Universal Credit The Elephant in the Room

by Mary Latham

20:16 PM, 19th March 2012
About 7 years ago

Universal Credit The Elephant in the Room

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Universal Credit The Elephant in the Room

After reading the comments posted here, I wanted to begin a new discussion about Universal Credit and I hope that Ben Reeve-Lewis will join me to give his take on what the future holds for landlords who take tenants on benefits. I hope that others will also join in.

Ben said “I read today that Westminster council are opting to raise council rents for tenants earning slightly over £60,000, to 40% of their income, so what? £2,000 a month (help me out here guys, I have number blindness) Not a bad wage I hear you say, but this is total household income. So a married working couple on an average wage with a working 18 year old child may well tip them over the limit, meaning they lose the family home.

Big changes afoot and they aint over yet.

My reply

Ben, Westminster are continuing the ethos. Council owned homes were meant to provide a safety net for those who could not afford to buy.

The theory is that if these homes are occupied by those who earn enough to own their own home they are not fulfilling that function and, since the supply is under so much pressure, this is one of several methods that will be used to make people move out. In my opinion what these authorities would like to say is “if you earn £X you don’t need the local authority to house you and therefore it’s time to buy your own home and leave these homes for those who do need them”. If a certain lady who is now in a sad state were in the driving seat I think this is exactly what Government would be telling us but since no-one has the courage to say that we will see a nibbling around the edges and a long painful process to achieve just the same thing.

Universal Credit is part of the movement towards empowering people on benefits to take control of their financial affairs and at the same time reducing the cost to the public purse. One payment to cover all living expenses is similar to one wage packet for those in work. People will be expected to prioritise their spending and make the money go around just as those in work do. In many ways it makes sense for us all to be in a similar financial “system”, the only problem is that to just take away the water wings and hope that that everyone will swim is unrealistic. This is why I work with my local authorities and Credit Unions to ensure that when Universal Credit happens those who are in receipt will have the possibility of a simple bank account through which they can set up direct debit payments to help them.

My article here, written last year, discusses the poverty trap that the benefits system has become.



Comments

Ben Reeve-Lewis

21:16 PM, 19th March 2012
About 7 years ago

Yeah I wrestle with conflicting ideas on this.

Sticking solely with the Westminster thing for now (This is a massive subject that wil probably become a book in its own right) Imagine a secenario, that I dont think will be uncommon. Adult parents earning £20k each, which in London is shop assistant wages, hardly second home 'gite in Draguinan' territory, and adult child earns the same whilst trying to save deposit to stop being a KIPPER (Kids In Parents Pockets Eroding Retirement Schemes) and save a mortgage deposit (£80k at the last call I heard for London) How can they do that when they will lose the home because of joint household income?

Kid will be even further down the rung of homeownership and parents will have been thrown to the PRS at a rent vastly increased from social levels. Who is served by this?

When they trialed a similar system in New South Wales they found that many who were interviewed were disincentivised from getting work in case they lost thier home.

I'm not saying this is good or an effective approach to life's vicisitudes but it is simply how people responded. You cant use renting legislation to educate people.

The government are certainly using UC and rent direct payments to empower people to take control of their financial lives, and I agree, people need ot take more control but to expect that to happen just by introducing the legislation is a fools errand and seriously misunderstands how people work.

Your witness.....:)

Mary Latham

21:35 PM, 19th March 2012
About 7 years ago

Like you Ben I wrestle with this.  On one hand I see local authorities struggling to house vulnerable people, some with familes with young children.  All are trying hard to work with the PRS to increase their options.Many people believe that Westminster is an area where people with high incomes buy homes and therefore the local authority should be pulling in revenue from that area that they might not get from a less expensive area because the property they have there is a public asset.

When UC comes in people on benefits will face the same decisions those who are working face every day.  What can I afford from my income and how can I reduce my costs to live within my means

I totally agree Ben Rome was not built in a day and we need more education at every age to help people to rethink their situation and learn to live by new rules.  legislation alone will not do this but it is a start.

Ben Reeve-Lewis

22:12 PM, 19th March 2012
About 7 years ago

I dont think it is a start though.I think it is misplaced.

Many people who work, drawing down a monthly wage cannot make ends meet, either because they dont have decent money management skills or because thier wages just dont allow them to live a normal life, even if they dont overstretch themselves.

I worked for the council until 2001 when I went self employed. At that time everyone just worked their job. I came back when the recession hit my training business in 2009 and the difference is, nearly everyone I work with now does at least 2 jobs. Whetehr they work in a bar 3 nights a week or runs business on the side (Importing black people's hair, cake making, catering, beauty prodcuts....to name just a few) and I'm not talking about funding a collection of Jimmy Choos or a second home, just people trying to feed their families.

Its bad, and simply putting the unemployed in the same positio as the employed, with a monthly wage to manage does nothing at all to help them manage it. I struggle and I am on what would be termed a decent wage and Frazzles is a hard working self employed travel agent, working 15 hour days 7 days a week to service her corporate clients. If we struggle how will UC as a principal help people?

On the one hand is bad money managemtn skills, on the other hand is simply not earning enough to meet basic outgoings. I cant see UC helping in either situation

Mary Latham

23:06 PM, 19th March 2012
About 7 years ago

I think you have hit the mail on the head Ben.  People who work and do not earn enough to pay their bills find a way to earn more because pay their bills they must.  There is a perception that those who do not work have an expectation that "someone" must take care of them and often do not see it as their responsiblity to find the extra money from their own endeavours.

The fact is that there are not enough people in work paying into the system or that those who are in work are not paying enough into the system to afford those who do not work the lifestyle they want. We therefore have three options

1. Get more people into work
2. Take more from those who are in work
3. Give those who are not in work less

I am proud to live in a country where those in genuine need are supported and I am happy to contribute to that support but there has, for several generations, been little or no incentive to work to pay your own way and we now have families where there are four generations who have never worked. 

UC is using option 3.

4:07 AM, 20th March 2012
About 7 years ago

I think the idea of empowering people to manage their own benefits is a disaster waiting to happen.
We already have the experience of LHA; that hasn't gone too well has it!?
Or rather it has for tenants who ripped LL off by not paying rent and then moving onto the next mug LL.
For the LL it has been a nightmare experience.
Of course the social LL have not had this horrendus experience that private LL have experienced.
When UC comes in they will face the same problems.
These LHA claimants are by their very nature generally not capable of managing a budget on limited resources.
The idea that things come before fags and booze and drugs is an alien concept to them.
Paying the rent is the last thing thing they will be bothered with.
They know the law is on their side as it will take ages for them to be evicted.
If they can find another mug LL then they will receive LHA and they can do this repeatedly as a lot do.
They know that any county court recovery efforts will be a waste of time.
And so the LL gets ripped off even more.
Of course these are vastly sweeping statements.
After all how many non-benefit claimants have proven themselves incapable of managing their personal financial circumstances?
If it wasn't for the availability of free and easy credit how many people would actually survive on their real wages?
So to be disparaging of benefit claimants is perhaps not the correct approach.
I think one could say there is a general societal immaturity when it comes to people managing their finances.
We are the most indebted of consumers in the world I think.
What have we got to show for it?
The I want it now seems to go across generations.
People seem to behave like children and benefit claimants are exposed more so to this childlike way of dealing with things as they have less.
Society is to blame for this  immature way of viewing financial responsibility or should I say irresponsibility.!
Until society impresses a mature responsibility on people to manage their resources we will continue to to see the less capable be more obvious in their mismanagement of their limited resources.
People who have access to credit can hide behind a veneer of supposed financial responsibility.
They are in reality no better at managing things than a benefit claimant.
I think the average consumer debt is £750.00.
This means we have all given ourselves a 35% pay rise.
This as we have spent money we did not earn and yet have to pay back some day.
As we can no longer obtain credit we are stuffed.
It will take decades to return to a normal situation.
The Japanes model is the one we are going to have to follow if we ever hope to recover our senses!?

4:22 AM, 20th March 2012
About 7 years ago

If wages had not been depressed by unfettered immigration, more so from the EU we would probably have increased wage levels and less people on benefit as they would be doing those immigrant jobs.
Benefits would probably be less than a normal wage thereby presenting an incentive to work.
These incentives DO NOT exist presently and UC will not make the incentive enough to get people off benefit.

6:37 AM, 20th March 2012
About 7 years ago

One of the Sunday papers this weekend "People living in private rented accommodation who pay their rent on time could soon get a boost to their credit rating, following the launch of the Rental Exchange service by Experian." The service will require the tenants permission but perhaps landlords should start to obtain this at the start of any tenancy. It is touted as a boost for first time buyers who can obtain a good credit history ahead of applying for a mortgage. The article I read also noted that a tenants payment history would also be impacted by missing housing benefit payments which are often out of tenants control... Not once we have universal credits they won't be. Clever Experian.

My first understanding of Universal Credits came before my time at Property118 working in the voluntary sector with extremely vulnerable individuals. There was incredulity at the proposals. Neither the individuals nor the charities working to support them wanted Universal Credits. It will be interesting to see where exceptions, if any, are made.

Ben Reeve-Lewis

7:08 AM, 20th March 2012
About 7 years ago

@Mary. I dont disagree that benefit culture has created a dependant mentality. I really see the difference each day, as I deal with landlord/tenant disputes and mortgage repossessions and do see a different approach from those who are working and those who dont. But when you say "often do not see it as their responsiblity to find the extra money from their own endeavours", remember you arent supposed to do extra work if you are signing on so technicaly the couldnt even if they wanted to@landlordtweets:disqus 

Also, it occurs to me writing this that maybe at the core of the problem is the length of time people spend on benefits. When benefits were invented they were a wonderful safety net for people coming out of the depression, which must have been terrifying but I would guess that the attitude at that time was that it was only a helping hand, but as subsequent generations live on it the mindset changes.

I remember being on the dole for a few months after the collapse of my daft musical career and before I came back into housing and noticed that after a few weeks I stopped getting up early and stopped shaving. Luckiliy I spotted what was happening to me and set an alarm for 8am, even though I had nothing to do, and wore a suit everyday. Sounds daft I know but I thought it was important, then I simply took the first job that came up, driving a 14 ton lorry 6 days a week, starting at 3,30am for £5 a week more than I was getting on benefits. That crappy job helped me get a better job in Homelessness and here I am.

I hate to label all people, if one person is capable of something then so am I if placed in similar circumstances, I wish people could experience something different. If I was on benefits now I would spend as much time as possible doing anything at all, volunteering, working in a charity shop....whatever, just dont slide down there.

When your income has come from benefits for a long time, and particularly if your parents were also on it how are you ever going to learn the skills to manage? but simply dumping all the money in their lap and saying "Get on with it" isnt going to work. AS Teena points out, most people dont want it. I suspect because they can see it coming themselves

But on UC specifiacly. I agree with Paul, I think it is going to be a disaster. I was in Wales last year training a bunch of very experienced housing officers of a council on court procedures for possession and they hadnt heard about the direct rent payments element of it. One guy with 25 years behind him said "We're finished", because he knows where rent arrears will go

Ben Reeve-Lewis

7:27 AM, 20th March 2012
About 7 years ago

Oh and I meant to say, behaviourists call it 'Boiling frog syndrome'. If you dump a frog in boiling water it will jump out immediately because its temperature and that of the water arent matched, but if you put a frog in cold water and gradualy heat it the thing will boil because it doesnt notice the incremental changes hapening to it.

This is how you get people to work in concentration camps and explains how people slowly adjust to a benefit mentality.

I think being made to work for your benefits would be the best thing. Not from a Daily Mail hang em and flog em attitude, I just think it would be a real gift to those on benefits. It isnt about being used as slave labour its about the priceless gift of finding out that you are useful and valuable that unemployment takes away

8:41 AM, 23rd March 2012
About 7 years ago

As a landlord and an agent in NW London and also having attended a local Borough meeting just two days ago, the UC topic was raised and is getting ever closer. In NW London and outwards this is going to have a tidal wave effect on pretty much every claimant from one beds to four. This in turn will ensure whatever landords are currently within the HB sector will opt out with practically immediate effect. Thus ensuring the property rental market will return to the working sector only as in pre LHA times. I struggle to know which way to turn!

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