Communities and Local Government CommitteeWritten evidence from Wakefield District Housing

Introduction

WDH is a stock transfer housing association serving over 31,000 tenants in the Wakefield and district area.

WDH has since transfer in 2005 sought to increase the confidence of our communities with innovative programmes with the Council, Police, Job Centre Plus and Health Authority to increase the number of people living in our homes who are in employment.

We, therefore, welcomed the opportunity to participate in the Direct Payments Demonstration Project to enable us to learn what the impacts are likely to be for our tenants and for us as an organisation.

The Findings from the Direct Payment Demonstration Project

The project has shown its impact in the following ways.

Over 1,000 tenants have received direct payments through the project.

Increase in arrears—arrears have increased to over £180,000 on the project. This equates to 11% of the debit compared to 2.7% for the whole stock.

Increased enforcement action—over 170 tenants or 17% of tenants have been served with a Notice of Seeking Possession (NOSP), this compares to less than 1% for the whole stock.

Payments reverted back to WDH—174 tenants payments have reverted back to WDH. Over 90% of these have been due to a 15% underpayment trigger. Very few instances have been due to eight weeks arrears accruing.

Increased administration costs—WDH are increasing the administration costs for 2013–14 by £250,000 per annum. This is money from those tenants who pay their rent subsidising those that do not. The increased costs come from chasing more, smaller debts, increased transaction charges and higher levels of engagement.

Conclusions from the Project

Most tenants pay most of the rent most of the time but are now susceptible to temptations when they have a crisis in their lives.

Housing providers will have substantially higher costs in terms of arrears and administration costs.

Housing providers will have less information on which to plan to help and assist tenants.

Impacts of wider Welfare Reform

Like all housing providers, WDH has been assessing the impact of Welfare Reform on this long term business plans. This analysis has shown that:

Changes to the Social Sector Size Criteria (Bedroom Tax) will affect around 5,200 tenancies with an average deduction of £14.60 per week, equivalent to 16.7% of the weekly rent. Using prudent estimates of collection rates this would reduce WDH’s income by £0.8 million per year.

Using the best estimate of Universal Credit phasing at the current time the impact in the increase in bad debts for working age tenants is estimated to be £0.4 million in 2013–14 rising to £3.1 million in 2016–17.

Combined this will result in a potential loss in revenues to WDH of around £4 million by 2016–17.

It has been independently assessed that every £1 spent by WDH in the district contributes £4 of additional social value. Therefore, a loss of £4 million investment by WDH by 2016–17 would result in a loss of £16 million of social investment by WDH in Wakefield’s local economy.

Running scenario plans on WDH’s 30 year business plan has shown that the loss of income to WDH would result in a reduction of £220 million in development capacity or 2,200 less new homes built over the next 30 years.

Conclusions

The increased costs of collection and administration are falling on the rent payers who pay full or partial rent to their landlord.

If landlords redirect their resources to meet the financial challenges of welfare reform, other organisations will be left to pick up the financial costs of the reduction in the return on investment that landlords provide and the lost capacity in meeting new house building and stimulating economic growth.

Tenants should be offered the choice on whether they want to receive direct payments to improve their well being.

January 2013

Prepared 28th March 2013