A ministerial wrangle has
erupted over plans to pay housing benefits direct to claimants rather than to
their landlords.
The Evening Standard has
learned that Treasury Chief Secretary Danny Alexander has taken up concerns
that it will draw vulnerable people into debt and eviction.
He has written to Welfare
Secretary Iain Duncan Smith warning that a big increase in rent arrears would
disrupt investment in new social housing.
Mr Alexander is
threatening to block the scheme unless safeguards are brought in for the
vulnerable.
The plan is part of Mr
Duncan Smith’s flagship universal credit reform. He believes making claimants
learn to juggle their personal finances to pay for rent, food and heating
is essential to preparing them to cope in the world of work.
However, early results
from six pilot schemes, including one in Southwark, found the level of rent
arrears went up from five per cent to eight per cent — a 60 per cent rise.
A National Housing
Federation spokesman said nine out of 10 social tenants chose to have rent paid
to their landlords.
He added: “The Government
is planning to remove that choice. More than a third of housing associations
believe the shift to direct payments to tenants under Universal Credit will
make it harder for them to build new homes.”
In his letter, Liberal
Democrat Mr Alexander makes clear that he backs Mr Duncan Smith’s general aims
but wants safeguards to identify vulnerable people quickly and have their rent
paid direct.
A source said: “There are
clearly some people who simply cannot manage their own finances and will end up
in arrears.
“That is also a problem
for housing associations who need to demonstrate a reliable source of rental
income to their lenders.”
Mr Duncan Smith is
determined to make welfare claimants more self-reliant. One minister said:
“It’s a major barrier to people holding down a job if they do not learn how to
budget out of their pay packet. In too many cases people can’t cope and
get into debt.”
