Tenants of social housing will have no choice but to pay rent by direct debit after residents lost their fight to force a council U-turn.

They took their freedom of choice campaign to the council yesterday.

It follows a decision by Kirklees Cabinet to introduce mandatory direct debit rent payment for all tenants and residents of social housing to save administration costs of £129,000 a year and protect rental income.

Rod McInnes handed the 2,100 name petition coordinated by Kirklees Federation of Tenants and Residents (KFTRA) to the council’s Overview and Scrutiny Panel for Development and Environment.

Mr McInnes said: “This is a bad decision because it’s caused division.

“This decision is stereotyping all tenants as being bad payers – treat tenants as individuals and give us a choice over how we pay our rent.”

But the panel of three councillors and a co-optee said they were assured the change was done for the right reasons and backed the Cabinet.

Clr Ken Sims, chair of the committee, said: “The panel feels the support mechanisms are in place to deal with all concerns raises.

“The panel is happy that there is ongoing dialogue between the council, Kirklees Neighbourhood Housing (KNH) and its tenants to assist them in this transition period.”

The committee, including Clrs Karen Rowling and Vivien Lees-Hamilton, along with Ray Firth, noted the petition but chose not to recommend a Cabinet re-think. They had powers to overturn the decision, made last September and already introduced.

Residents raised concerns about tenants with poor or no credit scores being unable to have a direct debit facility and said it removed freedom of choice and forced them into the banking system against their will.

Mel Spencer, of Golcar, asked why the council had not considered allowing a standing order option, saying: “I’m not signing up to something that means they can take whatever they want out of my bank account without my permission.”

Helen Geldart, Kirklees assistant director for housing, said the welfare reform changes had forced a re-look at the cost of transactions.

She explained that with Universal Credit due next April, tenants in receipt of benefits would get the money and have to pay rent themselves, rather than it going straight to council coffers as housing benefit currently does.

“There is a risk to the council,” she said. “There’s an extra £32m in transactions and the costs needed to change.”

Simon Rogers, chief executive of KNH, explained: “The council will have to collect £32m from tenants that currently is part of the housing benefit system.

“Pilots elsewhere have shown the collection rate has dropped to 94% – 4% or 5% less than before the pilot. In Kirklees, if we felt that ourselves, that would be a £3m reduction in income.”

He said direct debit payment was the most cost effective and efficient means of payment transaction – the cost of people paying their rent via the Post Office payzones was said to be 46p while a direct debit transaction was 21p.

Clr Cathy Scott, Cabinet member for Housing, said: “With an increase in the number of transactions we’ll face with Universal Credit it would cost us £237,000 a year. Direct debit will cost £108,000, so it makes sense”.