Support for housing costs in the reformed welfare system - Work and Pensions Committee Contents

7  Transitional protection

136. In order to mitigate the effects of the Housing Benefit reforms and smooth the transition for affected claimants, the Government provided some protections. The main element of the transitional protection is the increased funding made available for Discretionary Housing Payments (DHPs). DHPs are intended for claimants who are eligible for Housing Benefit (or the housing costs element of Universal Credit) and who require "further financial assistance with housing costs". LAs may grant DHPs in order to cover any portion up to the total shortfall between a claimant's eligible rent and their benefit. DHP grants vary in length and there is no requirement on LAs to pay them indefinitely once granted. They are intended to address periods of temporary need while tenants make longer term arrangements to deal with the impact of the reforms such as moving house, entering work or increasing working hours.[142]

137. DHP funds existed prior to the current reforms but the Government has substantially increased funds for DHP to assist local authorities in helping tenants to cope with the current reforms. From an annual baseline of £20 million a year, funding was increased to £180 million in 2013-14 and £165 million in 2014-15. Of this, £25 million per year is ring-fenced to assist those living in significantly adapted accommodation who are affected by the social sector size criteria. [143]

Local authority criteria for DHP award assessment

138. Many witnesses reported that the level of discretion allowed to local authorities in managing DHPs was creating too much variation in decision-making and leading to a "postcode lottery" whereby households with similar circumstances would receive different DHP decisions because of where they lived. Witnesses also described variation in local authorities' priorities for DHP; for example, some LAs prioritised households in temporary accommodation over other households. Some LAs are also placing conditions on payments, such as requiring claimants to meet some of the shortfall themselves. In Scotland and Wales the devolved administrations have addressed this by providing additional funding for DHPs. [144]

139. Local authorities use a means test to determine eligibility for DHP. In some cases they are taking disability benefits into account in the means test as permitted under DWP regulations.[145] The Chartered Institute of Housing told us that this meant that "people who are disabled are less likely to get Discretionary Housing Payment". Placeshapers, a housing association alliance, told us that in some areas people in receipt of disability benefits were completely unable to access DHPs. Community Housing Cymru argued that it was unfair to expect disabled people to divert funds from their disability benefits to cover shortfalls in their housing benefit. It believed that all local authorities should be mandated to disregard disability benefits when conducting assessments for DHPs. Carers UK made a similar point about the diversion of income from disability benefits.[146] Several witnesses recommended that the Government provide more codification and clearer rules on how local authorities should assess claimants for DHPs, while allowing some discretion for local circumstances.[147]

140. The Government emphasised that DWP guidance advises LAs that "they can consider whether to disregard income from disability related benefits where they are being used to help pay for the extra costs of disability". LAs are advised to bear in mind that DLA and PIP might be being used to meet other costs, such as for care or Motability schemes. The Government's view is that "each case must be decided on its own merits and decision making must be consistent throughout the year".[148]

141. We welcome the Government's additional funding for Discretionary Housing Payments (DHPs) to assist the transition for claimants affected by the housing cost reforms. However, we are concerned that the discretion allowed to local authorities in granting DHPs is resulting in access to DHP funding depending heavily on where a claimant lives. We are especially concerned that some local authorities are taking income from disability benefits into account in their means tests for determining eligibility for DHP awards. Disability benefits are intended to cover the extra costs arising from a disability or long-term health condition and we therefore believe they should not be included in DHP means tests. We recommend that the Government issues revised guidance to local authorities which advises them to disregard disability benefits in means tests to assess eligibility for DHP awards.

Length of DHP award

142. DHPs are intended to offer short-term support to help affected claimants adjust to the welfare reforms, while a longer-term solution is found. Carers UK and Homeless Link both told us that some local authorities would not consider granting DHPs to people who did not have an "exit strategy" in place, such as moving house or entering work. However, other witnesses said that, in the absence of other solutions, DHPs were being granted to claimants with long-term problems who could not realistically be expected to take these steps, for example, people with disabilities living in homes adapted for them, or people in temporary accommodation. This in itself created problems: claimants with an ongoing need for DHPs were being required to make repeat applications. Hilary Fisher of Women's Aid told us this was causing a lot of anxiety among the victims of domestic violence with whom she worked.[149]

143. The Government recognised that there were particular issues with using DHPs to assist households with long-term problems. Lord Freud told us:

    Where someone will clearly need long-term support, [re-applying] on a regular basis has no point and is stressful. [...]We put out guidance to councils to clarify that they should make much longer term DHP assessments.[150]

144. This "guidance" appeared to refer to a Housing Benefit Circular issued in January 2014, announcing the details of the Government contribution and overall expenditure limit for DHP in the financial year 2014-15. This circular states that the Government's announcement that DHP funding to address the impact of the SSSC would be maintained in 2015-16 was intended "to give LAs the confidence to make long term awards where they are appropriate.[151] However in supplementary written evidence, the Government pointed out that it had issued comprehensive guidance to local authorities on administering DHPs in April 2013 which stated that "local authorities are able to make long-term or indefinite awards, with the start and end dates of an award decided by local authorities on a case by case basis."[152]

145. The Government has recognised that, in some cases, longer-term DHP grants are appropriate, including for people with disabilities or other claimants for whom there is little reasonable expectation of finding work or moving house. However, we are concerned that the Government's guidance to local authorities is not strong or explicit enough to convey this message and that many LAs remain reluctant to grant long-term awards. We believe that responses other than DHPs should be used to support the majority of claimants facing long-term hardship arising from the reforms, preferably exemptions for disabled people and claimants in temporary accommodation, as recommended in this report. To provide reassurance for claimants who may continue to require long-term DHPs, we recommend that the Government issues new guidance to local authorities making explicit that it supports long-term DHP awards for specified categories of claimants and that frequent reapplication should not be necessary for these households. The Government will also need to take the impact of long-term awards into account when deciding on DHP funding allocations after 2015. Local authorities need clarity on DHP funding for at least a three-year period ahead. The Government should announce its decisions on future funding for DHPs at an early date, to enable local authorities to plan effectively.

DHPs and funding levels

146. Citizens Advice concluded that the ability of DHPs to enable transition was "exaggerated, given the scale of the problem." It pointed out that "in the current year (2013-14) the overall DHP budget is equivalent to about seven per cent of the HB cuts total". The LGA agreed that the DHP level was insufficient, calculating that even when responses by tenants are taken into account "DHPs would cover just £1 in every £7 of the impact of housing reforms on tenants." Z2K was concerned that the low level of funding available for DHPs meant that not everyone who needed help would be able to obtain it. It pointed out that some local authorities were having to use the bulk of their DHP funding just to help homeless households in temporary accommodation.[153]

147. The Government argued that the DHP fund is sufficient, citing as evidence that £11 million of the DHP pot had been returned as unspent to central Government in 2013.[154] Lord Freud also highlighted that a further £20 million made available for an additional DHP bidding round has been "under bid".[155] However, witnesses put forward several reasons as to why DHP may have been under-spent in 2012-13. As noted above, these include people with disabilities not being eligible because of disability benefits being taken into account in means tests; and the unwillingness of some LAs to grant DHPs if the claimant does not have an "exit strategy" in place, for example moving house or plans for finding work. Other reasons for the under-spend were likely to be a lack of awareness of DHPs amongst potential claimants; and claimants who do not meet certain criteria being discouraged from applying. Some local authorities had also preserved their DHP pots in anticipation of the Benefit Cap being introduced in September 2013, when they could make a full assessment of need. They therefore did not have time to allocate all the extra funding in awards before the end of the financial year.[156]

148. The level of DHP spending in 2013-14 is unlikely to provide a true picture of need because local authorities and claimants have understandably taken time to adjust to the reforms to housing costs. The Government needs to ensure that those who cannot move house or enter work in response to the reforms are supported in the long term in a way that avoids hardship. We recommend that the Government review DHP provision when more representative data are available and increase the funding for it, if necessary, to a level which is effective in preventing hardship to vulnerable people. This will be particularly important if the exemptions to the Benefit Cap and SSSC are not extended in the way we have recommended in this report.

142   DWP, Discretionary Housing Payments Guidance Manual, April 2013 Back

143   DWP, Discretionary Housing Payments: DWP response to the consultation on the Discretionary Housing Payments guidance manual, December 2012; DWP (HCT 08), para 4.4; HM Treasury, Autumn Statement 2013, December 2013 Back

144   House of Commons Library Standard Note, Under-occupation of social housing: Housing Benefit entitlement, SN/SP/6272, 24 February 2014; Welsh Government, 28 January 2014, The Minister for Housing and Regeneration has approved the programme of additional funding of discretionary housing payments by local authorities totalling £1,026,771 this financial year Back

145   HC Deb 28 January 2014, col 464w Back

146   Oral evidence taken on 04 December 2013, Qq149, 151; Oral evidence taken on 15 January 2014, Q324;Community Housing Cymru (HCT 46) para 18 Back

147   Oral evidence taken on 06 November 2014, Qq68-70 Back

148   DWP (HCT92) section 3 Back

149   Oral evidence taken on 15 January 2014, Qq338-342 Back

150   Oral evidence taken on 12 February 2014, Q489 Back

151   DWP, Housing Benefit Circular HB S1/2014, January 2014 Back

152   DWP (HCT92) section 8; DWP, Discretionary Housing Payments Guidance Manual, April 2013 Back

153   Citizens Advice (HCT 77) para 2.3; Local Government Association (HCT 52) para 5.7.1; Zacchaeus 2000 Trust (HCT 35) para 21 Back

154   HC Deb, 13 January 2013, col 564 Back

155   Oral evidence taken on 12 February 2014, Q579 Back

156   Oral evidence taken on 04 December 2013, Qq148-149; Oral evidence taken on 15 January 2014, 335, 341-2; Oral evidence taken on 29 January 2014, Qq415, 460 Back

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Prepared 2 April 2014