Posted by: Carl Brown10/08/2012
It may only be August but the clock is ticking for councils preparing to deal with the barrage of welfare reforms from the coalition government.
Next April will see councils have to grapple with an overall benefits cap and a 10 per cent cut to council tax benefit at the same time as the controversial bedroom tax begins slashing support from hundreds of thousands of social housing tenants. If all this isn’t enough, six months later universal credit will start to be phased in, bringing in challenges around direct payment of benefits and the provision of budgeting and access to IT for tenants.
Throughout the fiery Welfare Reform Bill debates in parliament the government conceded very little of substance to those seeking to make the bill fairer. It did however massively increase discretionary housing payments from £60 million to £165 million a year. Administered by councils, DHPs are intended to help claimants who cannot pay their rent or council tax. The extra cash in the DHP pot is being ring-fenced specifically to help those hit by the benefits cap and certain groups of people affected by the bedroom tax.
Lord David Freud promised parliament he would keep the DHP pot under review and that is undoubtedly what was behind an announcement from the Department for Work and Pensions last week that DHPs will be monitored. This has been interpreted by some in the sector to mean the department is concerned about the impact of its reforms and welcomed by Lord Richard Best, who is hoping DHPs will be increased if the reforms lead to homelessness.
In addition to increasing DHPs and ringfencing the bulk of them for welfare reforms, the DWP also allowed councils to stockpile last year’s funds in order to use them this year when the full impact of LHA caps are starting to be felt.
The purpose of DHPs is therefore changing drastically, from payments intended to provide help for tenants suffering unexpected ‘income shocks’ to a fund designed to alleviate the impacts of far-reaching welfare reform. As one senior housing figure put it this week, perhaps DHP should now be renamed as a ‘welfare reform hardship fund.’
The DWP is even calling on councils to publicise DHPs more widely, through, for example, leaflets and posters.
The problem with all of this is that it risks creating unrealistic expectations among affected claimants that they may be able to claim extra money to lessen their pain. We need to remember the DHP is still only £165 million. This is minuscule when compared to the estimated £500 million that is being taken from tenants’ income through the bedroom tax, the £740 million of cuts through LHA changes and £305 million of expected government savings from the benefits cap.
DHPs are welcome and any concession is better than none, but claimants and social landlords should be wary of assuming an over-reliance on them when planning how to cope with welfare reform.
From Housing matters
Carl Brown looks at regulation, training, board members, pay and a host of other issues that impact the day to day running of social landlords