Wednesday, 04 March 2015

First four councils call for more help to reimburse cost of ‘topping up’ rents

Benefit pilots in funding crisis

The four boroughs forced to trial a £500-a-week benefit cap will spend their whole share of an emergency hardship fund within five months unless they move people to cheaper areas or obtain more funding.

Research by London Councils for Inside Housing reveals the four London boroughs unexpectedly having to trial the government’s £26,000-a-year benefit cap could spend their share of the pot before their peers are affected at all.

Bromley, Enfield, Croydon and Haringey councils found out on 19 December that only their residents will be hit by the cap from 1 April.

The research shows nearly 5,000 households will be affected in the four boroughs.

The councils will receive £8.16 million in discretionary housing payments in 2013/14 but the cost of ‘topping up’ rents will be £22.4 million.

If the councils were to top up rents completely, the DHPs will run out in little more than four months. The boroughs could be at a disadvantage as they will have less of their DHP money left to help house people than councils affected later on.

The real picture is likely to be worse as some of the DHP allocation is ring-fenced for other purposes, such as mitigating against the bedroom tax, which comes in from April, and local housing allowance cuts.

All four boroughs are calling on the Department for Work and Pensions to increase their level of DHPs and to reimburse them for costs.

Nigel Minto, head of housing at London Councils, said boroughs will be forced to decide whether to top up rents from their general funds or place people outside the boroughs.

He said: ‘We would not be expecting the boroughs to be making a loss purely on the basis they are introducing the cap earlier than the other authorities.’

A spokesperson for the DWP said the government could make some extra funding available. He added, however, that DHPs are not designed simply to top up rent.

Readers' comments (96)

  • Rick Campbell

    " that DHPs are not designed simply to top up rent. "

    Strangely, that's precisely what I thought DHPs were for -- obviously, the DWP have a different agenda.

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  • Where is Nigel Minto's rationale' in this statement? Moving tenants where and at what cost?

    The incoming tenants to those vacated homes will face the same difficulties.

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  • Any tenant affected by the benefit cap can be placed outside the borough and continue to receive full HB for the 6 months of the pilot period.

    The "incoming tenants" will be those who are not affected by the Benefit cap. Remember this cap only affects a small number of large families.

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  • so councils give just these 5000 households at least £130million already and the councils want to give them more?

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  • Chris

    Perhaps they should use the discretionary funds to purchase rail tickets for the many poor who will be made destitute by Tory Social Cleansing - in the absence of any suitable cattle waggons that is.

    And what is the Opposition's position - exactly the same as the other Tories!

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  • In other shock news, the Vatican has confirmed that the Pope is indeed Catholic...

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  • Lets not forget that the new homelessness suitability states that any offer of accommodation made in discharge of the homelessness duty must be affordable. London rents are so out of whack with benefit caps that the only way offers will be affordable will be to make them well out of area.

    Government have already anticipated this little wrinkle and have been loudly announcing that councils shouldn’t be sending people miles away in discharge of homelessness, so DHP top up is the only option for most.

    Can you see the noose tightening? Of course when everything starts to collapse, government will stand back and accuse councils of mismanagement. All getting very Orwellian isn’t it?

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  • Joe Halewood

    Hulagu - You couldn't be more wrong in your assertion when you say "...this cap only affects a small number of large families."

    The overall benefit cap works by deducting the amount of welfare benefits from the cap figure. What is then left is the maximum that can be paid in HB/LHA towards rent.

    A couple with 3 children receive in WB - £327.05 - left for rent £172,95
    A couple with 2 children receive in WB - £261.35 - left for rent £238.65

    Now take LHA cap figure as avergae private rentals
    2 bed £290pw
    3 bed £340pw

    A couple with 3 children (hardly a large family!) in a 3 bed will have their current entitlment reduced from £667.05 down to £500 a reduction of £167.05 per week = eviction and a much increased cost to the state as they become a 'homeless family.'

    Even a couple with 2 children in a 2 bed go from £551.35 down to £500 - a reduction of £51.35 and again eviiction and homeless

    Sorry, the above is simplified, the correct route is OBC to eviction to homeless to being exported to oop North so t'bairns can play with whippets!

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  • Just to add to the above. In these 4 areas there are 56,360 private sector recipients of LHA.

    Does anyone think it is likely that the nearly 5000 families affected is a reasonable estimate? Just 9% of the all privately rented flats and houses in these 4 areas have couples with 2 children or more?

    No neither do i and I strongly suspect the figure will be much higher and the single parent with 3 children or more needs to be included as well (£286.20pw in WB) in that number.

    Additionally the £22.4m seems low too. The DWP estimate on a national basis that the average reduction due to the cap will be £93pw. Of course with the highest rent levels in the country the averag figure for London boroughs will be much higher.

    So: 5000 x £93pw x (365.25/7) = £24.26m

    Whereas you can see from above post a couple with 3 children will lose £167 or so per week and much higher than the national average £93pw .

    Go figure! Yes the impact will be I strongly suggest much higher in financial terms than the above estimates .....but hey as long as Joe Public believes the benefit cap only affects a small number of large families of uneducated Waynettas breeding for the welfare benefits with 57 different fathers to create a brood of feral delinquents....

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  • Gavin Rider

    Joe - yet again, I am aghast at the amount of taxpayers' money that is being paid to these families to allow them to live well beyond their means in one of the most expensive parts of the country.

    For anyone to be raising their family in London primarily at the expense of taxpayers like me who actually earn less than half of what these families are claiming in benefits and who don't receive a penny in handouts is a complete and utter travesty of justice.

    For you to defend this system so vehemently is ridiculous.

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