Hard-up Britons facing fresh crisis as extra housing benefit fall to 5-year low

British property tenants discuss feeling 'trapped' in the rental cycle

Local authorities in England and Wales collectively spent £111.2million on Discretionary Housing Payments (DHPs) over the past year, figures from the Department for Work and Pensions (DWP) reveal.

These are lump sum top-ups given out by councils to people already receiving benefits who find themselves in financial distress due to housing costs.

The cost-of-living crisis has pushed more and more people into this situation, as annual inflation remains at a decades-high 7.9 percent. The amount paid out last year, however, was the lowest since 2017.

With funds increasingly limited, tales of rejection are increasingly common, and there remains no formal appeal process for those whose application is refused.

They are intended to prevent homelessness, yet a record 104,510 families were in temporary accommodation as of March 31.

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A total of £141.5million was paid out by councils in England and Wales in the year to March 2022. That means that payments have fallen by a fifth over the last 12 months. A year earlier, at the height of the pandemic, the total reached £171.4 million.

Payments may go towards rent where housing benefits or Universal Credit do not cover the full amount, or to cover the cost of other necessary housing expenses, such as rent deposits.

They cannot, however, be used to clear rent arrears. According to Lambeth Council, many applications made purely for this reason are rejected.

One person who approached the Money Advice Hub after being refused DHP claimed to have been told: “Your rent arrears are so high, we do not consider a payment from us will help you, we have therefore rejected your application.”

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Sue Ramsden, Policy Leader at the National Housing Federation, said: “Benefit cuts like the benefit cap and the bedroom tax, alongside housing benefit payments not rising to keep up with private sector rents, are having devastating impacts on thousands of low-income families.”

The DHP amounts paid out vary widely by local authority, with large cities paying the most. Birmingham spent more than any other council at £2.65million last year, followed by Liverpool at £2.1million, Enfield at £2million, and Manchester at £1.9million.

Just over a quarter (27 percent) of DHPs are paid out to people who are struggling with the removal of the spare room subsidy, local housing allowance reforms account for 18 percent of claims, while the benefit cap accounts for 12 percent of claims. 

Ms Ramsden added: “Councils use DHPs to try and soften the impact of these cuts; however this is not what they were originally designed for. They were designed to help people in a crisis or for whom a one-off payment or temporary solution is appropriate.”

The DWP allocates money to councils to cover the cost of DHPs, but in many cases this falls short of what actually gets paid out.

Across England and Wales, a total of £100million was handed out by Government – just 90 percent of what councils ended up spending. Some local authorities faced having to pay more than double the amount they received.

Torfaen in Wales paid out £452,122 in DHPs in the year to March 2023, compared to an allocation of £189,926 – an overspend of 238 percent. Cardiff paid out £1.8million in DHPs, 231 percent of their £781,533 allocation and Caerphilly 222 percent.

Ms Ramsden said: “It is difficult for councils to manage the unpredictable nature of demand for these payments over the year – it is therefore a postcode lottery for people, and some councils underspend.”

A Government spokesperson said: “Nearly £1.6billion funding for Discretionary Housing Payments has gone to local authorities since 2011 and we are set to spend over £30billion on housing support this year, providing a vital safety net for people struggling with housing costs.

“It is for councils to allocate DHP funding, which they can boost by up to two and a half times using their own funds.”

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