Changing benefits to monthly payments - why is it a problem?

[Deleted User]

BigAunty wrote: »

Firstly, there are the initial problems when the timing switches from weekly or fortnightly to monthly - how to minimise hardship when making someone wait an extra two to four weeks for their money when the new payment cycle is bought in.

Secondly, some of those on very low incomes have a very hand to mouth subsistence living and can go into debt very easily. It can be hard for some benefit claimants to manage to pay their basic living expenses and if they incurr an emergency, perhaps a travel expense to visit a sick relative, a plumbers bill to fix a leaking pipe or broken cooker, then it is really much more tricky for them.

Lastly - mindset. Those who receive weekly or fortnightly benefits, especially long term claimants, simply don't have the planning or budgeting skills or knowledge to make their money last over a longer period.

They've never had to before so haven't any experience of making money last so they get into a cycle of feast or famine. My teenage nephew could earn £200 one week and be found sitting in the dark the next week because he didn't have any money to feed the meter. Logic says 'make your money last and be sensible with it' but human behaviour isn't logical.

I am a supporter of benefits being paid on a monthly basis as this mirrors most employment and direct debit/standing order options but it's not without its problems.

I recall similar horror stories of what would happen when Local Housing Allowance claimants started receive it directly instead of it going to the landlord and that's never been as big an issue as it was made out to be.

This should be in discussion time.

I agree stuff like this should be in DT however mse towers hardly set a good example when they stick discussion topics on here in the guise of "news"

mrs_motivated

Looking at this from another perspective.

Benefits will be paid monthly in arrears, rent is due monthly in advance as housing benefit will be paid direct to claimants, they will owe eight weeks rent when they get paid.

Landlords will have to collect much more rent and face a significant increase in arrears. This will effect business plans quite significantly, particularly as social housing landlords are non profit making.

Even a small organisation with 850 properties, will on average have to collect over 1million pounds more in rent and manage increased arrears.

With the reduction in benefits many will be facing the effect will be compounded.

Long term reform of the current system is needed, but in my opinion to much to soon. It's the changeover that will be a nightmare.

sniggings

mrs_motivated wrote: »

Looking at this from another perspective.

Benefits will be paid monthly in arrears, rent is due monthly in advance as housing benefit will be paid direct to claimants, they will owe eight weeks rent when they get paid.

Landlords will have to collect much more rent and face a significant increase in arrears. This will effect business plans quite significantly, particularly as social housing landlords are non profit making.

Even a small organisation with 850 properties, will on average have to collect over 1million pounds more in rent and manage increased arrears.

With the reduction in benefits many will be facing the effect will be compounded.

Long term reform of the current system is needed, but in my opinion to much to soon. It's the changeover that will be a nightmare.

add into that the plans for bedroom tax, benefit freezes and council tax benefit being reduced, they are hitting benefit claimants from all angels.

They soon backed down on taking child benefits away from those earning over £40k a year but don't seem to have any shame in trying to make the biggest cuts on the smallest set of people, more benefits are paid to those in retirement but they are always excluded from the cuts, these people make up 70% of the welfare budget but also make up the majority of Tory voters!

[Deleted User]

I think it will be much harder for people whose sole income is from benefits than those who work and claim as well. Take me for example, I get my wages plus HB monthly (luckily my council have given monthly payment option for the past couple of years as 4 weekly was always a nightmare) so wages go in on 24th bills come out between 25th and 1st then my rent is paid on 4th. I still get weekly tax credit of £109 each Tuesday which is what we live on. I get CSA around 15th so any clothes or shoes etc come out of this plus I tend to do a big shop and stock up on laundry products, toiletries and load the freezer. If I got switched to Monthly tax credit it would be a case of some belt tightening for 1 Month. I would hope it would be done April time along with the start of the tax year as I don't pay water or council tax Feb & Mar so I could save that
£220 to assist with the changeover. But this is the beauty of working, you do have more financial control. The people I feel sorry for are the vunerable people who simply cannot budget! We are not all the same.

anguk

I think it's the initial changeover that would be a problem, after a while it would become easier. Imagine if your monthly wage was changed to yearly all of a sudden, you could divide your salary into monthly amounts but it would still take some time to adjust.

Sniggings made a good point, benefits are the bare minimum you need to live on so many claimants end up living from one payment to the next. At first with weekly payments they may have only had to wait a day or so if they were broke, then it became a few days when it became fortnightly payments, when it changes to monthly payments I can see people being broke for a week before their next payment is due. I predict a rise in doorstep loans as some people struggle to cope.

BigAunty

sniggings wrote: »

your other post was very good and made the argument for not having monthly payments, so I was surprised to see at the end of the post, you supported the change.

Working people with low disposable incomes face similar constraints to managing their money - it's not just those wholly on benefits that have to budget across the month.

The switch from paying housing benefit (LHA) to private tenants instead of directly to their landlord was motivated by a desire to make the tenant take on responsibility for basic budgeting (i.e. paying the landlord for the accommodation instead of squandering it). It was about ensuring that they take on rather simple responsibilities instead of being hand-held by the state.

While some landlords did not like the change, some landlords despised the way that claimants would consider matters of delays and arrears in their rent an issue between the landlord and the council, never accepting they were the primary person responsible, often slow to act with the paperwork and chasing. It was a mindset/culture of benefits issue.

It is better that some elements of the benefit system mirror employment rather than long term claimants getting a shock when they re-enter the labour market and then just struggle with basic housekeeping/budgeting skills.

BigAunty

mrs_motivated wrote: »

Looking at this from another perspective.

Benefits will be paid monthly in arrears, rent is due monthly in advance as housing benefit will be paid direct to claimants, they will owe eight weeks rent when they get paid.

Landlords will have to collect much more rent and face a significant increase in arrears. This will effect business plans quite significantly, particularly as social housing landlords are non profit making.

Even a small organisation with 850 properties, will on average have to collect over 1million pounds more in rent and manage increased arrears.

...

Housing benefit for social housing tenants (and I think the HB bill for the social housing sector sees more tenants receive it proportionally) is paid directly to the social housing landlord.

Social housing tenants are virtually impossible to evict and social housing landlords will be aware of any impacts and will have prepared for them. Private tenants are more vulnerable.

There is supposed to be some kind of transitionary period when the payment cycles change, don't know what this involves but the govt seem aware of issues that come from the lag.

sniggings

BigAunty wrote: »

Working people with low disposable incomes face similar constraints to managing their money - it's not just those wholly on benefits that have to budget across the month.

The switch from paying housing benefit (LHA) to private tenants instead of directly to their landlord was motivated by a desire to make the tenant take on responsibility for basic budgeting (i.e. paying the landlord for the accommodation instead of squandering it). It was about ensuring that they take on rather simple responsibilities instead of being hand-held by the state.

While some landlords did not like the change, some landlords despised the way that claimants would consider matters of delays and arrears in their rent an issue between the landlord and the council, never accepting they were the primary person responsible, often slow to act with the paperwork and chasing. It was a mindset/culture of benefits issue.

It is better that some elements of the benefit system mirror employment rather than long term claimants getting a shock when they re-enter the labour market and then just struggle with basic housekeeping/budgeting skills.

we are coming at this from different angle, you seem to think it's just a budgeting issue, I'm saying it's a case of not having enough money to last the period of time it is meant to cover.

Budgeting just doesn't work on benefits.

ATM a family on benefits maybe on 3 or 4 different benefits, each paid on a different day, child benefit, CTC, housing benefit, income support etc so not too long to go before at least one of them is paid, thats how someone on benefits budgets.

The government seem to be trying to sell this as a means to get those out of work to learn how to budget like those in work, first that only works if you agree with the premise that those out of work couldn't budget on a working wage, and also that they have been out of work for so long that they no longer know how to budget.

The facts are most people on benefits are either in work or are unemployed for a short time, so the budgeting argument doesn't work.

Lastly budgeting only works if you have time to save and the bill is due only when you have had time to save, real life is not like that, which would mean, finding the money meant for food or rent etc and using that to pay the bill, then playing catchup for other bills, try and budget then!

It would be great if all expenses were due only after you had time to "budget" for them and save for them over a few months.

Lets say what this is about, it's about saving money and assuming being on benefits is a choice, so if conditions are made so bad, it will force benefit claimants into work, you may agree with that or not but lets not pretend it's about budgeting.

mazza111

Gosh it's years since I was paid monthly. My last job was a weekly paid one that I was in for about 5 years.

I remember when a supermarket I worked in gave you an interest free loan for 3 weeks money. You then paid this back over the year from your wages. Just to make that transition easier.

I do agree that it would be hard in the first 4 weeks for anyone relying on benefits for that transitional period. Maybe they could do something like my former employer did?

princessdon

There are discussions going to Re the transition - they are looking at this to minimise the disruption. Quite what that is I have no idea but yes a "loan" has been discussed.

They are also in my area looking at budgeting courses and help with budgeting and it talks with CAB and CAP etc.

I think it is the way forward - but it needs careful handling not the usual !!!! up they do.