The pilot scheme, one of six across the country, reports 'soaring arrears' since the beginning of the trial and is telling ministers that the idea could leave landlords trying to recover millions in debt.
Southwark Councils cabinet member for finance, Cllr Richard Livingstone, told the Guardian:
"My message to Iain Duncan Smith is that the demonstration pilots are clearly showing that direct payments need a rethink. It does not appear to be working. The DWP needs to go back to the drawing board or it will have devastating consequences for vulnerable tenants and landlords alike. I can understand some of the thinking behind why direct payments have been put forward, but it seems that when it is tested it doesn't really work."