Social entrepreneur Kevin Green warns of welfare reforms disaster

By Robert Lloyd

Social entrepreneur Kevin Green has warned that the Government’s Universal Credit welfare reforms are a “disaster waiting to happen”.

Green, who is one of the UK’s largest private sector landlords, has said the Government should be ringing “alarm bells” following the results of a South Wales trial of benefit reforms.

The trial in Torfaen saw rent arrears from tenants in the area rise seven-fold to £140,000 in seven months.

The planned Government changes mean that housing benefit (previously paid directly to landlords) will now be transferred to claimants.

The Government has said that the change will help claimants manage their finances better.

But landlords in the pilot area in Torfaen have warned that evictions could increase if the trend in the trial area continues after the system for paying benefits is fully adopted.

Millionaire entrepreneur Green, 49, runs a massive portfolio of private rental properties from his South Wales base.

“Like hundreds of other landlords out there, I operate with a high degree of social responsibility.

“It is in everyone’s interests that there is a good landlord-tenant relationship built on mutual trust and respect.

“It is stating the obvious that some of our tenants on lower incomes find it very hard to manage their budgets. When payments are made directly to landlords, problems can be eased.

“But when the system changes fully to payments made directly to claimants then we have a disaster waiting to happen.

“It is only right and proper that we should start ringing alarm bells after this trial in Torfaen. Sadly, it shows that our worst fears are coming true with an increase in rent arrears.

“No-one likes evictions, but many landlords will be pushed into making harsh decisions if rental payments don’t come through on a regular basis. Sadly, for the taxpayer, the result of any evictions puts further pressure on housing and social services – more pressure and more expense for the public purse.

“I have been warning about the problems in these Government changes since they were announced. The problems in Torfaen seem to back up my worst fears.

“The changes will do no-one any good – tenants, landlords, local councils.

They will all suffer.”

Torfaen is one of six areas where the Department of Work and Pensions is running what it calls “demonstration projects” ahead of the introduction of the UK government’s flagship welfare reform of Universal Credit in the autumn.

The problems in Torfaen have already been highlighted by the BBC’s Eye on Wales radio programme.

Under the reforms, claimants’ benefits will be rolled into one credit paid directly to their bank account on a monthly basis.

Housing benefit will become part of the Universal Credit, signalling an end to the current system where payments are made straight to local councils or housing associations, reducing the risk of the 100,000 social housing tenants in Wales falling into arrears.

Bron Afon Community Housing, the biggest social housing landlord in Torfaen with 8,000 properties, has 950 tenants receiving direct payment of their housing benefit.

Chief executive Duncan Forbes described the rise in arrears to almost £140,000 as “significant”, adding that a large proportion of the tenants were “never in rent arrears before”.

“That was a group of people who had a good track record of payment and pretty low level of arrears, thrust into a position where they are now is significant arrears,” said Mr Forbes.

Steve Clarke, managing director of Welsh Tenants Federation, told Eye on Wales that direct payments were a major cause of concern.

Mr Clarke said: “There are a lot of people out there that are finding it difficult on very small incomes to be able to manage their budgets. You only need a broken washing machine or cooker and suddenly you are in a real difficult bind in missing your rent.”

Similar concerns have been voiced by a Commons select committee which last November warned the Department of Work and Pensions not to rush into launching Universal Credit.