Bradford’s biggest social housing group is offering thousands of tenants a cash incentive to join a credit union to try to safeguard their benefit payments after the introduction of controversial Universal Credit in October.
The move comes amid fears the new single-payment will lead to a spike in homelessness through rent defaults among people who have difficulty managing their budgets and put them at risk of loan sharks.
Incommunities has contacted more than 4,000 tenants to offer them advice about the controversial changes and promote membership of the Bradford District Credit Union with a free £10 savings start on new accounts.
Universal Credit, which replaces Working Tax Credit, Child Tax Credit, Housing Benefit, Income Support, income-based Jobseeker’s Allowance and income-related Employment and Support Allowance is part of the Government’s welfare reforms.
It means claimants will receive any support for their housing costs directly on a monthy basis, rather than having benefit paid direct to their landlord.
David Wilford, chief executive of Holme Christian Community in Holme Wood, said a task force involving Incommunities, the NHS, Bradford Council, West Yorkshire Police and voluntary groups had been set up to look at what the “worst effects” of the changes will be.
He also claimed loan sharks could have a “field day” targeting people who are used to getting money every two weeks rather than once a month.
“In theory it’s a good idea for people to take control of their own financial affairs, but a lot of these people are not in the position to manage their finances that well,” he said.
“People will spend their money on what is the priority at the time and it may not be their rent.
“It could spiral downwards and cause an increase in homelessness.”
A report to Bradford Council’s regeneration and economy overview and scrutiny committee, which meets on Thursday, highlights the importance of making sure social housing tenants are ready to accept direct payments.
But it warned: “While most tenants will prioritise the payment of their rent, fully understanding that non-payment would result in eviction, there is a perception that vulnerable and chaotic tenants will not be able to manage their money and others could use the payments to cover unexpected expenses.”
Dave Dickens, director of income management at Incommunities, said it has been working with its customers to make sure they are aware of the reforms and had been offering drop-in sessions to encourage more people to open basic bank accounts.
The social housing landlord said it has employed staff to meet tenants and offer them individual support.
Mr Dickens said: “In 2013 we will be stepping up this proactive work to help fully prepare our customers.”
Rob Warm, Yorkshire manager of the National Housing Federation, said he had “concerns” about whether tenants would be able to manage their finances if they received their benefit in a single payment.
“Research we have done shows that 30 per cent – that’s 1.9m people – believe they will struggle. The question is how do we help them so they can manage their money better..
“We need to stop debts getting unmanageable.”
Mr Warm also expressed concerns that doorstep lenders could take advantage. He said: “They may visit them at the start of the week before they get the credit offering them money to tide them over. We have got to encourage responsible credit unions to make sure that unscrupulous lenders don’t take advantage.”