Councils and housing associations to test direct payments of housing cost support

Local authority and housing association partnerships are named as the successful volunteers the Government plans to work with on pioneering demonstration projects that will see claimants in the social rented sector directly receiving monthly housing benefit payments and paying rent to landlords themselves for the first time.

The demonstration projects, which will take place from June 2012 until June 2013, will test how claimants can manage housing benefit monthly payments ahead of the introduction of Universal Credit from October 2013.

The projects will also look at the appropriate level of safeguards needed to help secure landlord income streams if tenants fall behind on their rent.

The local authority and housing association partnerships named for the demonstration projects are:

  • Southwark Council and Family Mosaic, London
  • Oxford City Council and Oxford Citizens, (part of the) Greensquare Group, Southern England
  • Shropshire Unitary County Council and Bromford Group, Sanctuary Housing and The Wrekin Housing Trust, West Midlands
  • Wakefield Metropolitan Borough Council and Wakefield and District Housing, Northern England
  • Torfaen Borough County Council and Bron Afon Community Housing and Charter Housing, Wales

Each will be involved in testing out different elements of the project, including testing different trigger points when social landlords should receive direct payments if tenants fall into specified levels of arrears. The projects will also inform how best to communicate the changes to claimants, provide assistance with budgeting to successfully pay their rent, and support claimants and landlords experiencing financial difficulties.

Minister for Welfare Reform Lord Freud said:

“Direct monthly benefits payments are a key part of Universal Credit, allowing claimants to prepare for the financial responsibilities they will face when in work and to encourage them to move away from often costly weekly and fortnightly budgeting.

“However, we know that some families will need support to adapt to managing their finances in this way. The demonstration projects will help us to understand the demand for budgeting support and the best ways to deliver it.”

Alongside this measure, Ministers are working with the banking sector, credit unions, supermarket financial services and the Post Office to explore opportunities to develop cost-effective budgeting accounts for claimants moving onto direct payments.

The Government has also commissioned a review of the projects led by Professor Paul Hickman from the Centre for Regional Economic and Social Research at Sheffield Hallam University. The review will evaluate the impact of direct payments on claimants and vulnerable groups, as well as local authorities and social rented sector landlords.

While the majority of Universal Credit claimants renting in the social sector will be responsible for making their own rent payments to landlords, vulnerable claimants and pensioners will continue to have their housing costs paid direct to their landlord.