What is happening to discretionary housing payments?


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If you had heard the Minister for Disabled People, Mark Harper, reassuring MP on Monday this week about future funding levels of Discretionary Housing Payments (which help vulnerable families hit by housing benefit cuts to meet their rent payments and prevent homelessness), you would be forgiven for believing that, on this issue, the Government was making adequate resources available to meet needs. And no-one would blame you for not realising that funding for this lifeline has been cut by 24% for next year.

This is what the Minister said: "We have actually increased the funding for discretionary housing payments to help those who are affected by the removal of the spare room subsidy, and, as the Chancellor announced in the autumn statement, it will be protected in 2015-16."

Let’s unpick that statement a little bit.

The coalition government has indeed increased funding for discretionary housing payments. During this parliament, funding for payments increased from a baseline of £20m to a high of £180m in 2013/14. However, since then it has been dropping and in 2015/16 funding will be reduced to just £125m.

But increasing this funding has also not been an act of largesse, but instead an attempt to blunt some of the most severe effects of welfare reform. In the same year that DHP funding reached its peak of £180m, government estimated that £2715m would be cut from the housing benefit bill as a result of welfare reform.

On to the assertion that payments for people affected by the removal of the ‘spare room subsidy’ (commonly known as the ‘bedroom tax‘) are protected. Central government divides DHP funding between four different needs, one of them being the ‘bedroom tax’. However, when this funding is passed to councils, it is not ringfenced to a particular need and councils are free to spend it on housing costs as they see fit.

In both 2013/14 and 2014/15, the majority of DHP funds were spent on households affected by the bedroom tax (50 per cent and 56 per cent). This is significantly higher than was intended through the distribution of funds: 31 per cent was earmarked for this in 2013/14 and 36 per cent in 2014/15.

Councils have been making up the shortfall between the 31-36% earmarked for the ‘bedroom tax’ and the 50 - 56% actually spent from either DHP money intended to cover the impact of other welfare reforms or through their general funding. The reduction in overall DHP funding (as well as their general funds) will limit their ability to do this in future. In addition, there will still be families hit by other welfare reforms facing significant shortfalls in their housing benefit.

CPAG believes that the social security system should provide support based on need, rather than rely on discretionary, time-limited payments to fill in the gaps. In our view DHPs are not adequate to protect low-income families. But while policies such as the ‘benefit cap’ and the social sector size criteria (the proper name for the ‘spare room subsidy’ and ‘bedroom tax’)remain on the statute book, DHPs are essential as they both cushion the impact of benefit cuts for families and individuals, and they have also protect the government against legal claims of discrimination.

For this reason, I am considerably more anxious than ministers about DHPs ability to support vulnerable families.