Why tenants and landlords are finding themselves short-changed
An “extraordinary” exchange of correspondence with the Secretary of State of Work and Pensions, local government and other housing bodies published this week, reveals the particular financial consequences, for Universal Credit claimants and social landlords, of the way DWP calculates Universal Credit payments and awards.
Frank Field MP, Chair of the Committee, said: “We’ve spent weeks engaged in this extraordinary correspondence, trying to get to the bottom of why tenants and landlords are finding themselves short-changed. It’s heartening that the Secretary of State might change these rules too, but it’s hard to escape the conclusion that people have been left short on rent simply because the DWP can’t count how many days are in a year.
“All this may seem absurd, but it reveals a very serious issue. The ongoing administrative failures of Universal Credit are biting into incomes already cut, frozen, sanctioned and capped to below basic living costs. DWP must do better.”
Not a mere problem of “perception”
DWP initially claimed that there was no problem. But the Secretary of State acknowledged on 28 February that the underlying problem is not a mere problem of “perception” and was taking a welcome second look at the calculation.
The problem was vividly expressed by Islington Council’s Head of Income and Home Ownership, Adam Jenner, who wrote to the Committee on 28 February 2019, saying: “The fundamental problem is that it appears the DWP disagrees with the fundamental workings of the Gregorian calendar”.
The apparent misunderstanding and confusion cover a serious issue for the housing associations and local councils struggling to fulfil legal duties and obligations to their residents. Mr Jenner goes on to explain: “The Department for Work and Pensions’ decision to only provide 52 weeks’ rent payment to claimants is very concerning to Islington Council. We, along with most other local authorities, charge rent on a weekly basis. … As you are well aware, there are 52.143 weeks in a year. For the DWP to claim that they will only pay on the basis of 52 weeks is a rejection of this fact and that will ultimately bring hardship to tenants.”
The Committee has now asked for an update on the “problem with the way Universal Credit converts a weekly rental liability into a monthly entitlement”, more than two months after the Secretary of State said she was “currently” considering it.
Key points on ‘the problem’ – the way DWP converts weekly rent payments to fit into Universal Credit’s default monthly household payment:
- the calculation for converting weekly rents to a monthly figure is: weekly rent multiplied by 52, divided by 12. But 7 x 52 is 364 – so a day or two is lost every year.
- this leaves people who pay their rent weekly (like most social housing tenants) receiving less UC than they’re entitled to. If they paid their rent monthly, DWP would give them their full entitlement.
- the Department argues that, for individual claimants, this is not alarge amount of money – though a day or two’s rent a year is not inconsiderable, especially in the context of the Committee’s recent report on the benefit cap, for example.
But for social landlords, says the Committee, the cumulative effect can be substantial, as the full correspondence illustrates.
* Read the letter from Frank Field to Amber Rudd here
* Read the letter from the National Housing Federation here
* Read the letter from Halton Housing here
* Read the letter from Newcastle City Council here
* Work and Pensions
Date; 9th of May 2019