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GreenSquare has been selected as one of only five housing associations the Government plans to work with on pioneering demonstration projects that will see claimants in the social rented sector directly receiving monthly housing benefit payments and paying rent to landlords themselves for the first time.

GreenSquare's Oxford Citizens Housing Association will work in partnership with Oxford City Council for the pilot project between June 2012 and June 2013; it will test how claimants can manage housing benefit monthly payments ahead of the introduction of Universal Credit from October 2013. The projects will also look at the appropriate level of safeguards needed to help secure landlord income streams if tenants fall behind on their rent.

The other local authority and housing association partnerships named for the demonstration projects are:

• Southwark Council and Family Mosaic, London
• Shropshire Unitary County Council and Bromford Group, Sanctuary Housing and The Wrekin Housing Trust, West Midlands
• Wakefield Metropolitan Borough Council and Wakefield and District Housing, Northern England
• Torfaen Borough County Council and Bron Afon Community Housing and Charter Housing, Wales.

Each will be involved in testing out different elements of the project, including testing different trigger points when social landlords should receive direct payments if tenants fall into specified levels of arrears. The projects will also inform how best to communicate the changes to claimants, provide assistance with budgeting to successfully pay their rent, and support claimants and landlords experiencing financial difficulties.

GreenSquare's chief executive David Ashmore said: "The Government’s proposals for welfare reform and the payment of universal credit will give people more freedom and responsibility. But will this lead to greater pressure to manage personal finances and inevitably lead to increasing debt?

"We are pleased to have the opportunity to be part of this pilot – to test what will actually happen, to inform the final policy decisions, and achieve an evidence based conclusion that is in the best interests of residents and the social housing sector."

Councillor Ed Turner, Deputy Leader of Oxford City Council, said: "We are pleased to be part of this demonstration project. We offered to participate so that Oxford's experiences can help to identify the ways in which the proposed changes will affect the viability of the government's planned introduction of Universal Credit, and the steps which will be necessary to support tenants and to protect housing organisations and landlords from the danger of rising arrears. We will aim to find ways of minimising the financial risks of direct payments for landlords while improving the financial awareness of tenants."

Minister for Welfare Reform Lord Freud said: "Direct monthly benefits payments are a key part of Universal Credit, allowing claimants to prepare for the financial responsibilities they will face when in work and to encourage them to move away from often costly weekly and fortnightly budgeting.

"However, we know that some families will need support to adapt to managing their finances in this way. The demonstration projects will help us to understand the demand for budgeting support and the best ways to deliver it."

Alongside this measure, Ministers are working with the banking sector, credit unions, supermarket financial services and the Post Office to explore opportunities to develop cost-effective budgeting accounts for claimants moving onto direct payments.

The Government has also commissioned a review of the projects led by Professor Paul Hickman from the Centre for Regional Economic and Social Research at Sheffield Hallam University. The review will evaluate the impact of direct payments on claimants and vulnerable groups, as well as local authorities and social rented sector landlords. While the majority of Universal Credit claimants renting in the social sector will be responsible for making their own rent payments to landlords, vulnerable claimants and pensioners will continue to have their housing costs paid direct to their landlord.

[published online 26/1/12]