Monday, 02 March 2015

Authorities fear £150m discretionary housing payment fund is too small

Applications to hardship fund surge by 300%

English councils received more than 13,272 extra applications for an emergency hardship fund in the first month of the bedroom tax.

Inside Housing revealed in May that several councils have experienced sharp increases in applications from tenants for discretionary housing payments to help them pay their rent. Now an exclusive survey of 102 English councils lays bare the full extent of this surge in demand for help.

Councils received 17,673 applications in April, compared with 4,401 in April 2012 - a whopping fourfold (302 per cent) increase.

The figures, obtained under the Freedom of Information Act, are likely to renew fears that the £150 million DHP pot will not be enough to help people worst affected by the under-occupation penalty and wider welfare reforms.

DHPs are short-term payments to help people with their housing costs. The Department for Work and Pensions increased the DHP pot from £60 million 2012/13 to £150 million in 2013/14, and suggested councils use £25 million for people hit by the bedroom tax who live in significantly adapted properties.

Wakefield Council received 1,472 applications in April compared with just 99 in the same month last year (see table). Its 2013/14 DHP allocation - the bulk of which is likely to be used for households hit by other benefit caps - is £644,505.

Kevin Dodd, chief executive of Wakefield and District Housing, said: ‘WDH has seen over 1,500 of our tenants apply for DHP, which oversubscribes the council budget if all applicants were successful.’

The most applications were received by Birmingham Council, with an increase of 2,105 on April 2012. The council has already spent £400,000 of the £716,000 the DWP suggests it set aside for the bedroom tax from its £3.77 million DHP allocation in 2013/14.

The council is so concerned that on Monday its cabinet is expected to approve plans to create a £2 million fund to boost DHP payments in its housing revenue account, subject to approval from the Communities and Local Government department.

‘It is clear the allocation of DHP funding will not be adequate to provide sufficient assistance to tenants,’ the cabinet report stated.

Manchester Council, where applications increased from 123 to 718, has already spent £620,000 of its £1.92 million DHP budget for 2013/14.

The largest percentage increase (1,471 per cent) was in Telford and Wrekin, which received 220 applications compared with just 14 in April 2012.

Just two councils reported a decrease in DHP applications. These were Stratford-upon-Avon and Tewkesbury, which had a reduction of 15 and one application respectively.

The survey also revealed a 21 per cent increase in the number of households approaching councils to question their housing benefit awards. Councils received a total of 2,231 objections to benefit decisions in April,
compared with 1,847 in April 2012.

Discretionary housing payment applications

DHP applications in April 2013DHP applications April 2012Percentage increase
Telford & Wrekin220141,471
North Lincolnshire155121,192

Readers' comments (5)

  • Joe Halewood

    The DWP in its (so-called) impact assessment for the bedroom tax in June 2012 estimated 40,000 DHP applications across the country in all of 2013/14.

    Here we have 44% of that yearly figure in one month from less than a quarter of all councils.

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  • Melvin Bone

    The number of applications mean nothing. It's how many are paid out that matters...

    Anyone on any income can apply for DHP.

    A lot of the applications are via social landlords telling tenants they'll get some cash to top up their rent when it's obvious from their income they will not.

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  • How can the number of applications mean nothing? I think it's conclusive that the rise in applications is directly related to the bedroom tax.

    It would also be interesting to see the evidence relating to your claim that applications are coming via social landlords where the tenant will not qualify for the payment - why would any social landlord encourage this kind of behaviour amongst its staff - it's a ludicrous claim.

    Looks to me as if you've allowed your ideologies to out weigh the hard facts. The bedroom tax is a cynical omnishambles and 3 months in it is already being proven, although anyone with any common sense would have known this when it was announced. The past 3 years have demonstrated that the tory party are as nasty as ever. Roll on 2015!

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  • Melvin Bone

    'How can the number of applications mean nothing?'
    It's a meaningless scaremongering figure brought about by random FOI requests that journalists love.

    Just because someone applies does not mean that they are in any way eligable.

    You do not seem to understand how this works...

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  • Joe Halewood

    Melvin, I strongly disagree with you for many reasons on this one.

    The DWP (alleged) impact assessment says at section 53:-

    As an illustration, it is estimated that if 40,000 of the householders that experienced a reduction at the point of transition were to make an application for a Discretionary Housing Payment, the total cost across all Local Authorities of administering these additional applications would be approximately £1m. This is the estimated cost of administration, regardless of whether the outcome of the application for a Discretionary Housing Payment is successful or not."

    Firstly the admin cost which in DWP view equates ridiculously to a mere £25 per DHP still adds cost to the public purse. So the more DHP applications the greater the public purse cost - though it appears DWP dont give a stuff about this as the cost is to LAs not central government.

    Secondly as the cost of assessing each DHP is far higher than £25 each this is a significant cost increase to LAs. And there is nothing to stop an applicant repeatedly filling out a DHP form - which coincides with DWP ministers saying at every turn apply for a DHP as the panacea and a mantra.

    Thirdly, there is no eligibility and each case needs to be assessed on its merits. For example the April 2013 guidance allows LAs carte blanche in how they assess and also as a specific example they can chose to include DLA as income or not.

    Fourthly, when LAs spend more than the alloted 16% of DHPs on bedroom tax it means there is less left in the pot for benefit cap DHPs or for the largest recipients of DHPs the private tenant. The lack of funding via DHP in both these areas WILL lead to more cost as landlords will evict due to arrears in these cases.

    Fifthly, the £25m alloted for a £480m clawback means that just 6% was set aside for bedroom tax cases - a point confirmed by the S1/2013 and by the cicil service mandarin in parliamentary committees so 94% will not get a DHP if alloted correctly.

    Sixthly, the Independent produced figures for all councils in April a few weeks back to say over 25,000 applications had been made in April alone - thats 25,000 lots of admin cost too.

    seventh, Liverpool City Council stated on 17 May they had spent £400k of their alloted £1.6m in fist 4 weeks. Also that over half - which must mean £200k+ went on bedroom Tax DHPs for which they have been alloted £267k for the entire year.

    What that last point illustrates is that DHP will run out soon if it has not already. Given bedroom tax arrears (non and part payment) are much higher than anyone imagined then that situation will get worse as DHP funds run out and so arrears will increase as will evictions as will public purse costs in homelessness.

    The huge numbers applying got a DHP are far from irrelevant for all these reasons

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