This briefing paper explains the funding position and considers evidence on how Discretionary Housing Payments (DHPs) are allocated by local authorities. DHPs are applied to help with shortfalls between Housing Benefit or the housing element of Universal Credit and the rent due in certain circumstances.

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What are DHPs?

Where a claimant is eligible for Housing Benefit or the housing element of Universal Credit but experiences a shortfall between the rent due and the Housing Benefit payable (e.g. because they live in a property that is deemed to be too large for their needs, or the rent charged is higher than the Local Housing Allowance rate) they can apply to the local authority for a Discretionary Housing Payment (DHP). 

There is no obligation on authorities to pay DHPs. The Department for Work and Pensions (DWP) has issued guidance for authorities (updated in August 2019) but the method of allocation adopted and decision making process lies with local authorities.

Funding DHPs

Increasing the level of funding for DHPs was one of the ways in which the Coalition and Conservative Governments sought to mitigate the impact of some of the reductions to Housing Benefit entitlement introduced between 2010 and 2017. These reductions included the under-occupation deduction for working-age claimants in social housing (also referred to as the ‘Removal of the Spare Room Subsidy’ or ‘bedroom tax’), the household Benefit Cap and reforms to the Local Housing Allowance (for claimants in private rented housing). Both the Scottish and Welsh Governments also took steps to increase DHP funding to mitigate the impact of welfare reforms. More recently, the Government has referred to the existence of DHPs when questioned about help for tenants struggling to meet their rent commitments during the coronavirus pandemic.

Alongside the announcement of further cuts to Housing Benefit entitlement as part of Summer Budget 2015, the Chancellor said that £800m would be made available for DHPs over the five years to 2020/21. An additional £40m was announced for 2020/21 in the 2019 Spending Round.

Scotland

Measures in the Scotland Act 2016 gave he Scottish Parliament legislative competence to develop its own DHP scheme. DHPs for Scotland were fully devolved from 1 April 2017. The Department for Work and Pensions is obliged to transfer DHP funding to Scotland.

Northern Ireland

Welfare reform implementation was delayed in Northern Ireland – the under-occupation deduction was introduced for social housing tenants from 20 February 2017 and the Department for Communities committed to mitigate tenants against the impact. Only private tenants can apply for a DHP in Northern Ireland.

The New Decade, New Approach (January 2020) which sets out the text of a deal to restore devolved government in Northern Ireland, states that “the Executive will extend existing welfare mitigation measures beyond March 2020, when they are currently due to expire” and “a review of welfare mitigation measures will be taken forward as a priority, with any agreed measures in place before March 2020”. Due to the coronavirus outbreak, necessary legislation was not passed in time, but the Northern Ireland Executive said it would make temporary arrangements until new legislation is passed.

Wales

The Welsh Government took steps to increase funding for DHPs in 2013/14 but this was not repeated in subsequent years. The Welsh Equality, Local Government and Communities Committee undertook an inquiry into Benefits in Wales in 2019. The Committee recommended the devolution of DHPs to Wales. In response, the Welsh Government said it would consider the direction it would take over the devolution of any parts of the social security system and would, with the UK Government:

Establish a clear set of principles for social security, that we assess the implications for the devolution settlement, and that any funding transfers and negotiations are informed by a good, sound evidence base.

Inconsistent use of DHPs?

Evidence on the use of DHPs has raised questions around the adoption of different practices by local authorities – leading to allegations of a ‘postcode lottery.’  There are references to disabled tenants (particularly those living in adapted properties) struggling to access DHPs in some areas, coupled with issues around the need to submit repeat applications and the consequent uncertainty and anxiety associated with this.  The adequacy of the overall level of DHP funding has also been questioned.

Other relevant Library briefing papers

Information on the implementation of the under-occupation deduction from Housing Benefit in social housing can be found in Library briefing paper 06272, Under-occupation of social housing: Housing Benefit entitlement. A further briefing paper considers evidence on the impact of the under-occupation deduction: 06896, The impact of the under-occupation deduction from Housing Benefit (social rented housing).

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