Council’s are cutting back on discretionary housing payments

Earlier this year the central government announced a reduction in the discretionary housing payments programme by about £40m. The cutbacks were being spread across the UK, with some council’s impacted more than others. Now, the results are starting to become known.

Due to the continued focus on welfare reductions, the Department for Work and Pensions (DWP) has allocated much less funding for the government funded rent assistance programme for the upcoming year. The total of £40m in cutbacks equates to about a 25% overall reduction, and the total being spent now across the UK in 2015 won’t exceed £125m.

While many local council’s contested this reduction, as well as the cut backs in other safety net schemes such as welfare, after further review there is nothing that can be done. With less resources allocated to DHP, and less money being allocated to local welfare in general, this is bound to create more problems for families on a low income. These reduction in the housing safety net, as well as other reforms, is part of the government plan to save £2 billion a year over the next few years.

The impact varies by city. The Derby Council is expecting a 27% reduction and it is expected that around 1080 tenants may be impacted. The city of Oxford will have £230,000 less to spend on rent from DHP, or about 40 per cent less. So the amount available varies based on an assessment done by DWP.

Each council can decide how to spend their allocation as part of DHP. Typical use of funds is for paying rent arrears for people impacted by the housing benefit cap. Other assistance is for making up to reductions in the local housing allowance and supporting tenants impacted by the bedroom tax. Some councils may even use the DHP money for moving costs. So the Department for Work and Pension programme is flexible.

With there being less money available, there will be an impact to families on a low income as well as the most vulnerable among us. In particular, this may lead to an increase in homelessness as DHP focused on paying housing costs. So all councils can expect a greater number of tenants being evicted in their area.

All the news is not bad though, especially for tenants in the private sector. Some council’s, with approval of DHP, are increasing the funds available for private renters. In fact, in aggregate, up to an additional £45m may be spent on rent for homes in the private sector. This will lead to even more people leaving social housing and entering the private market.