How to manage Universal Credit rollout
- Our New World of Risk report reveals welfare reform is a key concern for Registered Providers (RPs) of social housing
- The roll-out of Universal Credit will end direct payments of housing benefit to the RP
- RPs should view this as an opportunity to show their social value by helping tenants to manage their finances
Welfare reform is a key government priority, and the Welfare Reform and Work Bill, which will introduce £12 billion of cuts, was voted through by MPs earlier this year.
Nearly two-thirds (65%) of RPs surveyed for our New World of Risk report said they were “very concerned” about welfare reform.
With the right strategies, however, RPs can lead their staff and tenants through the challenges ahead.
Impact of Universal Credit
The rollout of Universal Credit is a particular challenge for RPs, as housing benefit will no longer be paid directly to them. Instead, recipients of Universal Credit will get one monthly sum and will become responsible for making their rental payments.
This has led to concerns that tenants who are not used to managing their finances may struggle to make prompt payments.
Richard Wood, Head of Housing and Health at Zurich Municipal, sums up the challenge for RPs.
“The guarantee of income is no longer there”, he says.
“Any financial arrangements with lenders are fundamentally different, and that makes financing new projects and maintenance programmes more of a challenge, and perhaps more expensive.”
RPs are also likely to incur costs while preparing for Universal Credit.
“I know of some housing associations that have recruited additional resource to educate tenants on the changes, and this additional resource requirement comes at a cost,” says Wood.
The guarantee of income is no longer there
Demonstrating social value
However, RPs could also see the requirement to educate tenants on the changes as an opportunity to show the social value of their organisation.
“Clearly this is an opportunity for RPs as well as a challenge,” continues Wood. “They can demonstrate their role in society by helping their tenants manage their finances.”
When educating tenants on the impact of Universal Credit, it is important not to take a one-size-fits-all approach.
Some tenants will prefer modern, digital methods of communication, while others will prefer to speak to somebody face to face.
It is also important to make it as easy as possible for tenants to adjust to Universal Credit, by making a wide range of payment methods available (see box out for more guidance).
Opportunity to diversify
The welfare challenge is also indirectly driving other opportunities for RPs, as they diversify beyond their core role of providing social housing, in order to open up new revenue streams.
Our New World of Risk report found three-quarters (76%) of RPs are introducing new services – such as operating leisure facilities, healthcare facilities and retirement homes – to supplement their core role of providing social housing.
Wood adds: “Diversification, and the more commercial mindset that comes with it, brings new opportunities, but also new risks that RPs need to be aware of.”
Read our article on how to diversify safely here.