The government is cutting the funding it gives to councils in England and Wales to help struggling tenants by more than a fifth, with critics warning the move will drive up homelessness following the recent end of the Covid evictions ban and the end of the furlough scheme in September.
Discretionary housing payments (DHPs) provide financial support to people claiming housing benefit or universal credit who face rent shortfalls or need assistance with payments such as rent deposits in order to move home.
The government boosted DHP funding from £139.5m to £180m in 2020/21 amid the pandemic, but is now cutting that back to £140m in 2021/22 – a reduction of 22%, and lower than the DHP budget in 2017/18 or 2018/19. The cut was slipped out as part of the spring budget this year.
While the worst of the pandemic appears to have passed, unemployment remains high in much of London and deprived parts of northern England. Local housing allowance (LHA) has been frozen this year, leaving tenants facing higher rent shortfalls in many parts of the country.
A government survey in April suggested that nearly one in 10 private renters were behind on their rent at the end of 2020, about three times as many as before the pandemic. A further 8% of private renters said they were likely to fall behind on rent in the following three months.
Karen Buck, Labour’s shadow minister for social security, told the Observer: “Every time since 2013, since the first big wave of the benefit cuts came into effect from the government’s welfare legislation, every time we’ve said anything about the bedroom tax, about the benefit cap, about LHA restrictions, the mantra is: DHPs will fix it. If there are exceptional circumstances, if there’s a need for flexibility, if there’s a need for a local response, you’ve got the DHP pot, and the DHP pot is kind of magic beans – it can grow to cover anything you want it to.
“Of course it can’t, and doesn’t, but at the very moment when we’ve growing [rent] shortfalls, we’ve got the [end of the] evictions ban, we’ve got all of the evidence of stored-up arrears and financial challenges for people in the private rented sector, they’ve cut DHPs.”
A spokesperson for tenants’ union Acorn said: “This cut to the DHP pot couldn’t come at a worse time. This will undoubtedly lead to more people needlessly ending up on the streets because they can’t pay their rent, and the emergency safety net that is supposed to help in this scenario will have been gutted.”
Of the £140m, the government is holding back £40m until midway through the year, at which point it will distribute the money to councils based on local levels of demand. There are fears it will make it harder for councils to plan ahead, and could discourage them from awarding funds early in the year.
A spokesperson for the Local Government Association said: “The decision to withhold some of the DHP funding this year will make it harder for councils to plan their spending at what is a challenging and uncertain period. Reinstating this funding will enable councils to better support struggling low-income households during a time when many will be facing hardship.”
The Welsh government said in a statement: “It is deeply disappointing and concerning that the UK Government is making cuts to discretionary housing payments at a time when many households are already facing considerable financial pressures due to the covid crisis.
“We are providing an additional £4.1m to help local authorities to continue supporting struggling households and prevent homelessness in Wales.”
A DWP spokesperson said: “We have provided over £1bn in discretionary housing payment funding since 2011 to support thousands of families. This is alongside increasing local housing allowance rates in recent years providing nearly £1bn of additional support to over a million privately renting households claiming universal credit or housing benefit in 2020/21. Support for private renters is still significantly higher now than it was before the pandemic.”