Forget the bedroom tax, the biggest impact of the welfare reforms on social housing has had very little discussion at all and this is direct payments of Housing Benefit to the social tenant.
Direct payment due October 2013 is one of the welfare reform policies and it fundamentally changes the control dynamic in the social landlord:social tenant relationship. It gives the tenant CONTROL of rent payments whereas historically the landlord has had control as HB was paid directly to the landlord and the tenant never saw the money. The social landlord gets between 55% and 63% (figures vary) of its income from the current way HB is paid directly to them. The direct payment change is of huge and genuinely seismic proportions.
At a very simplistic level does the tenant pay rent or put food on the table? Is the school uniform more important than paying full rent? Do I pay for a birthday party for my daughter or pay my rent? This list is endless as to the emotive and practical decisions which will be imposed onto the tenant in the name of ‘choice’ and ‘responsibility.’ The social tenant on the lowest incomes and benefit must be the most rational decision maker of the lot in this theory and prioritise the roof over their head above everything else including letting their children go without. The landlord is more important than the tenants children is the theory!!!
If direct payments was the only welfare reform change this year then Twitter and Facebook and Inside Housing and the Guardian and even the Daily Mail would be awash with thousands of articles on this instead of millions on the bedroom tax. However, direct payment is coming in with the bedroom tax and the benefit cap which both reduce the social tenants income, and monthly payment of benefits that will test the money handling skills of the tenant to the full. Bringing in tenant control of rent payment in this context heightens the significance of direct payment of housing benefit to the social tenant.
Direct payment has been trialled or piloted in 8 areas of the country and even with carefully selected tenants on these trials we see in Torfaen in Wales that arrears have increased from 2% to 8% – a four fold increase – and in Wakefield in West Yorkshire arrears have risen from 2% to 11% – an increase of 5.5 times!
Specifically direct payment gives the social tenant economic and financial power and this is why the social landlord has been running around getting every tenant to sign up to a direct debit and even getting the social tenants basic bank accounts. A natural and obvious reaction from social landlords to the direct payment change as was doubling their provision for bad debts which most did in anticipation of the welfare reforms. Yet when benefit payments are delayed for whatever, and they will be as they always are, and the direct debit is not paid and the tenant gets hit by a £30 charge from their bank who will the tenant blame? The DWP AND the landlord and such instances will see the tenant blaming the landlord for insisting on a DD in the first place.
As the direct payment trials show quadrupling the landlords original position on provision for bad debts is needed at least as the trial research to date suggests that is needed. Note this excludes the bedroom tax and payments of council tax replacement and the overall benefit cap doesn’t come on stream until July and this substantiates my earlier point that even if direct payment was the only welfare reform change that it would be a highly significant one.
What direct payment does in simple terms is give more choice to the tenant not to pay rent. Until now that choice has not been there and rent payments have been prioritised for the tenant with HB being paid direct to landlord. Yet come October that choice lies with the tenant and note well the tenant cannot choose to keep the current arrangements and can’t simply say pay my landlord direct as you always have!
The social tenant has to choose how to prioritise all payments and the payment of rent needs to be seen in the round and in the context of the bedroom tax deductions, the overall benefit cap reductions (and 46% of those affected are social tenants); and with paying council tax for the first time, and with welfare benefits rising at below inflation and well below the cost of living as we see gas and electricity and food prices increase by 3 times inflation. A tricky task for the most thrifty and organised person.
What direct payment also does is force the tenant to become the customer.
Social landlords have started to call tenants ‘customers’ for years yet still treated them like a mere tenant – by that I mean a cash cow with direct HB – and most social landlord tenant consultation / involvement / participation has been largely top-show. Yet with the financial and economic control of the payment of rent shifting dramatically with direct payment that will all have to change.
The tenant becomes the customer and the customer is king. In operational terms the social landlord will have to be far more responsive to what tenants, these now customers want because TENANTS hold the purse strings and the landlord no longer does.
Tenants mobilisation and the risk to landlord reputation.
The use of social media to mobilise tenants is a stunning development that the social landlord does not fully see the risk of yet. They need to as does the tenant. The bedroom tax policy has seen hundreds of anti bedroom tax groups formed on Facebook and other social media and numbers of some exceed 10,000 in just a few short months. The social landlord has been attacked ferociously on these SM sites – despite the welfare reforms being government policy – for the social landlords lack of challenge to the reforms.
It doesn’t matter how much validity there is in this perceived lack of challenge, the fact that perception is there is all that is needed.
The reputations of social landlords has been shot to pieces and of course not helped by many of them shooting themselves in the foot with alleged legal disclaimer letters and other heavy-handed tactics which confirm in the tenant perception (a) that social landlords are only worried about their bottom lines and ‘complicit’ in the reforms and (b) don’t give a damn about the lot of the social tenant. In short the social landlord has kept faith with their traditional view that social housing is about bricks and mortar and not about people. Yet by giving control of rent payment to the tenant, the now customer, ALL the welfare reforms become about people and not about bricks and mortar.
A good reputation can take decades to achieve whereas a bad one can be achieved in five minutes. The social landlord who has always been in control of the payment of rent has barely had to look at or consider risk to reputation before, at least from below with the tenant. Yet the welfare reforms change all that and this is a huge seachange.
Come October the social tenant will consider how the social landlord appeared complicit in the welfare reforms and how they did in the tenants view little to challenge them and as a result of how tenants see them (the reputation) the tenant will de-prioritise the payment of rent. This is on top of obvious de-prioritising of rent by the tenant when faced with paying rent or putting food on the table or their children’s new school uniforms or at other peak expenditure times such as Christmas.
The power of social media in the landlord:tenant dynamic is huge and now that the tenant is mobilised that cannot be reversed. When you factor in far worse reforms than the bedroom tax such as the overall benefit cap have yet to receive the blanket media and public awareness of the bedroom tax as the policy has yet to roll out nationally then we see that such tenant mobilisation and tenant power can and will only increase!
When in late January 2013 I stared writing about the bedroom tax and blog views increased massively I started getting hundreds of emails each week and hundreds of comments on blogs. This week for example these are all about tenants getting bedroom tax demand letters from their landlord and what tenants see is a distinctly heavy-handed approach from their landlords. Many such letters have bold red ink saying DO NOT IGNORE THIS LETTER or we will start court proceedings and other such language which is angering tenants. What do you think they will do Mr Social Landlord when direct payment comes in and the tenant has control of rent payment? Yes, I don’t need to answer that question do I!
Social housing in operational terms is going to have to change massively and will become (tenant) customer driven as the tenant will hold all the aces from October. There is also something ironic about October 2013 when direct payment hits at the same time that those who are hit with the 25% bedroom tax deduction will be hit with eviction proceedings as if they don’t pay they will be at the 4 full rent weeks arrears stage which tends to trigger the serving of Notices Seeking Possession. With some unions now calling on members and neighbours to block evictions with sit-ins and the like, October 2013 could become the tenants October Revolution and heated argument and tensions really emerge between landlord and tenant just as the tenant takes control of rent payments. The social landlord needs to very carefully consider the perceived heavy-handed and we hold all the aces approach it is doing now!
No longer will the social landlord be able to pay ‘lip service’ to tenant involvement and social housing becomes tenant directed, or more correctly customer driven. The existing real power that the social landlord has, becomes neutered and massively diminished with direct payment and the landlord:tenant power struggle changes once and for all. The tenant becomes the customer and that customer is king and sovereign.
The welfare reform policies shaft the landlord and the tenant. The landlord for once is not and has not been four-square behind the tenants cause and instead has sought to pass the financial risks downwards to the tenant. The tenant is fighting back and come October they will hold the aces as they take control of rent payments. The risk to reputation that the social landlord has overlooked in not challenging the bedroom tax enough, the absolute dearth of any challenge to the overall benefit cap and monthly payments and the overall perception of caring only about its bottom line and not a jot for the tenant and now its heavy-handed approach to rent collection, will transform into even greater financial losses and indeed financial survival when direct payment comes online in October.
Direct payment as the tenants October Revolution anyone?
Courtesy of Joe Halewood at SPeye