Research and analysis

Summary: Local Authority Insight Survey Wave 36: Discretionary Housing Payments

Published 29 February 2024

By Ceri Davies, Tim Buchanan, Jonah Bury, Joe Crowley, Shivonne Gates and Joanne Maher.

Overview

The Local Authority Insight Survey is a long-running series of research projects with local authorities focused on housing policies. This research discusses the findings from a mixed method study asking local authorities (LAs) in England and Wales about how they award and manage Discretionary Housing Payments (DHPs). Based on a survey and interviews with Housing Benefit (HB) staff it includes information on the management and use of DHP awards and identifies how LAs spend their overall allocation. DHPs are funded by central government contribution, with LAs able to top-up their funding to 150% of the central allocation using their own resources. The research looks across a range of LAs that typically under-spend, spend exactly or top-up their DHP budget annually and illustrate some of the factors that influence this.

DHP is a discretionary scheme that allows LAs to make discretionary monetary awards to people who qualify for HB or the housing costs element of UC and who are experiencing financial difficulty with their housing costs. As part of the welfare reforms package introduced from 2011, the government has significantly increased its contribution towards DHPs to help LAs support those affected by some of the key changes to HB and UC, namely:

• the introduction of the benefit cap, which is administered through HB and UC
• the Removal of the Spare Room Subsidy (RSRS) in the social rental sector (SRS)
• the Local Housing Allowance (LHA) reforms in the private rental sector (PRS).

DHPs are awarded entirely at the discretion of each LA and can be used to provide help with on-going housing costs or one-off expenses (e.g. moving costs). DHPs for Scotland were devolved from 1 April 2017, under the Scotland Act 2016 implementing the Smith Commission Agreement. Therefore, Scotland was not included in the scope for this research.

Research context

At the end of each financial year, the Department for Work and Pensions (DWP) requires that LAs provide details of their DHP expenditure for financial accounting purposes. This data includes details of how much of their central government contribution an LA has spent, and any additional expenditure above that.

In 2017/18, central government contributed £166.5 million to DHP funding in England and Wales^{[footnote 1]}:

• the majority of LAs, who submitted returns, have reported spending less than or equal to their central government allocation of DHP funding (71 % of LAs)
• total spending on DHPs in England and Wales (including additional funding provided by LAs) was 99 % of the total central government allocation, amongst LAs submitting returns.

However, whilst overall DHP spend is well-evidenced, there remained evidence gaps around demand for DHPs and how LAs allocate them, as well as the effect of Universal Credit on DHP administration in local authorities, which this research was designed to address.

Main findings

These findings are based on the perspectives of LA staff. Whilst they may be informed by data collected by LAs, the research questions focused on gathering opinions and insight as opposed to specific numerical data. Local authorities reported that:

Demand for DHPs has grown over the past three years, though little change in the mean length of each award was recorded.

• this demand is likely driven by increasing number of claimants applying at risk of homelessness, with rent arrears, or claiming UC.
• demand is likely to increase further and for different groups, including those in work. Repeat applicants were also flagged as a growing group.

LAs approach DHP administration in two broad ways, proactively and responsively:

• the responsive approach to DHP awarding was characterised by LAs trying to prevent claimants’ situation from worsening when they were near or already in crisis, e.g. covering rent shortfalls for claimants at risk of eviction or homelessness
• the proactive use of DHPs related to a series of actions focused on changing and improving claimants’ circumstances, for instance by facilitating the process of claimants moving into affordable accommodation. Where DHPs were used more proactively LAs wanted to utilise them with claimants at as early a stage as possible.

DHP applicants are affected by systemic and individual factors, which also drive LA approaches to administration:

• systemic: employment markets, housing affordability, etc
• individual: relationship breakdown, health, etc.

LAs used a range of approaches to reduce reliance including the use of conditions on any award.

The overall future of DHPs after 2020 was flagged as a challenge, as LAs rely heavily on DHPs for alleviating poverty and homelessness, and they highlighted that without DHPs there would be a gap in support for financially vulnerable people.

Methodology

An online survey was sent to Revenue and Benefit Managers (and those in a similar position) at 348 local authorities in England and Wales in November and December 2018. An initial email and advance letter were sent, along with follow-up telephone calls to encourage participation.

A positive response rate of 62% was realised, the highest achieved by the Local Authority Insight Survey (LAIS) series for 10 years, with 201 responses to the survey which covered 216 LAs. As outlined in Table 1.1 there was a good spread of participants by type of authority and region. Nevertheless, the response rate varies somewhat between regions.

Qualitative research was carried out using semi-structured telephone interviews with 35 key personnel from the Housing Benefit teams in participating LAs. The interviews were carried out between November 2018 and January 2019. Secondary criteria of geography and the date of UC roll out was also monitored (i.e. early and more recent adopters). These additional criteria were important to ensure some range and diversity in responses as LAs experience different local housing markets and pressures and variation in experience of implementing welfare reform.

Findings explained

DHP awards

• LAs reported that since November 2017 the average mean amount awarded for one-off DHP awards was £658. For ongoing awards, the average amount awarded was £53 per week
• DHPs were more likely to be awarded on an ongoing, rather than a one-off basis
• the most commonly reported reason for deciding on whether to award DHP was whether claimants already had enough income to cover their housing costs

Priorities for awarding DHPs

• DHPs are used by local authorities to prevent homelessness, support housing transitions and when doing so can save the LA housing-associated costs. This could be because the costs for other LA products, for example Temporary Accommodation, are greater.
• more than half (57%) of local authorities reported that they had priority claimant groups and. The groups included acute risk of homelessness (37% of LAs), those at risk of domestic violence (22% of LAs), and people leaving care (19% of LAs).

Reliance on DHPs

• survey data demonstrates a clear trend towards ongoing support of claimants who make repeat applications for DHP support.
• the circumstances driving repeat applications can be understood as both structural and individual.
• the local employment market and shortage of adequate accommodation were commonly cited as impacting a claimant ability to transition away from using DHPs despite making changes to their personal circumstances and choices.
• individual factors such as health issues typically meant people were not able to change their circumstances.
• LAs used a range of approaches to reduce reliance including the use of conditions on any award which included: asking claimants to seek alternative accommodation or engage with housing services (97%), engagement with financial support services (86%), and reducing non-essential spending (77%) or trying to seek employment or engaging with employment services (66%)

Changing demand and the future for DHPs

• this study demonstrates an increase in the number of applications for DHPs in the last three years, though no real change in award lengths was reported. The data most clearly points to changes in the type of claimant applying for DHP with LAs reported those in rent arrears accounting for the biggest increase.
• the data also suggest that DHP is increasingly applied for by people in work; suggesting economic factors are becoming more determinant.
• LAs particularly held the view that those applying for DHPs were more financially vulnerable than they used to be.
• comparison was drawn between what was seen to have been a ‘traditional’ DHP claimant who were typically using DHP to manage a transition, such as being temporarily out of work with increasing demand from claimants in more precarious circumstances, such as being on the brink of eviction.
• a further driver for change has been the roll out of Universal Credit (UC), which was linked to increased demand, and particularly from vulnerable groups.
• LAs also reported a lack of synchronicity with UC in terms of administration.
• the changes in administration and lack of access to data or information on claimants and their awards has also impacted Housing Benefit teams’ ability to target those potentially in need of DHPs.
• the overall future of DHP after 2020 was also raised by some LAs as a potential challenge. LAs rely heavily on DHP, and they highlighted that without long-term DHP funding there would be a gap in support for financially vulnerable people.

1. See Use of Discretionary Housing Payments: financial year 2017 to 2018 ↩