Tuesday, 01 September 2015

Rainy day savers

The storm of welfare reform is raging for tenants, so why are councils holding onto money that could help them stay afloat? Pete Apps investigates

Last month, Haringey Council leader Clare Kober took to Twitter to warn that her council’s discretionary housing payment pot would be spent ‘within weeks’. Ms Kober’s is not the first local authority to publicly warn that the £155 million discretionary housing payment pot granted to English councils by Westminster in April is not sufficient to meet need.

But an investigation by Inside Housing has suggested this rhetoric is not the reality faced by all councils.

Despite Ms Kober’s tweet, Haringey was actually spending at a steady rate at the midpoint of the financial year, with just over half its £2.4 million DHP pot spent after six months.

Similarly Durham Council in September said it would be eight weeks until its DHP funds ran out - despite nearly 70 per cent of its £880,000 pot remaining in the kitty.

A spokesperson for Haringey said the tweets related to a ‘longer term forecast’ - although it was unclear how this fitted with Ms Kober’s tweet - while Durham said the money would disappear if everyone who qualified for help with their housing costs applied.

The spending pattern is common among the majority of local authorities. At the midpoint of the 2013/14 financial year, 80 of the 213 councils that responded to an Inside Housing freedom of information request had spent less than a third of their pot, while six had spent less than 15 per cent. In total, 161 local authorities were on course to hand back at least some of their DHP money, which cannot be rolled over to 2014/15, to the government if their current spending pattern is maintained.

‘I am gobsmacked by those figures,’ says Giles Peaker, a partner at Anthony Gold Solicitors.

Mr Peaker’s astonishment at councils’ remaining piles of DHP cash is shared by many. The expectation - in part fuelled by councils themselves - was that DHP would prove woefully inadequate as people hit by welfare reforms, such as the bedroom tax, applied for short-term financial help.

So why are millions of pounds of DHP cash sitting untouched in council coffers?

Some councils have been more generous than others when it comes to handing out DHPs. Knowsley Council, for example, has already spent 91 per cent of its £480,000 DHP pot with six months of the financial year still to go. On top of this it has transferred £700,000 from the council’s general fund to top up its DHPs, and it plans to go to the Department for Work and Pensions to ask for more.

Knowsley is, however, the exception rather than the rule. The average spend is just under 40 per cent and Wandsworth Council, the smallest spender, had used just 8 per cent of its £1.8 million DHP pot.

Political gain
The issue also shows signs of becoming politically charged. Simon Hughes, MP for Bermondsey and Old Southwark, accused Labour councils of ‘playing politics’ by keeping a tight hand on the DHP pot. Stories of deserving tenants being forced out of their homes by the bedroom tax were being used to make the policy look worse, he claimed at the Liberal Democrat party conference in September. So is he right?

Responses to Inside Housing’s survey go some way, on the face of it, to support Mr Hughes’ theory. The 69 Labour councils that responded have spent an average of 28 per cent of their DHP, with 13 per cent allocated to those hit by the bedroom tax.

This compares with an average spend of 39 per cent by the 112 Conservative-led councils and 40 per cent by the seven Liberal Democrat-led councils, while they have allocated 18 per cent and 20 per cent to bedroom tax-hit tenants respectively.

Terry Stacy, the Liberal Democrat’s lead member for housing at the Local Government Association, says bluntly: ‘We live in difficult times, but Labour councils should hang their heads in shame, stop whingeing it’s everyone else’s fault and pull their finger out.’

Labour councils do have more tenants impacted by the bedroom tax however, meaning they may need to hold more money in reserve.

But Darren Johnson, chair of the London Assembly’s housing committee, and Green Party assembly member isn’t convinced: ‘If this is politics, it’s absolutely appalling,’ he says.

‘Our poorest and neediest residents should not be used by political parties to make a point.’

Saving up
Sharon Taylor, deputy leader of the LGA Labour Group, defends the slow use of DHP saying it is the result of the ‘rushed, confused and chaotic’ implementation of welfare reform, which will drive up need at different times of the year as reforms are phased in.

‘Councils will do all they can to make sure those most in need are supported so will have to be careful how they use the money they have,’ she says.

This sentiment is shared by Labour-led Barking and Dagenham Council, which has spent less than 13 per cent of a £1.3 million pot so far, but says it expects to use it fully by the end of the financial year. This is because the benefit cap was only fully implemented at the end of September.

The Local Government Association says it would be ‘overly simplistic’ to expect councils to spend the same in the second half of the financial year as they did in the first six months.

But Sam Lister, policy and practice officer at the Chartered Institute of Housing, says councils may be wrong to be saving their DHP money for the benefit cap to hit.

‘I would expect [the cap] to only be a major concern in London,’ he says. ‘And it doesn’t explain away such a large percentage of underspend [in some cases].’

Laurna Reid, lead supervisor in welfare benefits at the Islington Law Centre, says money should not be held back for the benefit cap at the expense of other claimants.

‘People claiming in August need to have the same chance as people claiming in March. If councils are tactically holding back funds, then they are excluding people who need it earlier in the year.’

The FOI figures relate only to English councils, but the Scottish Welfare Committee recently expressed ‘concerns’ that uptake of Scotland’s £35 million DHP pot was not happening fast enough. At the Tenant Participation Advisory Service Cymru conference, anecdotal evidence suggested there are similar concerns about Welsh councils. Shelter Cymru is currently working on research about DHPs in Wales. In Northern Ireland a £3.4 million pot is only used for tenants receiving housing benefit in the private sector, but may be extended to social tenants if and when welfare reform is introduced.

Lack of resources
Another explanation for the underspend is that councils just do not have the resources to deal with the volume of claims coming in.

‘[Councils] don’t get any money for administering the scheme. All they get is the grant money to cover the pay outs,’ Mr Lister says.

With local authority budgets stretched to the limit, there just aren’t enough staff available to deal with the demand. Research by Inside Housing earlier in the year showed demand for DHPs had increased by 300 per cent in 2013 compared with 2012. One benefits expert says she has come across councils with just one staff member tasked with processing DHP claims.

Jeinsen Lam, a housing solicitor at South West London Law Centre, says he has a client who fell behind on his rent after being hit by the bedroom tax when his mother died. The man applied to Croydon Council for a DHP but after two months has heard nothing from the authority.

Another issue is the way councils decide who does and does not qualify for help.

Conservative-led Wandsworth Council, the smallest spender by proportion, has 1,726 tenants who are affected by the bedroom tax. It has awarded just 61 (3.5 per cent) of them DHP in some form, spending £44,191, with just over £100,000 spent on other types of cases.

Paul Ellis, cabinet member for housing at Wandsworth Council, says: ‘We regard DHP as interim assistance. We need to make sure people are making other arrangements.’

In a DHP refusal letter, seen by Inside Housing, Wandsworth turned down an applicant because the tenant had not signed up to the council’s downsizing programme.

‘DHPs are only being considered for tenants working to resolve their housing issues,’ the letter states. ‘A DHP award is not deemed necessary or appropriate and you will have to make up the shortfall yourself.’

Mr Lam, who has advised a number of tenants seeking DHP in the south London borough, says: ‘They would rather just wait for the day when the tenant is evicted.’

Raising awareness
Ms Reid also warns that many tenants are missing out on DHP cash because they are not aware they can apply to their council for help.

Rod Cahill, chief executive of 21,000-home association Catalyst Housing agrees this is a problem. ‘Councils must get their act together and start letting tenants know the money is available. Social landlords also need to raise awareness among tenants,’ he says.

Whatever the ultimate cause is for the underspend, if things don’t change, millions of pounds earmarked to help people survive the storm of welfare reform could be handed back to government.

‘It’s our most vulnerable residents that are suffering,’ adds Mr Johnson. ‘If the money went unused, that would be an absolute tragedy.’

Top 10 smallest spending councils (by proportion)

Local authorityDHP PotAmount spentProportion spent
Wandsworth£1,839,423£149,8818.1%
North Lincolnshire£238,069£20,0208.4%
Tandridge£257,778£23,6329.2%
Redbridge£1,620,804£187,31711.6%
Barking and Dagenham£1,310,802£169,04412.9%
Harrow£1,223,994£171,80614%
Epping Forest£207,000£31,00015%
South Ribble£106,928£16,60015.5%
Ryedale£237,313£37,42915.7%
Wyre Forest£152,091£24,60916.2%


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