Gwyneth King considers the role of discretionary housing payments (DHPs) in mitigating some of the effects of cuts contained in welfare reform measures.
In principle
A number of welfare reform cuts have affected housing, namely:
•reductions in housing benefit (HB) via the imposition of ‘the bedroom tax’;
•the benefit cap, which in particular affects those with high levels of HB; and
•additional restriction of HB via the freezing of local housing allowance rates.
Further cuts to HB and universal credit (UC) housing costs elements were announced as part of the Summer Budget 2015:
•the withdrawal of entitlement from certain 18-21 year-olds; and
•a reduction in the benefit cap, from £26,000 to £23,000.
The government has consistently emphasised the role of DHPs in mitigating the effect of these changes and committed to providing extra funding to local authorities. For the Summer Budget changes, the Chancellor said a further £800 million would be made available over the next five years.
In practice
In 2012, the National Audit Office questioned the sufficiency of the level of additional DHP funding set aside for the period 2011 to 2015 (£390 million): ‘this amount represents 6% of the savings expected from the housing benefit reforms, or around £200 per household affected’
1 The National Audit Office’s report ‘Managing the impact of Housing Benefit reform’, HC 681, Session 2012-13, 1 November 2012 (£50 per year).
Local authorities are permitted to contribute up to two and a half times the DWP contribution to their DHP budgets, but they have faced extensive cuts to their other funding streams, and many are therefore unlikely to be able to top it up to anything like that extent in practice, if at all.
DHPs are awarded on a discretionary basis. This can result in some varied approaches by local authorities:
•some appear to prioritise households in temporary accommodation;
•some attach difficult-to-meet conditions, such as requiring claimants to meet some of the shortfall themselves;
2 HC 720, Work and Pensions Select Committee, Fourth Report of 2013-14, ‘Support for housing costs in the reformed welfare system, 2 April 2014, para 138 •some seem reluctant to grant DHPs to applicants who do not have an ‘exit strategy’, such as moving house or starting work; and
•many take disability benefits into account when means-testing applications.
There are concerns about the accessibility of DHP applications to disabled tenants and those with mental health problems; also about the need to submit repeat applications, and the anxiety associated with the consequent uncertainty about their ongoing ability to meet their rent liability.
3 Ibid, para 141Some local authorities also seem to have the misapprehension that DHPs cannot be paid to UC claimants; in fact, relevant legislation has been amended to make this possible.
4 Section 69(1)(a) of the Child Support, Pensions and Social Security Act 2000 The National Housing Federation reported
in February 2014 that only 24 per cent of people affected by the cuts had made a DHP application, and that only 15 per cent had DHPs awarded.
5 Ipsos MORI for the National Housing Federation (‘NHF’), ‘Impact of welfare reforms on housing associations: early effects and responses by landlords and tenants’, February 2014 By January 2015, it confirmed that housing associations had reported a slow-down in the number of successful DHP applications since the start of 2014/15, which they believed was likely to have an impact on future rent arrears levels.
6 Ipsos MORI for the NHF, Welfare reform impact assessment: Final report’, January 2015, p7Scotland
More positively, the Scottish government has obtained agreement to set its own ‘cap’ on the total amount to be made available to Scottish local authorities, and committed to enabling them to provide DHPs to all tenants affected by the bedroom tax.
7 ‘The Impact of the Bedroom Tax in Scotland: Devolving the DHP Cap, HC 1292, Fourteenth Report of 2013-14, 20 May 2014The Scotland Bill, progressing through parliament, contains measures enabling the Scottish government to set up its own DHP scheme.
Sanctions
Another key feature of welfare reform is a substantial increase in the number and length of sanctions.
Not only can a sanction take away the whole of the claimant’s income-based job-seeker’s allowance (JSA) or UC standard allowance, it can also impact on the claimant’s ability to pay her/his ongoing rent, or repay outstanding rent arrears, where direct payments in respect of rent arrears are being paid to the claimant’s landlord out of her/his JSA or UC prior to the sanction:
•for JSA, these direct payments will stop when the sanction is applied (as there is nothing to pay them out of), causing the claimant to breach the repayment arrangement; and
•for UC, these direct payments will continue, eroding the claimant’s housing costs element (as the standard allowance has been wiped out by the sanction), meaning full on-going rent is not covered, causing new rent arrears to accrue.
Either scenario puts the claimant at risk of eviction and homelessness.
Despite this risk, sanctions are notone of the aspects of welfare reform targeted as necessitating further DHP funding. In fact, regulation 3 of the Discretionary Financial Assistance Regulations 2001 specifically excludes people whose need for a DHP arises as a consequence of a sanction from being considered for DHPs.
This makes it vital to:
•challenge sanctions whenever possible by way of mandatory reconsideration/appeal;
•apply for hardship payments;
•communicate/renegotiate with landlords; and
•explore applying for local welfare assistance/Scottish Welfare Fund grants and loans.
8 It should be made clear these applications are to avert the ‘crisis’ impact caused by now needing to pay their housing costs out of limited resources that should be for buying food or paying their utility bills, or ease the exceptional pressure placed upon their family by this situation – ie, that the grant/ loan is for expenditure other than housing costs.
Using DHPs
Three quarters of people affected by the welfare reform cuts have not applied for DHPs.
9 See note 5 above Advisers may therefore need to undertake proactive ‘take-up’ work, and facilitate access to the application process (eg, supporting applicants to provide the requisite evidence). The local authority may have a DHP application form, or ask for a written application in a letter. The law does not require an application to be made in writing. Legally (though not always in practice), applications can be made by telephone, electronically or in person at a council office.
DHP refusals can be challenged by way of a local authority review.
10 Regulation 8 of the Discretionary Financial Assistance Regulations 2001 Local authorities operate their own review schemes: they may have a review form, or accept requests by letter, email or telephone. Claimants may be called for interview. If there are no set procedures, it is probably best to write a letter. There are no time limits for requesting a review, but it is clearly best to apply as soon as possible.
If there is a delay dealing with a DHP application or review, the claimant may submit a complaint Local Government Ombudsman.
If the local authority refuses to carry out a review, or the process is unsuccessful, judicial review may be possible where the decision is unlawful – eg, where a local authority appears to have ‘fettered’ its discretion to award DHPs by having blanket policies about when it will or won’t make awards, such as a policy to prioritise people in temporary accommodation, or to refuse applications where there is disability benefit income ‘available’ for housing costs.
Swift action is essential. Advice is needed from a public law specialist to actually issue judicial review proceedings, including about the cost implications. Sometimes a letter before action to the council’s solicitors threatening judicial review results in the local authority changing its decision.
Please be aware that welfare rights law and guidance change frequently. Older Bulletin articles may be out of date. Use keywords or the search function to find more recent material on this topic.