No Time for a Freudian Slip

Lord Freud’s address was received with great interest and many questions.
Lord Freud’s address was received with great interest and many questions.

Those of you who attended the NLA National Conference last week will know that Lord Freud’s address was received with great interest and many questions.

The Minister for Welfare Reform, Lord Freud, began his key note speech by thanking the landlords in attendance for their response to the recession; he said they played a “remarkable role”, providing the many extra homes that the social-rented sector was not able to offer.

Lord Freud went on to make the case for the Government’s policy for welfare reform, explaining how the reforms have been built on the principles of fairness, affordability and making work pay. According to the Minister, there is a need for financial control of the benefit system. He highlighted the rise in housing benefit expenditure to 23 billion pounds in 2011, citing instances in which tenants were claiming £100,000 in housing benefit as justification for the reforms.

But will Universal Credit work? Lord Freud seems to think so. According to the Government’s research, during the Universal Credit pilots 34 per cent of claimants chose to look for jobs to fill the shortfall in their income.

And whilst many will be worse off as a result of Universal Credit, Lord Freud informed the audience that nearly half of claimants will £25 per week better off and will be lifted out of poverty. As a result, Lord Freud said that he “is not expecting landlords to suffer sudden loss of income as a result of Universal Credit”.

But what about those with learning difficulties and vulnerable people who may not be able to manage monthly payments?

The Minister outlined the new budgeting bank accounts or jam jar accounts that will be made available to helps tenants budget on a monthly basis. He also assured the audience that in situations where people can’t manage monthly payments, there would be an exceptions process in which local authorities, housing associations and third sector organisations will provide services to support these people as well as a mechanism for rent payments to be made direct to their respective landlords. But generally, the Minister concluded that people are happy and ready to manage their own money.

After Lord Freud’s address, landlords at the conference had the opportunity to voice their concerns and question the Minister about the finer points of his department’s policies.

One landlord asked about rent arrears and how they should be dealt with after the introduction of Universal Credit. Lord Freud advised that there needs to be a support network for tenants including the local authority, housing associations and third sector organisations but that landlords need to have a rounded relationship with their tenants.

Another landlord raised concerns about tenant migration from London to cheaper communities, putting pressure on local landlords, schools and healthcare in these areas. The landlord asked if the Government is monitoring this. Lord Freud recognised that this needs to be researched but assured the audience that discretionary funds will be given to councils who experience migration from London.

A further question raised concerns about Article 4 Directions which limit the amount of Houses of Multiple Occupation (HMOs) – an affordable housing option – in any given area. Many landlords are concerned that if people can no longer afford to live in their homes and there is no availability in local HMOs, they will become homeless. Lord Freud promised he would look into Article 4 Directions as he felt it seemed to contradict the ethos of Universal Credit.

Finally, a landlord asked how the changeover to Universal Credit will be managed as local housing allowance tenants will not have a month’s money spare for the first month. Lord Freud advised that advances will be issued to tenants going onto Universal Credit for the first time and that this advance will fill the gap.

It is fair to say that Lord Freud really listened to the landlords’ concerns. Indeed, he promised to look into many of the issues raised. So let’s watch this space. Perhaps at conference next year we will have some more answers…

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