Please Note: This Article is 7 years old. This increases the likelihood that some or all of it's content is now outdated.

The Government’s Direct Payment Demonstration Projects have now been extended until the end of 2013. The Department of Work and Pensions (DWP) has just announced that it will extend these direct payment trials for a further six months.

The thrust behind these trials is testing how something like 12,000 claimants manage their monthly payments of housing benefit before the introduction of Universal Credit.

The DWP want to be sure they have in place an appropriate level of safeguards they deemed necessary to secure social landlord income streams if tenants fall behind on their rent.

The Press Release from DWP states:

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“The Universal Credit direct payment demonstration projects will be extended for a further 6 months, Minister for Welfare Reform Lord Freud announced today, as new findings from the projects are published.

The extension will help to further develop the support needed for social housing tenants moving onto Universal Credit. The projects will now run until the end of the year.

The latest findings from the projects show a rise in the rent collection rate to an average of 94%.

Lord Freud said:

Direct payments will allow claimants to manage their money far more effectively and create a much smoother transition into work.

The Demonstration Projects show the majority of claimants are managing their own rent – even through Christmas when budgets can be tight.

But we have always been clear that there needs to be protection for both tenants and landlords if people build up arrears and to target help at those people who should not be placed on direct payments.

The Projects are helping us to develop and set this protection and that is why we are extending them for 6 months.

New figures from the Demonstration Projects show 6,168 tenants received direct payments, the total level of rent charged stood at £19,204,022 and an increase in the average rent collection rate to 94% – with levels of rent payment rates on the projects varying from 91% to 97%.

The projects are investigating a range of different elements of direct payments to provide protection for landlords and tenants including:

• levels of support tenants may need to start direct payments, such as advice on managing personal finances and budgeting

• the exemptions that need to be in place for direct payments

• payment switch-backs to the landlord if a tenant falls into arrears

• the support needed to help tenants in arrears to pay back their arrears and to potentially return to direct payments

• early intervention switch-backs before arrears reach trigger points

Findings from the 6 areas covering the first 9 payments of housing benefit directly to tenants is available here: www.dwp.gov.uk/docs/direct-payment-demo-figures.pdf

The Direct Payments scheme is a controversial one that has evoked some negative comments from the pilot provider councils. Despite this the Department for Work and Pensions insists its plans are to proceed.

Wakefield District Housing, one of six projects testing the direct payment of universal credit to tenants, calculates the reforms will lead it to them losing £8 million annually in bad debts. They think they will need to borrow an extra £20 million to shore up their finances.

Despite the more negative comments such as these, there are some other reports of moderate successes in the pilot scheme.

DWP have said they will publish details of rent arrears from the pilots before the end of the year.

DWP have been quoted as saying that the findings from one area alone do not represent the likely success of the direct payments scheme and that the policy will proceed, but they acknowledge that direct payment would not be for everyone.

Please Note: This Article is 7 years old. This increases the likelihood that some or all of it's content is now outdated.
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