RLA Housing Benefit expert, trainer, and consultant Bill Irvine has written an article concerning his reaction to recent announcements from the Department of Work and Pensions (DWP) regarding payments to local councils relating to funds for benefit payments.
Surprisingly, this year’s budget has been cut by around 25% from £165M to £125M nationally – through cuts to previous core funding, benefits cap and Local Housing Allowance (LHA) allocations, although, in the case of LHA a further £45M of targetted funding (outside DHP) has been provided to assist tenants residing in the highest rental arreas, like inner London, where LHA rates will be able to increase by up to 4%, against a national limit elsewhere of only1%. Discretionary Housing Payments (DHP) funding to offset “Bedroom Tax” reductions remains at £60M (representing nearly 50% of the fund) but as the budgets are not ring-fenced there’s no guarantee Social Landlords in England & Wales, in particular, will receive the same support as last year.
In Scotland, the Parliament had already made provisions to top up the DWP contribution, as it did in the two previous years, but as this provision was based on an assumption the allocation from DWP would remain the same, there might remain a small shortfall. However, it’s unlikely this will significantly affect the ability of Scottish councils to continue helping landlords fully mitigate the effects of under-occupation penalties.
The circular explains how the £125M allocation represents only central government’s contribution. It also provides a breakdown of the £125M, identifying each councils allocation, and has added another column which indicates the capped figure i.e. the figure each council can top-up the Government’s contribution too. Years ago, it was quite common practice for councils to make use of this provision, but sadly, few nowadays are in a position to provide this discretionary top-up, as it is derived from their own general fund. However, if you’re interested in finding out how much your local council has been allocated, and what the capped figure is look here.
As previously reported, “working age” social & private tenants, particularly in England and Wales have already been disproportionality affected by having to meet new council tax liabilities, amounting to between 8 & 33% of council tax liability, created by another Government imposed shortfall in funding, affecting, locally delivered, Council Tax Reduction schemes. Many tenants have, not surprisingly, been defaulting on council tax demands, and, as a result, have been served with Magistrates Court orders for the outstanding debt and expenses. Following this, the debt is, very quickly referred to Bailiffs to enforce recovery, and in so doing, tenants incur even more debt, through Bailiff charges. All of this inpinges on the ability of social & private landlords to collect rent and also enforce recovery of arrears, even when they’re in possession of a court order. Scottish tenants, reliant on state benefits and/or low earnings, continue to receive full relief with council tax so are not affected in this way.
In England & Wales, it’s a bit of a geographical lottery for tenants seeking assistance from council delivered Welfare Assistance Schemes (replacement for Community Care & Crisis loans assistance).
In some areas, councils have used 100% of the money allocated, arising from the transfer of funding from DWP, to set up schemes, designed to mitigate tenant/owner occupier demands, arising from Community Care needs and/or crisis situations. Elsewhere, councils are only using a part of the allocated funds or none at all. As the original government transfer of allocations for this scheme, represent sums far greater than DHP, you should write to your local council and/or MP, if you haven’t already, querying how much money was allocated; how these funds are being distributed; how the funds can be accessed by your tenants; and what the scheme will cover the costs off.
In Scotland, by contrast, social & private landlord tenants can apply to the Scottish Welfare Fund, delivered by local councils, who must publicise their own individual scheme and provide standard application forms. The Scottish Parliament has provided guidance and £9M in additional funding to ensure payments (usually in kind) are made to those most in need. The Parliament is also currently going through the process of creating a statutory scheme, in this respect, very much welcomed by both private & social landlords.
As Universal Credit is rolled out, social & private tenants, affected by under-occupation penalties or restrictions to their “housing element” caused by limits to “maximum rent (private rented cases) the benefits cap, non-dependents etc. can apply for DHP funding. The scheme will remain the responsibility of councils. Whether tenants will receive any help however, will very much be dependent on: a) where they live; b) their local council’s past record on optimising or not, the use of DHP funding; and c) its attitude and/or level of empathy for tenants affected by the range of welfare reforms highlighted in this article.