Updated 19 January 2012
Direct payments in the social rented sector
Ministers have been considering over the past few months the payment of housing cost support within Universal Credit, particularly in terms of how and to whom the payment is made to those in the social rented sector. (In this context, we mean the financial support paid to people on a low income to help them meet the costs of their rent. It is available to tenants renting their homes.)
Ministers believe that Universal Credit should replicate as far as possible a wage. So the way in which it is paid is of critical importance. The Government wants to see very many more people handle their own benefit and rent payments.
The Second Reading of the Welfare Reform Bill in the House of Lords on 13 September 2011, marked the next step in the legislative process. “Universal Credit: welfare that works”, which the Government published in November 2010, noted that there are advantages in paying the housing component of Universal Credit to individuals in the social rented sector, rather than the current system of payments direct to landlord. This would encourage people to manage their own budget in the same way as other households.
However, the Government also recognises the importance of stable rental income for social landlords to support the delivery of new homes. So it is important that the design of Universal Credit contains safeguards to help protect social landlords’ income streams. It is equally important that we ensure sufficient support mechanisms are in place for those who may need help managing their finances.
Demonstration projects
On 14 September 2011, Lord Freud, Minster for Welfare Reform, announced that we will establish about six small-scale demonstration projects to prepare for these changes. The demonstration projects will test some key elements of social sector housing support under Universal Credit while protecting social landlords’ financial position. The demonstration projects will include:
- direct payments to tenants being the default;
- adopting the payment frequency envisaged under Universal Credit. This is likely to be monthly payments in arrears;
- safeguards to pay the landlord directly where necessary. We will define the details of how the safeguards will operate during the project. We expect the safeguards generally to be rules based and automated, simulating the approach within Universal Credit.
We will run the demonstration projects in about six local authority areas from June 2012 to June 2013, with a five-month lead in starting in January 2012.
The deadline for volunteers was 8 November 2011.
Housing demonstration project volunteers announcement – testing direct payment to claimants
The Government has announced the local authority and housing association partnerships the Government plans to work with on pioneering demonstration projects. This 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 local authority and housing association partnerships named for the demonstration projects are:
- Southwark Council and Family Mosaic, London
- Oxford City Council and 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
