Discretionary Housing Payments (DHPs) Peter Meehan HB Benefits Adviser 27 th August 2014

Options for claimants with bedroom tax shortfalls Make up shortfall from current income? Take up paid employment? Increase earnings to meet shortfall? Downsize to smaller accommodation? Apply for DHP? Take in a Lodger? Challenge decision to class a room as a bedroom?

Discretionary Housing Payments: what legislation? The Discretionary Financial Assistance Regulations 2001 The Discretionary Housing Payments (Grants) Order 2001 Housing Benefit Regulations 2006, Schedule 5- Sums to be disregarded in the calculation of income other than earnings Paragraph 62 – ‘Any discretionary housing payment paid pursuant to regulation 2 (1) of the Discretionary Financial Assistance Regulations 2001’

What is a DHP? Further assistance with rent over and above the Housing Benefit which the claimant is receiving, in each case up to the maximum eligible charge. Can also be awarded to assist with the cost of moving to or taking up a new tenancy (eg rent in advance, a rent deposit and/or other lump sum costs such as removal charges) Not available from April 2013 to help with Council Tax payments

DHP: the ground rules There must be a claim for DHP; if not a written claim then a record should be kept of any verbal claim made either in person or by telephone. Claims can be made on behalf of a claimant by an appointee. Claim can be for a backdated period where Housing Benefit was in payment and there was a shortfall between HB and the total eligible rent. Claims must include grounds for the extra help and any additional information the LA asks for which is pertinent to the DHP claim. Once a claim is made it can be reviewed to take account of changes in circumstances or ongoing need

Covering HB shortfalls Shortfalls in eligible rent but not in respect of ineligible service charges, rent arrears, reductions in respect of sanctions and overpayment recovery deductions. Such shortfalls might be where a rent restriction has been applied (eg RO has intimated a LRR/CRR restriction, an LHA ceiling, a Shared Room Rate or an under-occupation reduction). Can also cover a shortfall resulting from a non- dependant deduction or because earnings/income above basic allowance rates has reduced HB entitlement (ie a taper reduction).

Review, Termination and recovery of DHP payments ‘A relevant authority may review any decision it has made with respect to the making, cancellation or recovery of discretionary housing payments in such circumstances as it thinks fit’ Reg 8 (1) of The Discretionary Financial Assistance Regulations 2001 Where the payments have been paid as a result of an error at the time of the assessment. Where a material fact (s) has not been disclosed or has been misrepresented by the claimant DHP cannot be recovered by deductions from ongoing HB, CTR or other state benefits.

DWP preferred use of DHP To help secure and move to alternative accommodation (eg rent deposit, rent in advance, removal costs) To help with short term rental costs while claimant seeks to move to alternative accommodation To help with short term rental costs while the claimant actively seeks and takes up employment To help with on-going rental costs for disabled person in adapted accommodation To help with on-going rental costs for foster carer To help with on-going rental costs for other reasons at the discretion of the council

2010/11 £20m 2011/12 £20m + £10m* 2012/13 £20m + £40m* 2013/14 £20m + £40m* + £30m** + £65m*** 2014/15 £20m + £40m* + £60m** + £45m*** Local authority can add a further 1.5 times the total DWP allocation to arrive at its own DHP budget for the year (eg if the annual DWP allocation is £100,000 then the overall budget can be £250,000 if the council so chooses but the extra money will come from the council’s own funds). Any unspent DWP funding at the end of the financial year must be returned to DWP and cannot roll over to the following year. * for LHA reductions ** for under-occupation in social sector reductions *** for benefit cap reductions

Final DHP totals for Scotland 2013/14 DWP Allocations £16.26 million Revised Upper limit £40.67 million Scottish Govt. funding c £20.00 million

DHP : Were Scottish councils on target to spend up to their 2013/14 revised upper limit Scottish Government survey of DHP expenditure up to 31 st February 2014 showed that an average of only 62% had been spent or committed. Why?

Mid-year changes to DHP for 2013/14 Corrections to initial allocations for Scottish LAs because of errors in distribution data. Extra £5 million for UK councils with large rural areas (£3.45 million of which went to 12 Scottish councils) Scottish Government provided £20 million to meet gap between revised allocation and spending limit. DWP provided extra funding in the form of a DHP Reserve Fund from which 14 Scottish LAs successfully bid for and received a total of £2.80 million in addition to their revised allocations. (NB. These 14 authorities were told that they couldn’t top up their Reserve Funding allocation but….)

Amendment to legislation An amendment to the ‘Discretionary Housing Payments (Grants) Order 2001’ will be made with retroactive effect from April 2013, to clarify that the overall 2.5 times expenditure limit will be based on total central government contributions awarded for the year in question, rather than the contribution awarded at the start of the year. Revision to 2013/14 limits HB Circular S3/2014HB Circular S3/2014 published 24 March 2014

Estimates of the Annual Loss of HB resulting from RSRS Source: DWP Stat-Xplore. Monthly Losses x 12 Estimated Annual Loss in Millions

2014/15: DHP Cap vs. RSRS estimate (1) Source: DWP Stat-Xplore and HB Circular S1/2014

2014/15: DHP Cap vs. RSRS estimate (2)

Looking ahead Impact of the bedroom tax looks to be reducing in Scotland, down from an initial estimate of £50million per annum. As it stands, the overall DHP limits in Scotland for 2014/15 allow full mitigation in 12 LAs Ministers are seeking for the DHP overall limit to be lifted.

DHP Funding in Scotland 2014/15 DWP total £15,230,343 SG funding £20,000,000 Total funding £35,230,343 Overall limit £38,075,857 NB. Scottish Govt. has committed £35 million to mitigate the impact of the bedroom tax but unless DWP removes or increases the overall limit then it cannot all be used to top up DHP.

Conclusions If the UK Government does not lift the cap on DHP spending, then the Scottish Government would “… put in place a scheme to make the additional £15 million available to social landlords so that we need not see any evictions in Scotland this year as a result solely of the bedroom tax”. – Cabinet Secretary for Finance and Sustainable Growth, John Swinney MSP

Recent Development DWP ministers are prepared to remove the overall DHP limit if Scottish Government agree to such a change. Amendments to the legislation to provide for such a change are being drawn up but it may be autumn before they are finally enacted. So what happens in the meantime?