Discretionary Housing Payments

What are Discretionary Housing Payments?

Local authorities can award Discretionary Housing Payments (DHPs) to households receiving the housing costs element of Universal Credit or Housing Benefit, if they need further financial assistance with housing costs.

DHPs can be awarded to households facing rent shortfalls, or short-term costs associated with moving home. Outside of Scotland there is no obligation on local authorities to pay DHPs in any particular case, and local authorities have broad discretion in setting the level and length of awards.

DHP funding

Additional DHP funding has been provided to local authorities to help those affected by welfare reforms introduced in the 2010s. These include the under-occupation deduction (also referred to as the ‘removal of the spare room subsidy’ or ‘bedroom tax’), the benefit cap, and changes to Local Housing Allowance (LHA) rates. However, in England and Wales, DHPs are not intended to fully mitigate the impact of these reforms, and local authorities are encouraged to prioritise people most in need.

Annual DHP funding for England and Wales was fixed at £100 million per year from 2022/23 until the end of 2024/25. This level of funding is lower than in the years from 2013/14 to 2021/22, with the then Conservative Government citing “broader economic pressures” when announcing the freeze at reduced 2022/23 levels.

Impact of DHPs

Department for Work and Pensions (DWP) research has found that DHPs have a positive impact. 75% of recipients report they would have been unable to pay rent without DHPs, and many say they would otherwise have to cut back on essentials. Most recipients also reported that DHPs helped with their wellbeing, although payments had little impact on employment prospects.

Due to the discretionary nature of DHP awards, there have been concerns around unequal access. There has also been scrutiny of the inclusion of disability benefits in locally determined DHP means-tests, and concern about the longer-term use of DHPs for people who have ongoing needs.

Scotland, Northern Ireland, and Wales

DHPs in Scotland were fully devolved from 1 April 2017. The Scottish Government aims to use them to mitigate the impact of the under-occupation deduction and benefit cap as fully as possible. Scotland therefore spends significantly more than England and Wales per capita, with £83.7 million allocated in 2023/24.

In Northern Ireland responsibility for social security is mostly devolved, but corresponding provision is usually made in legislation. The under-occupation deduction and benefit cap were implemented in Northern Ireland (after a delay), but mitigating their impact was included in the ‘Fresh Start Agreement’ in 2015. Mitigation is largely delivered through Welfare Supplementary Payments, but DHPs can be awarded to those still experiencing a shortfall in housing costs. Expenditure on DHPs was £5.9 million in 2023/24, slightly lower than the £6.4 million spent in 2022/23.

DHPs are not devolved to Wales. The Welsh Government previously allocated additional funding to help mitigate the impact of welfare reforms, but has not repeated this in recent years.