Authorities save £8 million as they prepare for the impact of benefit cuts
Councils stockpile benefits war chest
Councils are stockpiling money from a hardship fund that helps tenants hit by welfare reforms because they are expecting a huge jump in need next year.
Sixty-five per cent of 379 councils in Great Britain collectively squirrelled away almost £8 million of last year’s £30 million discretionary housing payments fund, figures obtained by consultancy Landlord Information Network show.
The stockpiling was sanctioned last year as a ‘one-off’ by the Department for Work and Pensions following an appeal by several authorities bracing themselves for an expected spike in demand as a result of welfare reforms such as the universal credit and the bedroom tax, which come into effect next year.
Westminster Council, which received the largest fund allocation of £1.1 million, spent just over a third of its budget last year.
‘Westminster has carried forward the underspend in full into 2012/13 when the majority of the impact of the housing benefit caps will be felt,’ a spokesperson for the authority said.
One in 10 councils spent less than half their budget, our analysis shows.
The figures emerged as the DWP said, for the first time it will monitor the way councils are using DHP after increasing the fund from £60 million a year to £165 million in 2013/14.
Guidance published last Friday said councils will be required to record the reason for DHP awards and submit returns to government twice a year.
Housing experts claimed this shows the government is concerned welfare reforms will increase homelessness. Sam Lister, policy and practice officer at the Chartered Institute of Housing, said: ‘Maybe [the government] want to cover their backs if homelessness shoots up, by pointing to councils which have not spent their allocations.’
Lord Richard Best, crossbench peer and president of the Local Government Association, said the move is positive as it means the government can identify struggling claimants and increase the DHP pot if necessary.
Joanna Till, partner at law firm Trowers & Hamlins, warned councils could face the threat of judicial review from claimants if they do not allocate DHP consistently.
Wellingborough, Fylde and Epping Forest councils, underspent their DHP budgets by more than 70 per cent, Inside Housing’s analysis shows.
The DWP said it would ‘work with [councils] to make the best use of this resource’. They added that monitoring will ensure help is given to those who most need it.