Universal Credit Claims and Payments (Scotland) Regulations: consultation responses

Payments of rent direct to landlords

Key Issues

The clear majority thought the draft regulations do meet the policy intent of offering a choice to UC applicants on managed payments of rent direct to landlords.

The most frequently-raised issue was around changes of circumstance. There were concerns that the draft regulations as currently presented do not refer to or put in place safeguards for claimants and landlords.

Another frequently-made comment was that there should be payment direct to landlords in all cases.

A concern of some respondents was that the Regulations do not address a situation where the tenant is vulnerable and does not exercise the choice to have the payment made to the landlord.

The Scottish Government is intending to introduce this flexibility to safeguard tenancies and prevent build-up of rent arrears. The intention is that tenants will have the option of having their housing element being paid directly to the landlord, broadly replicating the situation now with housing benefit.

Question 2: Do the draft regulations meet the policy intent of offering a choice to UC applicants on managed payments of rent direct to landlords?

Responses by respondent type are set out in Table 3 below.

Table 3: Question 2 - Responses by type of respondent

Type of respondent	Yes	No	TOTAL
Campaign Group or Third Sector organisation	10	2	12
Health	2	-	2
Local Authority	14	4	18
Other	2	-	2
Representative Body	6	1	7
Registered Social Landlord	17	3	20
Tenant group	8	1	9
Total Organisations	59	11	70
Individuals	28	2	30
TOTAL	87	13	100

As at Question 1, the clear majority of respondents (87 out of 100) thought the draft regulations do meet the policy intent of offering a choice to UC applicants on managed payments of rent direct to landlords. Those who disagreed tended to be the same respondents who had disagreed at Question 1.

Although 75 respondents made a comment at Question 2, a number of these raised the same or very similar issues to those already covered under the analysis at Question 1. Also as at Question 1, some respondents made brief comments supporting the proposal. These respondents sometimes noted that both tenants and landlords have stated a preference for a direct payment option and that this will help avoid rent arrears developing. An "Other" organisation respondent was supportive of the approach as potentially preventing people from financial harm. A Registered Social Landlord respondent was amongst those highlighting that the new flexibilities will also benefit landlords as rent payments make up a high proportion of their income and any reductions in this income stream may undermine their ability to provide affordable housing and services.

A number of respondents particularly welcomed the arrangements applying to private as well as social landlords. A Local Authority respondent commented that allowing managed payments of rent to private landlords may open access to other housing options for claimants; their point was that private landlords can be reluctant to accept tenants in receipt of benefit income but that having the option for rent to be paid directly to landlords may encourage private landlords to accept tenants in receipt of benefit income.

Issues raised in common with Question 1 included circumstances for refusal, rights to appeal, payment in arrears, informing claimants and the definition of 'Scottish claimant'. The remaining analysis presented below focuses primarily on new issues raised and which focus particularly on the issue of payment of rent direct to landlords.

As at Question 1, the most frequently-raised issues are presented first and tended to be raised by around 8-10 respondents. The latter part of the chapter covers issues raised by smaller number of respondents (around 4 to 7 respondents unless otherwise stated). The chapter concludes by considering a range of implementation-related issues raised.

Changes of circumstance

This was the most-frequently raised issue. Regulations 2(2b) and 4(3b) allow Scottish claimants to make requests for flexibilities at any time, such as switching between rent payments to themselves and direct payments to their landlord. However, there were concerns that the draft regulations as currently presented do not refer to or put in place safeguards for claimants and landlords. This was seen as enabling a claimant to cancel an arrangement at any time regardless of known vulnerabilities or any arrears they may have accrued with their landlord. It was suggested that landlords should be consulted before a managed payment arrangement is cancelled.

For example, a Local Authority respondent was amongst those reporting that landlords need the assurance of safeguards to ensure that direct payments are not overturned at the request of the claimant without engagement with the landlord. They suggested that a landlord receiving a direct payment can be deemed as a 'person affected' and should therefore be notified about any decisions to stop direct payments. They felt this would ensure that the appropriate support can be provided for claimants who may be presenting as chaotic or unable to manage their budget, particularly if they are making frequent requests to change payment methods.

A Campaign Body or Third Sector organisation respondent highlighted that, while in most situations people should not need to change their use of flexibilities more than once in a few months, people who are homeless inevitably experience much more fluid circumstances. They did not wish to see someone unable to benefit from the flexibilities through repeated changes outwith their control and suggested that being homeless should generally be considered as exceptional circumstances for making multiple requests for flexibilities.

Finally, a Campaign Group or Third Sector organisation respondent raised a particular issue around how quickly direct payment arrangements might be cancelled with specific reference to households who have the amount of UC they receive substantially decreased as a result of policies such as the application of the benefit cap or the two child rule. They noted that if UC is reduced due to the benefit cap, and even if the housing element might still be sufficient to cover their rental liability, a claimant may wish to have their direct payment arrangements stopped immediately to allow them to afford food and other basic essential costs.

Automatic payment to landlords

Another frequently-made comment was that there should be payment direct to landlords in all cases. The largely Local Authority, Registered Social Landlord and Tenant Group respondents taking this view tended to suggest that allowing tenants to opt to have the rent element of UC paid to them will only increase rent arrears as some people will not pay their rent in full or will delay rent payment.

One suggestion was that rent should only be paid to UC claimants if they actively opted-out of it being paid direct to the landlord. It was suggested that this approach would allow landlords to focus on those who opt out and ensure they have the necessary support and skills to manage their UC payments and Housing costs.

Landlord or Other Agency requested Managed Payments

A concern of some respondents was that the Regulations do not address a situation where the tenant is vulnerable and does not exercise the choice to have the payment made to the landlord. It was suggested that it should be possible and/or it should be made easier for landlords to request managed payments.

Specific suggestions included that:

• The draft Regulations could be strengthened by noting the need to temporarily direct funds to the landlord where a Local Authority (or delegated agency) contacts DWP to advise that an inquiry or investigation has been initiated under the Adult Support and Protection (Scotland) Act 2007.
• A Managed Payment Arrangement should automatically be put in place for anyone who is homeless and in temporary accommodation to allow the claimant to focus on finding a home.

Relationship to Alternative Payment Arrangements

A small number of respondents commented on the relationship between the new provisions and the existing Alternative Payment Arrangements. In one case, a Local Authority respondent sought confirmation that the 2013 UC Regulations on Managed Payments under Tier 1 and 2 vulnerabilities and when 8 weeks rent arrears have accrued still apply.

However, the decision not to completely replace the current DWP Alternative Payment Arrangement regime was also questioned. The Local Authority respondent raising this issue suggested that many of the claimants who will benefit from a Managed Payment under the new provisions to landlord are claimants who would already meet the criteria under the existing scheme. They went on to suggest that maintaining each scheme independently would be an expensive exercise with very little point and that that it would be better if the 'new' Scottish scheme simply replaced the current scheme and the Scottish Government paid a regular portion of the costs instead of trying to itemise the reasons for each Alternative Payment Arrangement individually.

UC housing element and claimant liability

A concern was also raised about how the direct payments made to landlords will relate to the rent charged. It was suggested that, as under the current arrangements, there is no guarantee that the payment made to landlords will cover the full rental amount.

In response to this potential issue, a Campaign Group or Third Sector organisation respondent recommended that consideration be given to what will happen in circumstances where the 'housing element' of a person's UC payment is insufficient to meet their full rental liability and/or where the amount of UC they receive in respect of their rental liability fluctuates from month to month. On this issue, a Local Authority respondent highlighted that the UC award may change each month, but the managed payment will always match the value of the Housing Element. One suggestion was that there should be a mechanism for informing the claimant of their outstanding rental liability on a monthly basis.

Accessibility & Support required by claimants

A small number of respondents highlighted issues around ensuring that the direct payment option is easily accessible to claimants and that those who need support in applying receive the necessary assistance.

Particular issues highlighted included:

• It will be important to provide the necessary support to those who are digitally challenged to ensure that they are not discriminated against. The Campaign Group or Third Sector organisation respondent highlighting this issue noted that people with disabilities are far more likely to be digitally disadvantaged but also that one in four people in the UK lack digital skills.
• Ensuring that a digital process is accessible can raise issues for people with particular needs. For example, another Campaign Group or Third Sector organisation respondent highlighted the challenges that people blind and partially sighted people can experience with being online and the very substantial costs of accessing the required technology.
• While some people with vulnerabilities may benefit from Managed Payments, they could also prefer other options, such as setting up a direct debit to their landlord. Advocacy to support this type of individual choice would be positive.

Importance of choice

While some respondents felt that direct payments to landlords should be the default or only position, others took a different view. For example, a Campaign Group or Third Sector organisation respondent, felt it is important that claimants have the choice to opt into this method, rather than the process being imposed. They suggested that it should be made clear to a claimant: that they pay rent; how much rent is being paid; to whom it is being paid; and how to start and stop the payments being paid through the direct payment process.

Finally, a Local Authority respondent commented that draft regulation 4(1) implies that the claimant can choose the amount they wish to have paid direct to their landlord. They there were of the view that this element of claimant choice would be a positive feature.

Housing costs vs. rent

A particular issue identified concerned the Regulations' reference to 'rent' as opposed to 'housing costs'. The Local Authority respondent highlighting this issue commented that the reference to direct payment of rent fails to recognise other housing costs, and in particular service charge payments.

Implementation and delivery

In addition to commenting on specific issues around the detail of the draft Regulations, a number of respondents commented on the implementation of the changes. Returning to the focus of the consultation questions, a Local Authority respondent commented that it is not possible to establish whether the Regulations will give effect to the policy objective until the arrangements for implementation are set out.

The timescales for implementation of the twice monthly and direct rent flexibilities were raised by some respondents. For example, a Representative Body respondent suggested there is a pressing need for clarity around the timescales for implementation of these flexibilities and that adoption as early as possible will be critical.

Other comments considered the interaction between the introduction of these flexibilities and other changes to the welfare regime, including mitigation of the Spare Room Subsidy using Discretionary Housing Payments. It was noted that the many changes create a significant administrative burden.

Respondents raised a number of communication-related issues which they would like to see addressed when taking these and other UC-related changes forward. A Representative Body respondent stressed the need to improve the standard of communication between the DWP and landlords and suggested that, until suitable data sharing channels have been put in place, the scaling up of the roll-out of UC will pose a danger for the sustainability of housing associations. Others also highlighted the need to consider the information provided to landlords; it was suggested that, unless some provision is made to improve the information provided to landlords, including about the payment amount and timing of direct payments something missing here. A specific direct payment suggestion was that the Regulations which should outline what information DWP will give to landlords about whose payments are being made direct to the landlord, the amount relating to each tenant, covering what period, and details of any deductions etc.

Other comments about the implementation and ongoing delivery of the flexibilities included:

• Requests for Managed Payments will need to be dealt with quickly. Specifically, it was suggested that it will be important to agree timescales within which claimants will be informed about the decision regarding their application.
• It would be helpful for the DWP and Scottish Government to continue to monitor the impact of their policies on the health of working-age claimants and support Local Authorities and Health Boards to mitigate adverse consequences.

Finally, there were calls for the Scottish Government to involve Local Government, along with representatives from the housing sector, including the private rented sector, in discussions on the implementation of the Regulations.