Providers need to be alive to the risk of contractors becoming insolvent and how to limit the resulting inevitable disruption.
Under Universal Credit, the default position for claimants is that they will receive their benefit payment award monthly in arrears plus one lump sum payment. Prior to this claimants would receive separate payments for the different benefit claims that they had ongoing and the payment frequency ranged from weekly, fortnightly and four weekly depending on the benefit they claimed.
Housing benefit could also be paid directly to the landlord if the claimant requested, regardless of whether the account was in arrears or not.
As you will no doubt be aware, the change from several payments to one single payment is highlighted as a concern by welfare right groups, citing that it will lead to budgeting problems for the benefit claimant, especially if there are delays in the payment. For those benefit claimants that specifically struggle to budget or are in rent arrears, the DWP has issued guidance on APAs that can be used to assist those specific claimants.
How does an APA work?
For those claimants that need additional support, an APA could be by way of either:
- Paying housing element of Universal Credit direct to the landlord;
- Payments that are more frequent than monthly; and/or
- Payment of benefit award that is split between joint claimants, depending on their circumstances.
Granting an APA is a discretionary power and, as long as the DWP follows its internal guidance and complies with human rights and equality law, there is no right of appeal to the decision (however, there is scope to request a review of the decision). This will mean that any decision can only be challengeable by way of judicial review.
When will an APA be granted?
The DWP guidance stresses that the award of an APA should only be made to claimants who cannot manage the monthly payment and, as a result, risk financial harm to themselves and/or their family. Applications are based on an individual claimant’s circumstances.
The guidance has set several factors or ‘triggers’ for when an APA should be considered and the likelihood of the need of an APA based on which trigger takes effect. There are two tiers:
- Tier One – Highly likely/probable need for APA
These include drug/alcohol problems, learning difficulties, mental health conditions, multiple debts, homelessness, domestic abuse and rent arrears.
- Tier Two – Less likely/possible need for APA
These include historic rent arrears, the claimant leaving prison or hospital, recent bereavement, and language skills.
The difference between the two tiers is the likelihood and probable need for an APA. The DWP would need to take into account the client circumstances on a case-by-case basis. Several tier-two factors might lead to an APA whereas just one might not be enough, depending on the particular circumstances.
Direct payments to landlords
The housing element of Universal Credit payable to the landlord is considered the highest priority to ensure that the claimant’s home is secure when an APA is requested.
APA payments made directly to the landlord as a managed payment can be requested by the claimant completing form UC129, or by the landlord by completing form UC47 (depending on whether as a landlord you have a secure or non-secure email address, the form slightly differs as does the information requested).
The landlord can request an APA when the benefit claimant is in arrears equal to or more than two months of their rent or if the benefit claimant continually underpays their rent over a period of time and arrears accrue to more than a month’s rent. The landlord would need to provide proof and a breakdown of the arrears.
Length of APA
APA payments are not seen as long-term and will continually be reviewed by the DWP. It may be decided that after a period of time the benefit claimant’s payments are returned to a single payment including the housing element, and they will have to make payments themselves.
For more information
For more details or advice on alternate payment arrangements, please contact Zishaan Saleem.
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