefit reforms threaten to make poorest residents harder to help

Tenants who risk falling into mounting debts because they are missing out on their benefit entitlements could soon become almost impossible to identify and help, claims a leading local housing association.

The warning comes as the government considers removing the right for tenants to choose to have their housing benefit paid direct their landlords, as has been the practice since Housing Benefit was introduced in 1987.

Under the new universal benefit proposals, which have their second reading in the House of Lords on 13 September, it would become the tenant’s responsibility to repay the correct amount for their rent to their landlord. However, Carol Matthews, Chief Executive of Guinness Northern Counties, which owns and manages over 5,100 homes across Lancashire, says the change could spell disaster for thousands of people on limited incomes.

“We recently ran a Housing Benefit take-up campaign to try and target help and advice to tenants who were falling into arrears because they weren’t receiving the full amount of welfare benefits that they should have been” she explained.

“We targeted 3,000 customers with rent arrears of £80 or more, from which we found around a hundred customers, so that’s around one in 30, who were struggling to make ends meet because they weren’t receiving the financial help they should have been.

“The group included pensioners, people with disabilities and young people trying to sustain their first tenancy. By sitting down and looking carefully at their circumstances, we were able to help them claim a total of £317,000 in missing payments; that’s an average of over £3,000 per person.

In one particularly moving case, we were able to help a lady whose main income of pension credit was stopped and for over three years, she had to live on disability benefits. As a consequence, she fell many thousands of pounds in rent arrears and she feared she was likely to lose her home. We pursued benefit appeals on her behalf and eventually, the persistence paid off and she was awarded over £35,000 in backdated benefits, which cleared all of her debt and arrears and restored her benefits in full.”

“What really concerns us now is that direct payments to tenants are predicted to cause a significant number of additional tenants to go into arrears, so in future those very people in greatest and most genuine need will become like a needle in a haystack to find and help.”

Ms Matthews added that early intervention was vital to stop people’s debts spiralling out of control, leaving them in often desperate circumstances but the task could become almost impossible if rent arrears rise as many experts predict.

“We need to get this message across to government before these disastrous reforms become law” she said.

She added that as well as looking at benefit entitlement, housing associations like Guinness Northern Counties were working across a range of fronts to help protect and boost their residents’ incomes.

“Despite what some papers might have you believe, the vast majority of people in social housing want a life where they can be self-sufficient financially and we and others like us are working to try and help them achieve this”, she said. Ms Matthews cited a range of initiatives that the association was involved in, from mobile money and debt advice services to campaigns against unfair fuel charges on people without bank accounts, and from apprenticeship programmes to support for tenants wishing to start a business from home.

“The fact remains however that many of our customers are financially vulnerable and in these increasingly difficult economic times are more at risk then ever of falling into the misery of debt.” 

A Department for Work and Pensions spokesperson said: "Universal Credit will simplify the benefit system, making it less open to error, which means that claimants will get the benefits they are due. Under Universal Credit we want claimants to take responsibility for their own budgets, including paying rent, as they would if they were in work and in most cases Housing Benefit will be paid direct to tenants. To ensure a smooth transition, we will be offering financial advice and support to those who need it."