Research and analysis

Summary: Early evaluation of Discretionary Housing Payments

Published 29 February 2024

By Stephen Finlay, Krishna Dabhi, Kelly Maguire, Charlotte Albiston, Daniel Holden (Ipsos).

Overview

This research discusses the findings from a mixed method study asking Discretionary Housing Payment (DHP) recipients in England and Wales about their experiences and the impacts of claiming DHPs. The DHP scheme is administered by Local Authorities (LAs) who have full discretion over its administration and the criteria claimants must meet to be eligible. This research was commissioned to better understand recipients’ experiences of claiming DHP, and to collect evidence on how DHPs contribute towards quality of life, in terms of preventing homelessness and evictions, and helping households through periods of transition.

Utilising a survey and in-depth interviews with DHP recipients, data was collected on recipient demographics, wellbeing, financial circumstances, reasons for and whether DHPs enabled recipients to sustain tenancies. Other areas covered by this research include links to the labour markets and recipients perceived impacts if they had not received a DHP.

Most DHP recipients were under financial pressure and applied for DHPs to help them with paying housing costs and expected the support to be short-term. Findings from the research showed that DHPs had a positive impact on recipient’s financial situations, alleviating housing costs that otherwise may have resulted in rent arrears or the need to cut back on other areas of spending such as food and bills. Findings also showed a positive impact on recipient wellbeing, reducing stress and worry. DHPs were less impactful on recipients’ employment prospects.

Research context

In 2013 DHP funding was increased to help mitigate the impact of welfare reforms (restrictions to Local Housing Allowance rates; removal of the spare room subsidy; and the benefit cap). Around this time, starting in 2013 to 2014, Local Authorities were asked to provide DWP with DHP usage information, and these are published on GOV.UK bi-annually. These national statistics cover aggregated spending and allocation at the LA, regional and country level. Alongside this spending data, LAs provide limited information relating to the purpose of the DHP and whether it is linked to any welfare reform measures.

Adding further to this evidence base, DWP previously commissioned external mixed methods research to identify how LAs manage and award DHPs. This report was part of the Local Authority Insight Survey (LAIS) series, titled: LAIS Wave 36: Discretionary Housing Payments.

The current research bridges evidence gaps surrounding recipient experiences of claiming DHPs, and the impacts they have in preventing households from experiencing financial difficulties and how DHP funding contributes towards improving recipients’ quality of life.

This research provides a richer understanding of DHP recipients demographics, their financial situations and whether, from their perspective, DHPs have enabled recipients to sustain tenancies and remain protected from homelessness and poverty. Other areas covered by this research include links to the labour markets and the recipients perceived impacts if they had not received DHP. Thus enabling a recipient focused assessment of the DHP scheme and further assessment on the effectiveness of DHPs in preventing the build-up of rent arrears and eviction.

Main findings

Claiming DHPs

• Most recipients had disabilities or long-term health conditions (or lived with someone in their household who had these).
• DHP recipients were financially strained and applied for DHPs to help them pay for their housing costs.
• Claimants typically applied for a DHP due to inability to pay rent. Reasons for this included the reduction in benefits, impact from welfare reforms such as the Removal of Spare Rooms Subsidy (RSRS) and Benefit Cap, and loss of income due to sickness or disability.
• DHPs are typically being used as a temporary measure of support, while recipients find alternative ways to improve their situation. The exception to this is individuals who require benefits but may not be getting enough money from this to cover both their rent and living expenses.

The impact of DHPs

• Over three-quarters of recipients said receiving DHPs had significantly helped them address financial challenges.
• Three-quarters reported that they would not have managed to pay their rent without DHPs, with many reporting they would have had to cut back on spending elsewhere.
• Survey evidence found that DHPs reduced the likelihood of recipients going into rental arrears.
• DHPs played a vital role in protecting recipients’ mental health and wellbeing.
• DHPs had little impact on recipients’ employment prospects, however, the majority of recipients in the sample were not working at the time of their application or were unable to.
• Most recipients had not moved accommodation as a result of receiving DHP. One of the main reasons given for not moving was suitable and affordable alternative accommodation was hard to find or not available.

Methodology

The research utilised mixed methods. This included a telephone survey of 1,000 DHP recipients, living in England and Wales, who were currently receiving, or had received, a DHP payment within the last two years. The survey ensured we could gather rich descriptive statistics on claimant characteristics, allowing for robust sub-group analysis.

Survey field work took place between October and November 2021, with interviews averaging 27.5 minutes, with an adjusted response rate of 52%.

The sample was supplied by DWP using random probability methods from the Single Housing Benefit Extract and stratified by age, gender and region. Survey data was weighted to be representative of the population identified in relation to stratification variables. The contractors screened out 37% of the original sample due to potential participants being ineligible, unusable (incorrect phone number or unavailable) or non-responsive (dialled 8 times without response) resulting in a fieldwork sample of 2400.

Qualitative data, from 30 participants, was collected via in-depth interviews to supplement the survey findings and provide a more detailed understanding of participants’ responses and provide further context to recipient circumstances.

Recruitment quotas were set to ensure a spread across employment status, experience of welfare reforms, age, type of award, timing of award and household type. Ten pilot interviews were conducted between July and August 2021 and were recruited using free-find methods while the remaining 20 mainstage interviews took place between October and November 2021 and were recruited from survey participants who consented to be recontacted for follow-up research.

Findings explained

Claiming DHPs

The survey explored the types of individuals that were receiving DHPs. Recipients were highly likely to be females (70%), to be aged 55 or over (33%), living on their own (48%), and without dependents (66%).

Recipients tend to be financially strained and apply for DHPs to help them pay for their housing costs, with 45% of recipients being unable to afford their rent and were unable to manage this using benefit payments alone. Reasons for being unable to afford rent included: loss of income due to a reduction in housing benefit (21%), not being able to afford rent due to the removal of the Spare Room Subsidy (21%), or loss of income due to sickness or disability (including mental health) (21%).

Most recipients (64%) were not working when they first applied for DHPs, which was often a result of their disability or poor health. Given this, it was common for recipients to rely on benefits to pay for their accommodation costs; nine in ten (90%) recipients mainly paid for their accommodation with income from benefits when they first applied.

Most recipients (79%) had disabilities or long-term health conditions (or lived with someone in their household who had these) which impacted their daily activities. Disability status appears closely associated with individuals’ financial circumstances and an indicator for whether or not someone is likely to need support with paying for their housing. This is likely because those with long-term conditions may be unable to work, which could limit their income and rent affordability; only six percent of recipients with long-term health conditions or disabilities were currently working.

Most recipients (60%) did not have any conditions attached to their award, whilst one in five (20%) did. The most common condition reported was to look for alternative accommodation or use council housing services (13%).

The majority of recipients had never moved accommodation as a result of receiving a DHP, even though more than half (53%) of recipients reported that their household was impacted by the removal of the Spare Room Subsidy (SRS). Recipients were often open to moving but suitable social housing was not available and private sector accommodation was seen as too expensive. Recipients with disabilities, or those living with someone who had a disability, found it particularly challenging to find alternative accommodation that was suitable for their needs.

DHPs are typically being used as a temporary measure of support, while recipients find alternative ways to improve their income or deal with difficult situations. The exception to this is individuals who require benefits but may not be getting enough money from this to cover their both their rent and living expenses. Findings revealed 68% of recipients expected DHP support to be temporary when they first applied and around one in five (20%) thought it was permanent.

The impact of DHPs

DHPs provided financial security for many recipients. With over three-quarters reporting they significantly helped address financial challenges. Almost two-thirds (63%) of recipients reported that they would have cut back on spending, if they had not received DHPs. This included cutting spend on food (36%), utilities and other bills (31%) and 27% said they would have ended up in more debt.

Almost half (49%) reported that not receiving DHPs would’ve impacted them financially. Overall, three-quarters (75%) of recipients reported they would not have managed to pay their rent without DHPs, with the majority of respondents (87%) agreeing that without DHPs they would have likely been in rent arrears. The findings suggest that DHPs can play an important role in reducing debt and supporting vulnerable people through challenging financial situations.

DHPs helped to prevent evictions; many recipients reported they would have been evicted without it. The findings suggest that from the recipient’s perspective, DHPs are meeting key policy objectives of supporting vulnerable individuals and preventing eviction and potential homelessness.

One area the research highlighted little impact was that of employment prospects. This is in part due to recipients feeling unable to work, as a result of poor health or disabilities, or because they were full-time carers, retired or on maternity leave. However, DHPs can help alleviate financial pressures which did enable some recipients to focus on finding better work.

DHPs played a vital role in protecting recipients’ mental health and wellbeing. Overall, seven in ten (70%) reported that if they had not received DHPs, this would have had a detrimental impact on their mental health and stress. DHPs had made recipients worry less about paying their rent (90%), being evicted (86%) or about their financial situation more generally (85%). The qualitative research also found evidence that DHPs helped to alleviate financial pressures, by giving recipients more time and opportunities to address their financial circumstances, such as applying for a more appropriate benefit or arranging a payment plan with energy providers.

Overall, the research provided evidence that DHPs are meeting key policy objectives by supporting vulnerable individuals. DHPs help alleviate recipients’ financial pressures, help reduce the build-up of rental arrears and sustain tenancies. Other impacts this research found were that DHPs protected recipients’ mental health and maintained well-being through the reduction of stress and worry, by providing financial security.