Discretionary Housing Payments – why this quick fix won’t last long

Recent, near-constant tinkering with welfare has resulted in many people losing vital support – either by design (as with bedroom tax trying to force people to downsize) or accident (like those living in areas where rents are rising but where local housing allowance remains frozen).

Remember those who lose out are already struggling to get by and that means they are likely to struggle even more, putting them at increased risk of homelessness. Therefore, people need help to cope, either while they try to change their circumstances or to simply make up for being unfairly penalised.

So when a charity like Shelter becomes concerned that a reform is going to hit people hard – so hard in fact that their home is going to be put at risk – the Government play their joker: “there will be DHPs”.

For those that aren’t familiar with it, DHP stands for Discretionary Housing Payments, and it is the go-to solution for fixing the unpleasant consequences of welfare reform. DHPs are funded by the Government but administered by local authorities to meet local need, hence the ‘discretionary’ part.

So if your area has a high number of people affected by the bedroom tax but no smaller homes to move them in to, or because the room houses someone’s dialysis machine, DHPs are expected to plug the gap caused by reducing housing benefit. Similarly, DHPs address the rent gap caused by the freeze to local housing allowance, which is not enough to meet rents in many areas. So, DHPs are needed both where cuts have impacted lots of people as well as where the Government has refused to address specific policy failures.

When talking about DHPs, the benefit cap deserves a special mention. A newly homeless family, placed in to emergency accommodation (often B&Bs or hostels) by a council can still be subject to the benefit cap – yep, homeless households are still capped.

Councils cannot afford to provide accommodation for free, so the homeless family is charged rent for their temporary accommodation and, being in dire straits, often have to claim housing benefit. Since 2013 many have found that the support they need is capped. The gap between their rent and housing benefit is then either plugged by the council with DHP money or from their own stretched budgets.

On the one hand, we can see that DHPs are vital in many cases and can be the difference between someone losing their home or not; so they’re hugely important. But on the other hand we might say they shouldn’t be needed so much in the first place – they’re simply the quick fix to structural problems created by punitive welfare reform.

At the moment, DHPs are the sticking plasters that are just about holding the creaking welfare system together, smoothing the transition of people into new circumstances and hiding the unintended consequences from view.

But what happens if the number of people likely to be affected by welfare reform suddenly skyrockets?

Under current plans to lower the benefit cap below average earnings, the number of people affected will quadruple – from 30,000 to 120,000 households.

“But there will be extra DHP” say the government – and they’re right. DHP budgets will increase from £165 million now to £185 million by 2017/18. But by 2020/21 DHPs will fall again to just £140 million – lower than now and despite the numbers of capped households increasing fourfold.

Less than half of capped households to date have moved into work and therefore out of the cap – so the problem is also unlikely to solve itself.

On top of this, DHPs will still have to be used for things like plugging the gap caused by the LHA freeze (LHA or local housing allowance is housing benefit for private tenants), where flat-lining LHA rates and rising rents diverge over the next four years. Oh, and add in other things, like dealing with the impacts of the bedroom tax, too and DHPs get stretched even further – how are councils supposed to meet the needs of local people pushed further into hardship by the Government?

It will become rapidly apparent that DHPs are not the answer to the failings of welfare reform. Councils will increasingly have to plug more gaps with less and less help.

We need to think again on some of the welfare reforms – is it right that homeless households get capped when in temporary accommodation? Or that the solution to this is to throw diminishing amounts of money at the gap instead of simply taking newly homeless households out of the cap?

We don’t think so.

One Comment
  1. After decades of intentional neglect by successive governments of the day, the problems that we are facing are being compounded by outside influences. No one wants to tackle a real, sustainable building program that allows the lowest common denominator within society to not only obtain a decent roof over their heads but to flourish whilst doing so. There are new building technologies that could build prefabricated 21st-century homes at a vastly reduced cost than at present. This aspect is total side-stepped. “Brown” building areas need to be revitalized and turned back into a community. Empty properties that are wealthy hedge funds for the opulent elite need to carry a premium Tax that cannot be written off or avoided. Until these addition factors are addressed in a realistic and open wide-eyed manner, nothing will change.

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