Plugging the gap? DHPs in the light of housing benefit cuts

Issue 224 (October 2011)

Edward Graham takes a look at discretionary housing payments (DHPs) and considers their scope to help claimants meet their rent in the light of the cuts to housing benefit (HB).

What are DHPs and who can get them?

DHPs are payments that can be made by the local authority (LA) to a claimant who is:1

  • entitled to some HB or council tax benefit (CTB);
  • appears to require financial help, in addition to HB and CTB, to meet housing costs.

‘Housing costs’ are not limited to rent payments and can include council tax, rent in advance, deposits and removal expenses. They can be paid for past, as well as ongoing, housing costs, so can be paid to cover arrears of rent, even when the clamant is currently receiving maximum HB and CTB.2(Although note that the claimant must still have been entitled to some HB/CTB during the period for which s/he is requesting a DHP.) There is no limit on the amount of a lump sum payment; however DHPs paid weekly cannot exceed the weekly amount of council tax liability or eligible rent.3 Some elements of housing costs are specifically excluded and claimants will only get help with rent for period when they are/were entitled to HB, and help with council tax for a period when they are/were getting CTB.4

DHPs are discretionary payments, and they are not payments of HB. There is no right of appeal against a refusal, but there is a right to a written decision, which must include the reasons for the decision.5 They do carry a right of review, and decisions can be reviewed on any grounds. The lack of a right of appeal means that it will be possible to apply for judicial review of negative decisions, but the broad discretion available and cashlimited nature of the payments suggests that, realistically, the scope for this is limited.

What are the recent changes affecting DHPs?

The June 2010 Budget announced big cuts to HB from April 2011, most notably the caps on maximum entitlement by room size, the reduction from LHA rates set at 50 per cent of the median to 30 per cent and the abolition the five-bedroom rate. A subsequent announcement of limited transitional protection for some existing claimants (see CPAG’s Welfare Benefits and Tax Credits Handbook, p281 for details) means that the impact of these changes will only now be affecting many claimants.

At the same time, the government announced it was, in order to alleviate some of the impact of these cuts, increasing the budget for DHPs from £20 million to £30 million in 2011/12. The extra £10 million will be allocated to LAs ‘based on the DWP’s estimates of the total gross reductions in HB entitlement in each LA’6 of the April 2011 changes to HB. The budget will increase further to £60 million from 2012/13; the method of distribution for LAs for this additional money has not yet been determined.

The DWP has also recently announced7 that LAs will be able to carry over an under-spend from 2011/12 into 2012/13. This is being allowed as many LAs are expecting the limited transitional protection available for existing claimants to mean they will not spend all the extra DHP allocation for 2011/12.

Updated guidance

In March 2011, the DWP published a good practice guide for DHPs.8DHPs are trumpeted as a ‘key element of the government’s strategy for managing reductions in LHA rates arising from HB reform’ (Appendix, para 20).

The guide supersedes an earlier version issued in March 2008. The purpose of the guidance is to:

  • reflect the LA role in assisting claimants affected by the changes to the LHA;
  • provide good practice examples;
  • provide clarification on items such as deposits and removal costs.

The first part of the guide gives an overview of the legal framework that LA must operate its DHPs scheme within. Some points of note in the guide are:

  • decisions on DHPs ‘must be made in accordance with ordinary principles of administrative law…. LAs have duty to act fairly, reasonably and consistently’ (para 12);
  • the amount of the government grant that is left cannot influence a decision whether or not to award a DHP – each case must be decided on its merits (para14);
  • it gives an example of shortfalls in rent due a claimant having to move home because of the changes to LHA rates and now having increased travel costs to work. It suggests the money spent on increased travel costs could be disregarded as income (para 310). (It is hard to discern an incentive for the LA such a claimant has moved into to do this in these circumstances);
  • rent in advance and deposits can be paid as DHPs, including where the claimant is moving to another LA area (para 320).

Appendix A, section one of the guide gives some examples of things a LA may want to consider when awarding a DHP (para 10):

  • alleviating poverty;
  • encouraging and sustaining people in employment;
  • tenancy sustainment and homelessness prevention;
  • safeguarding residents in their own homes;
  • helping those who are trying to help themselves;
  • keeping families together;
  • supporting the vulnerable or the elderly in the local community;
  • helping customers through personal and difficult events;
  • supporting young people in the transition to adult life;
  • promoting good educational outcomes for children and young people.

Most of these would appear to be self-evident and the list so wide that its usefulness is doubtful. Quite what ‘helping people to help themselves’ is meant to mean is unclear.

Section two of the appendix focuses on how to ‘assist customers affected by reductions in LHA rates’. It notes that DHPs are unlikely to be an option to meet all the shortfalls arising from the 2011 changes – in particular that if ‘you are in an area (generally in London) where LHA rates are limited by the LHA caps, ….the shortfall between benefit and rent levels may be such that it is impractical to use DHPs for any substantial period’ (para 131).

Suggestions for assisting those in these circumstances include:

  • helping the tenant negotiate a reduction in rent, perhaps in rent for direct payments, with the rest covered by a DHP;
  • for large gaps between HB and the rent, the LA should consider assisting with rent in advice deposits and removal expenses.

The guidance does give an illustrative list of some of the groups LAs may wish to assist (para 132):

  • families with children at a critical point in their education;
  • young people leaving local authority care;
  • foster carers and Staying Put Carers with children in care and care leavers respectively;
  • families with kinship care arrangements;
  • families with a social service intervention;
  • ex-homeless people being supported to settle in the community;
  • people with health or medical problems who need access to local medical services or support that might not be available elsewhere;
  • people with disabilities who need adaptations to their property. Maintaining the existing tenancy may be more cost effective overall to the LA;
  • people with disabilities who receive informal care and support in their current neighbourhood from family and friends, which would not be available in a new area;
  • the elderly frail who have lived in the area for a long time and would find it difficult to establish support networks in a new area;
  • people who need to live near their jobs because they work unsocial hours, split shifts or there is inadequate public transport.

The clear focus of the guide for those affected by the cuts to HB is in helping people to move to cheaper areas or reduce their rent, some suggestions to assist those working claimants who have moved, and limited support for the most vulnerable.

As a solution to the problems created by the cuts to HB, DHPs will prove to be hopelessly inadequate. The HB cuts in total aim to save £2 billion a year. The total DHP budget from central government in 2012/13 will be £60 million.

Those claimants whose circumstances fall within the ones listed in the guide9 will obviously want to quote the guidance in support of their applications/reviews. However, it is only guidance and LAs cannot be bound by it. For claimants who do not come within its remit, this fact cannot be used to refuse a DHP; all decisions must be made on their merits and any decision as stark as ‘you’re not covered by the guidance so you cannot get one’ would almost certainly be susceptible to judicial review.

More generally, the guide does give some useful reminders to LAs about the scope of the scheme, reminders that are needed, judging by some of the issues that crop up on CPAG’s advice line. For example, that it is not true that DHPs can only be paid for temporary needs, and that a LA cannot pay a DHP to a claimant once the grant money from central government has run out. LAs have the power to contribute one and a half times the government grant into the budget themselves.10

Please be aware that welfare rights law and guidance change frequently. Therefore older Bulletin articles may be out of date. Use keywords or the search function to find more recent material on this topic.

  • 1. Reg 2(1) Discretionary Financial Assistance Regulations 2001 (DFA Regs)
  • 2. Gargett, R v London Borough of Lambeth (2008) EWCA Civ 1450
  • 3. Reg 4 DFA Regs
  • 4. Reg 3 DFA Regs. See CPAG’s Welfare Benefits and Tax Credits Handbook, p261.
  • 5. Reg 6 DFA Regs
  • 6. HB/CTB S2/2011
  • 7. HB/CTB S8/2011
  • 8. Discretionary Housing Payments: a good practice guide, DWP, March 2011, available at www.dwp.gov.uk/docs/dhpguide.pdf
  • 9. Section 3 of the appendix gives further examples of ‘good practice’ when considering an award of a DHP.
  • 10. Discretionary Housing Payments (Grants) Order 2001, SI 2001 No.2340