Agenda item

The Director of Housing submits a report which seeks the view of Housing Scrutiny Commission Members on the proposed introduction of mandatory direct debits or credit union rent accounts for all new council tenants from early 2016.

The Director of Housing submitted a report which sought the views of the Commission on the proposed introduction of mandatory direct debits or credit union rent accounts for all new council tenants from early 2016, and asked to note the policy would start once the new housing IT system was in place. The report was presented by Mike Watson, Income Collection Manager.

Members of the Commission asked questions / made comments on the following matters:

It was queried what difficulties Kirklees had encountered and what was positive about their scheme. Also did they have an option available in the area like Clockwise to help their tenants? It was noted that date alignment was crucial for tenants not to be hit by failed Direct Debit payments. It was also noted that Kirklees gave existing tenants 12 months to move onto Direct Debits, and it was asked if that option would be explored in the future for existing Leicester tenants. Mike explained that Kirklees had tried to introduce mandatory Direct Debits to all tenants, but had run into difficulties. At the time Kirklees did not have a service like Clockwise but might have one now. He added the way Leicester was proposing to introduce mandatory Direct Debits for new tenants would give the tenant time to ensure everything was set up before signing for a tenancy. The council could look to extend and advertise the scheme to existing tenants, but the council would not be able to enforce the scheme as a condition of tenancy.

Members were informed there were currently 5-6 tenants signed up with Clockwise but that this number was expected to increase. Prospective tenants would be informed the Council would pay a small fee for an account to be set up with the credit union on the tenant’s behalf. Also, Clockwise would not charge for unpaid direct debits if there were insufficient funds in an account. Members were asked to note there would be alternative payment arrangements for people in difficulty, for example, those with mental health issues – whereby the Department for Work and Pensions would be asked to make payments direct to a rent account for those people. For those people who were not diagnosable, for example, with learning difficulties, a Clockwise account would be better for them. It was also explained that Clockwise had an additional service for account holders in the form of a payment card for a fee of £2 a month. Rewards could be earned at retail outlets through using the card.

It was noted that currently 19.3% of rent payments were by non-cash methods. It was suggested a promotional drive could be made to try and increase that figure.

The Executive Member for Housing commented that the need for Direct Debit payments had been forced on the Council by Government and the introduction of Universal Credit. He said there was a need to ensure the Council gained maximum rent from tenants, and that initially the introduction of mandatory Direct Debit payment from new tenants was the right step. He added that the scheme would not be introduced to all tenants, as it would be wrong to impose on those tenants who paid their rent and were not receiving benefits, unless it became an issue in the future.

The Chair noted the issues that Kirklees had faced when introducing mandatory Direct Debit payments for all tenants, but asked the Executive for the sake of tenant’s financial management and to reduce the impact of Universal Credit, to consider the following recommendations:

1.    The widening of the mandatory direct debit approach;

2.    That the Executive work with other social housing providers to create a common strategy for the issue;

3.    That consideration be given to looking at broadening the policy on either:

a.    An area basis (estate, estates or housing office); or

b.    Length of tenancy (e.g. up to three years)

4.    That work be undertaken in consultation with Clockwise Credit Union and other service providers (which might be credit unions and/or other banking service providers;

5.    That Clockwise be asked to come to a future meeting of the Commission to establish its capacity to provide a service for tenants (both LA and HA);

6.    If there was a partial extension of mandatory direct debits the impact should be assessed against a control of tenants who do not use direct debits to pay rent and other charges.

The Chair asked for a consensus from Commission Members on the above recommendations as read out, which were agreed.

RESOLVED:

1.    That the report content, and commencement of the policy once the new housing IT system is in place be noted;

2.    That the Executive be asked to consider the recommendations of the Housing Scrutiny Commission as listed in the minute text.