Scottish AffairsWritten evidence submitted by Convention of Scottish Local Authorities (COSLA)

WHAT IS HAPPENING WITH DISCRETIONARY HOUSING PAYMENTS?

Background

Discretionary Housing Payments (DHPs) can be used by local authorities to provide financial assistance to claimants in receipt of Housing Benefit when the local authority considers that help with housing costs is required. Until the recent welfare reforms, the UK Government’s total allocation for DHPs was c £20 million per year with Scotland receiving a proportionate allocation. Additional monies were announced by the UK Government to assist with the implementation of housing benefit reforms such as the Under Occupancy changes (Bedroom Tax or Spare Room Subsidy), Benefit Cap and changes to local housing allowance.

Scotland’s 32 local authorities received c£10 million allocation for 2013–14 from DWP for DHPs in April 2013. This included both the original base allocation plus the additional allocation in recognition of support needed for the housing benefit changes. Under regulations, councils have the ability to top up this DHP funding, from their own resources by a further 150%. At the end of May, COSLA’s survey revealed that 14 of the 30 councils who responded had either done so or made provision to do so if required.

DWP then announced, on 30 July, further funding, particularly for very rural authorities. Scottish local authorities with low population density received around £3.5 million of a £5 million allocation across Great Britain. As a consequence, revised DWP DHP allocations in Scotland reached almost £13.5 million, not including a further £20 million funding open to bidding across GB. The bidding fund does not count as DHP allocation for calculating maximum top up.

Scottish Government then made available £20 million in September to assist local authorities to deal with the consequences of the bedroom tax—which councils can use to maximise top up. Therefore the maximum funding currently available to councils in Scotland totals c£33 million. Successful bids to DWP might increase this by around £2 million.

An important point to note in relation to current patterns of expenditure and awards is that many local authorities will have adopted policies and practices and profiled expenditure on the basis of the funding available for DHPs at the beginning of the financial year. With the marked change to available funding, many are now re profiling expenditure and revisiting policy and practice.

COSLA recently sought further information from councils to increase our understanding of what is currently happening in relation to DHP spend across councils. Feedback was received from 26 councils (81%) and these findings are based on that response.

Current Position

From feedback from 26 councils, our understanding of the position at the end of September is as follows:

88% (23) have committed 30% or more of their DWP DHP allocation.

69% (18) have committed 40% or more of their DWP DHP allocation.

58% (15) have committed 50% or more of their DWP DHP allocation.

46% (12) have committed 60% or more of their DWP DHP allocation.

19% (5) have committed 90% or more of their DWP DHP allocation.

15% (4) have committed over 100% of their DWP DHP allocation.

The three councils who have committed below 30% of their DWP allocation are all rural who have now received significant DWP additional funding.

These 26 councils had received 42,247 applications in total at 30 September and made 27,828 awards (66%).

At 30 September £7,431,641 has been spent or committed by these 26 councils on DHPs.

Conclusions

It is important to remember that only limited conclusions can be drawn from this information. Funding available for DHPs has been increased incrementally and it is too early, in particular, for the £20 million made available by Scottish Government to have significantly fed through in this analysis. Feedback from councils suggests that many are adapting policy and practice in the light of a quite different picture of available funding. A number advise that they are now revisiting earlier applications. In addition, while there has been a high number of applicants overall, some councils have identified that significant numbers of those with an under occupation penalty (and now showing rent arrears) have not as yet made applications for a discretionary housing payment and these councils are now adopting a much more pro- active targeted approach eg Highland Council, Renfrewshire Council. It is therefore expected that the levels of expenditure on DHPs across Scottish councils are likely to change markedly over the coming months.

Under Occupancy and Rent Arrears

The picture is complex and changing. Key points are:

Arrears are up. At the end of May, all but one council with housing stock reported in COSLA’s survey an increase in arrears due to the bedroom tax. 75% reported that non-payment of rent due to the bedroom tax was directly responsible for the increase in their rent arrears.

Of that rent due to be collected from tenants affected, 60% of councils then reported receiving 40% or less and 80% reported receiving 50% or less (based on responses from 20 of 26 councils).

The Scottish Housing Regulator (who gave evidence to the Scottish Affairs Select Committee) survey of the position at the end of June for all social landlords appears to show that arrears rises are not so dramatic, only reporting a change from 3.51% to 3.73% increase in gross arrears for all social landlords. However they also showed a sharper rise for councils—4.62% (30 June 2013) vs. 3.73% (30 June 2012).

Just below 1% gross rent arrears doesn’t sound too bad BUT if no council tenant hit by bedroom tax paid anything at all, this would only increase gross arrears by 2.5% to 3%. The SHR survey is still showing a 24% gross rise for councils.

To increase our understanding, COSLA checked the 30 September position with six councils—North Lanarkshire, North Ayrshire, Dundee, Highland, Edinburgh and Fife a good geographical and demographic mix. The selected councils have the following coverage:

They cover 43% of all working age local authority tenants on HB in Scotland.

They cover 48% of all local authority tenants affected by under occupation.

Two had rent arrears over 4% of their gross rent in 2011–12 and four had rent arrears under 4% of their gross rent in 2011–12.

Four are urban (prop. density over 200 per Sq. Km; Two are rural (Pop. under 200 per square Km).

Three had an HRA surplus of more than 10% of their gross rent in 2011–12 and three had surpluses of less than 3%.

The following information is based on returns from all of the six councils:

The six councils identified 20,021 tenants impacted by the bedroom tax

37% (7,445) of these were in arrears on 31 March before bedroom tax came in.

On 30 September, 68% (13,712) were in arrears, a rise of 31%.

Arrears at 30 September 2013 were 29% (£5,122,366) higher than for the same period last Year.

	Highland	North Lanarkshire	North Ayrshire	Fife	Edinburgh	Dundee	TOTAL
At 30 September 2013 what was your total gross rent arrears figure?	£1,427,489	£2,534,000	£1,207,574	£5,668,750	£4,650,000	£2,085,051	£17,572,864
What was the total gross rent arrears figure for the same period last year ie at 30 September 2012?	£1,136,335	£1,532,000	£849,214	£4,764,542	£2,700,000	£1,468,407	£12,450,498
How many people in your council area have had a HB reduction as a result of the under occupancy (bedroom tax) changes?	1,677	5,201	2,260	5,267	3,319	2,297	20,021
Can you provide a figure for the number of those with an under occupancy reduction who had rent arrears at 31 March 2013?	623	2,333	779	1,882	969	859	7,445
Can you provide a figure for the number of those with an under occupancy reduction who have rent arrears at 30 September 2013?	949	3,449	1,294	3,642	2,523	1,855	13,712

November 2013