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Are you ready for welfare reform? Matthew Warburton - 03/05/2012

social_impact 300The time for lobbying is over, now councils must urgently turn their attention to getting ready to manage the far-reaching impact of the government's welfare reforms on tenants and income management.

This was the message delivered by Sam Lister, CIH welfare reform expert, to a hushed audience at the HouseMark Stock Retaining Councils Performance Improvement Club on 1 May. In a detailed and authoritative presentation, he showed how the reforms pose a major challenge to council business plans and why they need urgent and radical responses.

One in three tenants on HB is likely to be hit by the rules on under-occupation - the so-called "bedroom" tax - which come into effect in April 2013, losing an average of £13 per week.

Most households with four children and virtually all with more will be hit by the HB cap which comes in at the same time. These changes alone have major implications for rent collection and welfare advice services.

But they will be followed within months by the implementation of Universal Credit, with new HB cases transferring to UC from October next year.

UC will be centrally administered by DWP and involve payment of benefit direct to the tenant in all but exceptional cases, mainly where there is a history of arrears. In a typical council, this could involve a 25 per cent increase in rent transactions, with a major cost impact, particularly where tenants do not pay by direct debit.

Set against a background of high unemployment and flatlining wages, coupled with HRA business plans founded on the assumption of rent convergence and continuing increases above RPI, there is a strong risk of a surge in rent arrears unless councils act swiftly and decisively to prepare themselves and their tenants for the changes.

The price of delay is not only hardship for many tenants but also a serious threat to the 30-year business plans so recently agreed. It is time for every housing Director and Cabinet  lead member to ask themselves, "Are we ready for welfare reform?"

 

Please post your comments below, or email matthew.warburton@arch-housing.org.uk.

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