Work and Pensions Committee - Universal Credit implementation: meeting the needs of vulnerable claimantsWritten evidence submitted by the Community Housing Cymru Group

About Us

The Community Housing Cymru Group (CHC Group) is the representative body for housing associations and community mutuals in Wales, which are all not-for-profit organisations. Our members provide over 136,000 homes and related housing services across Wales. In 201011, our members directly employed 6,500 people and spent over £800 million in the Welsh economy. Our members work closely with local government, third sector organisations and the Welsh Government to provide a range of services in communities across Wales.

Our objectives are to:

Be the leading voice of the social housing sector.

Promote the social housing sector in Wales.

Promote the relief of financial hardship through the sector’s provision of low cost social housing.

Provide services, education, training, information, advice and support to members.

Encourage and facilitate the provision, construction, improvement and management of low cost social housing by housing associations in Wales.

Our vision is to be:

A dynamic, action-based advocate for the not-for-profit housing sector.

A “member centred” support provider, adding value to our members’ activities by delivering the services and advice that they need in order to provide social housing, regeneration and care services.

A knowledge-based social enterprise.

In 2010, CHC formed a group structure with Care & Repair Cymru and the Centre for Regeneration Excellence Wales (CREW) in order to jointly champion not-for-profit housing, care and regeneration.

We welcome the opportunity to respond to this consultation. Welsh housing associations provide homes to some of the most vulnerable members of the community and according to the Cuts Watch Cymru report, Wales on the Edge, more than two thirds of benefit claimants live in socially rented accommodation. We support the Government’s commitment to reforming the benefits system to increase work incentives and to “make work pay” through the Universal Credit.


Our response to the proposed arrangements for claims and payments and the provision of support and advice for claimants, including the presumption of a predominantly online, self-service claims process; monthly payment to one person in the household; and arrangements for providing telephone and face-to-face support and independent advice for claimants who need it

1. The presumption of a predominantly online self-service process is concerning since it is our experience is that a large percentage of people lack not only the knowledge and accessibility to make online claims but also the confidence. It is insufficient to simply provide on-line accounts for claimants and assume immediate and automatic take-up; we cannot underestimate the level of face-to-face support required for those claimants who are not digitally included and/or have literacy issues and other disabilities which may prevent them from accessing online services.

2. We know that a large percentage of social housing tenants do not have access to the internet at home, for example, in 2010 Tai Calon, a housing association based in Blaenau Gwent found that 42% of their tenants have access to the internet. Blaenau Gwent remains the most digitally excluded area in Wales.

3. A percentage of those who are not online will also have mobility issues and be unable to leave their homes. We need reassurances about how these claimants in particular will be supported. There are also huge concerns that those living in rural areas will be unable to access face to face support due to lack of provision and poor public transport and also digital exclusion which is associated with rural areas.

4. There is further concern that many claimants will be unwilling to divulge personal information over the internet particularly amongst older people who may worry about the security of divulging personal information over the internet.

5. CHC is currently working with Wales Cooperative Centre to get a clearer picture what digital services and support Welsh housing associations are providing not only for their tenants but also for their staff.

6. With regards to general financial capability, one housing association has provided us with evidence that over 70% of their tenants are in receipt of full or partial housing benefit. The ability of tenants to budget effectively has yet to be tested and a large increase in rent arrears due to non-payment of rent will have a significant impact on this organisation’s ability to deliver its commitments to its tenants.

7. Evidence suggests that whilst housing associations are working with tenants at pre-tenancy stage to collate bank account details/direct debit information, there is a reticence from new tenants to share this information until Universal Credit/direct payments are actually introduced. Some members, for example Tai Calon, are reviewing their rent collection policies as presently only 701 out of 6,000 of their tenants pay their rent via direct debit. Tai Calon have made a commitment to support tenants through the introduction of Universal Credit, however, many smaller housing associations will not have the resources to offer such support.

8. There is a lack of clarity in Wales as to where independent advice can be sought on Universal Credit. Citizens Advice Bureaux are already inundated and welfare benefit enquiries have now overtaken debt enquiries in number. The future of independent advice will become even more uncertain with the planned cuts to funding for advice services.

9. The move to monthly payments to one person in the household could lead to hardship for those in the household who do not receive payments. Those who are accustomed to fortnightly payments will no doubt find it difficult to budget with such a large amount of money. There are also concerns that the single payment could go to a member of the household who is least likely to be able to cope with it, for example, an individual suffering from an addiction.

10. Furthermore, those who are forced to wait 37–38 days after their first claim before receiving a payment will be hugely disadvantaged and we have grave concerns that this could lead to a spiral of debt and severe financial hardship. It is imperative that financial support is available to bridge this gap and help households avoid getting into debt at such an early and crucial stage in the new Universal Credit implementation. If households get into debt at this point they will doubtless spend many years in poverty “playing catch-up”, which is surely contrary to the overall aims of the new system. Moneyline Cymru is a not-for-profit responsible lender which was set up by Welsh housing associations to help tackle doorstep and illegal money lending. The sector has strong evidence to suggest that this type of lender might seek to exploit this financial “low-point” with aggressive marketing campaigns.

11. Under the new system, a household ceases to be entitled to benefit for any part of a month they will be treated as not being entitled for the whole period. For example, if a household becomes ineligible for to receive Universal Credit for two days at the end of a month, they will lose benefit for the whole of the month. This does not in any way reflect the way a wage earner would receive their salary if they were to hand in their notice and for that reason it seems completely incongruous with the objectives of the Universal Credit system. Households cannot be expected to budget for such an occasion and we therefore ask that this is reviewed and revised accordingly.

12. The third party arrangements such as jam jar accounts and credit union schemes which most landlords will be forced to take up in order to continue receiving their rent will attract fees and will therefore negate the expected benefit of welfare claimants, which is to improve their financial capability. It is therefore expected that a cut of the Welfare Benefit budget will be sacrificed by landlords and paid directly to financial institutions to manage these accounts, which offer no security whatsoever to the landlord who might still not receive their rent payment. The cost of working with third parties plus the potential for huge increases in rent arrears could render social landlords unable to provide services to the most vulnerable in our communities.

13. Housing associations, particularly in North and West Wales are concerned about the provision of services in Welsh. The ability to communicate in Welsh must be built into all aspects of the new service, for example, contracts with third parties such as Citybank. Members often receive complaints from tenants who are unable to conduct their business in their first language, for example, AllPay do not use Mutual Exchange services as the IT interface is not available in Welsh and tenants are therefore unable to conduct their transactions in Welsh. It is vital that claimants are able to conduct their business via the medium of Welsh if they should choose/need to do so.

Our response to the proposed arrangements for the “claimant commitment”, sanctions and hardship payments

14. Housing associations generally feel that sanctions for failure to comply with the “claimant commitment” are too harsh and could lead to housing related benefits being used for living expenses. This would inevitably leads to homelessness and place great strain on local authorities who will be under a duty to re-house such households.

15. In particular, the proposal for fining applicants for non-disclosure of changes in circumstances is very worrying, especially in the context of the move towards “digital by default” and the level of digital exclusion amongst the most vulnerable. The timeframe for advising of such changes must be carefully considered and flexibility and discretion exercised if we are to avoid a spiral of debt and poverty due to unrealistic fines.

Our response to the changes in the income entitlement of disabled people under Universal Credit, including those who may receive less income under Universal Credit than at present

16. There is concern among Welsh housing associations that those households with a disabled child who are not in receipt of the higher rate of Personal Independence Payment will be on a lower income under Universal Credit as they will become ineligible to receive the disabled child element. This is likely to be even more widespread since it is becoming harder to quality for the higher rate PIP (Personal Independence Payment). This reduction in income will directly impact on the household’s ability to provide appropriate care for the child and parents could be forced to use benefits which are intended for housing payments for the purposes of caring for their child. This will increase arrears and could potentially have a huge impact on local authority housing services.

17. There has not been any confirmation of whether there will be a severe disablement premium under Universal Credit but the Severe Disablement Fund will cease to exist in 2015. This fund currently supports 2,000 severely disabled people in Wales and the impact this will have one them will be catastrophic in terms of their quality of life.

Our response to the impact of the changes on local authorities, including budgets, staff and support for claimants. The changes include those to Housing Benefit; the introduction of the benefit cap; and localisation of council tax support

18. Welsh housing associations are greatly concerned about the potential loss of the close relationships that have been forged over many years with housing benefit departments in individual Local Authorities. This will undoubtedly have an impact on the way that possession cases have previously been dealt with as it may not be possible to find out the details of the tenant’s award as efficiently.

19. Under the new system, housing costs and housing benefit backdates are to have a statutory limit of one month rather than a maximum of 26 weeks. A full length “good cause” backdate can often result in the household remaining in their home instead of being evicted. This means of preventing homelessness will no longer be available and landlords will be forced to issue possession proceedings, thus placing severe pressure on Local Authorities and the Court system.

20. There will be significant pressures on council tax departments in administering council tax with at least 10% less funding although it is expected that it could be as much as 15%. The indications are that Local Authorities do not have systems in place to administer the new scheme and there are concerns about inconsistencies and therefore the potential for unfairness across Wales. For example, it is anticipated that council tax benefit claimants in Blaenau Gwent could be paying as much as 20% of the council tax due, whereas this could be lower in some areas depending on how Local Authorities administer the scheme.

21. When coupled with other potential reductions in income due to welfare reform, households who are expected to pay the shortfall in Council Tax Benefit will now be at risk of prison due to non-payment of Council Tax. The strain on the Court system will increase and create a huge resource issue which will negate any saving made by cutting benefit entitlement.

22. We would like to see proper consideration given to the huge resource pressure these changes present to the legal system and on Local Authorities. We believe the only outcome is that of a “false economy” and that overall, the cost of dealing with these changes will be far more costly to the taxpayer’s purse. We would like to see a system which is efficient, fair and consistent across Wales.

Our response to the level of the earnings disregards

23. There are concerns that the taper which is imbedded in Universal Credit has been set at 65%, rather than the 55% which was originally advised by the UK Government. Although this still represents some incentive to claimants to be gainfully employed, along with the earnings disregards, which are considerably higher for people with housing costs, this is going to cause more hardship than was originally thought.

24. We would like the disregards reviewed and a fairer system implemented to ensure that homeowners who have finished paying their mortgages do not benefit the most.

21 August 2012

Prepared 21st November 2012