Shelter Scotland briefing on Discretionary Housing Payments (DHPs)

Since the original version of this briefing was published in June 2013, both the UK and Scottish Governments have added to the original funds available for Discretionary Housing Payments. This updated briefing (November 2013) reflects those additions.

The Department for Work and Pensions (DWP) allocates a ring-fenced but cash limited pot of money to all UK local authorities to make Discretionary Housing Payments (DHPs) to those with a temporary or short-term shortfall in housing costs. This fund has been available since 2001, but in response to specific welfare reforms impacting on housing benefit entitlement, the baseline UK budget of £20 million a year has been augmented for the past two years. This included an additional £50 million to mitigate against changes in Local Housing Allowance (LHA) and from 2013/14 an additional £90 million to cope with the under-occupation subsidy or ‘bedroom tax’ and the overall benefit cap. For 2013/14 the Scottish DHP budget is just over £10m.

UPDATE: On the 30 July 2013, the DWP announced another tranche of funding in response to the difficulties being faced by certain groups as a result of the welfare reforms. This amounted to: £5m for those in rural/least densely populated areas; £20m which will be allocated through a bidding process across local authorities demonstrating good practice and £10m ‘transitional’ in-year funding which can be used by councils as DHP or for other purposes. From this it is anticipated that Scotland will get £3.5m of the rural funding, roughly £1m of the transitional funding and roughly £2m from the bid fund.

UPDATE: On the 3 October 2013 the Scottish Government added £20m of funding to be distributed amongst local authorities, ‘topping up’ the DHP pot to the maximum . This brings Scotland’s total DHP fund to £35.5m.

The cuts to housing benefit will impact on over 100,000 tenants across Scotland and, as reflected by the DWPs decision to increase the DHP fund, it is anticipated that demand will increase dramatically. In response to the reforms, the purpose of DHPs has fundamentally changed, and this pot of money is now critical to the successful delivery of the Coalition government’s welfare reforms.

The increased DHP budget only makes up around 10% of the total cuts to housing benefit in Scotland, so these payments are not designed to and could never compensate for the huge amount of money being removed from benefit entitlement.

Local authorities face the challenge of administering a fund for which demand is far higher than its capacity and will need to make decisions on how to assess and prioritise applications. Despite these pressures, it is important that funds are used effectively and targeted towards those in greatest need, and particularly at preventing homelessness and hardship
We have spoken with a number of local authorities about their DHP policy and processes and how they are responding to the challenge. It is important that good practice is shared at local and national level and that use of the fund is transparent and closely monitored.

In addition, the DWP allowed for carry-over of unspent DHP budget for 2013/14, but there is currently no guarantee this will be the case for 2014/15. Any under-spend this year could therefore mean a reduction in allocation for the following year. The Scottish budget is now more than double the previous years. Ensuring an optimal spend will mean close management to ensure the available budget is exhausted and that there are funds available in the second half of the financial year.

This briefing paper aims to set out some key principles for local authorities and draw together good practice. Shelter Scotland intends to review the use of DHPs in the future to reflect good practice and monitor the impact they have had on preventing homelessness and hardship.