Housing Collapse - how emergency housing cuts are hitting the vulnerable
7 min read
Severe cuts to central funding to help with emergency housing costs mean councils are refusing many more applicants. Chaminda Jayanetti unearths troubling data.
The success rate of applicants for emergency housing payments has collapsed in some parts of England after the government slashed funding for the scheme over the last two years, The House can reveal.
Discretionary Housing Payments (DHPs) provide help to people receiving housing-related benefits who are struggling with rent and other housing costs. Funded by Westminster in England and Wales, DHPs are provided by councils, who can top up their local budgets from their own funds.
They are often used to mitigate the impact of the benefit cap and bedroom tax, and can also plug short-term rent shortfalls caused by cuts to housing benefit for private tenants.
The government increased DHP funding for councils in England and Wales to £180m in 2020/21 in response to the pandemic, but cut that to £140m in 2021/22 and £100m in 2022/23 – the lowest level since 2013, when DHP funding was boosted as mitigation for the raft of benefit cuts introduced that year.
Data sourced by The House under the Freedom of Information Act shows the impact of these cuts. Across 252 councils in England that provided figures, the average success rate of applicants for DHPs fell by eight percentage points in the year from 2021/22 to 2022/23, and by 13 percentage points in the two years from 2020/21 to 2022/23 – with the acceptance rate for DHP applications falling from 71 per cent to 58 per cent.
But the national figures mask significant local variations. Rutland’s acceptance rate of DHP applications fell from 95 per cent in 2020/21 to 47 per cent in 2022/23. In Bracknell Forest, the acceptance rate also fell by 48 percentage points during the same period, with drops of 46 percentage points seen in West Oxfordshire, Hackney and Stratford-on-Avon. DHP applicants’ success rate fell by at least 25 per cent over two years in 40 council areas.
Responding to the figures, Liberal Democrat Work and Pensions spokesperson Wendy Chamberlain MP said: "The Conservatives are once again making the cost of living crisis worse. Cutting these payments when rents and energy bills are sky high shows how little the government cares.
"We need proper support for people rather than this heartless and out of touch approach."
Demand for DHPs has fallen since the first year of the pandemic – but by nowhere near as much as the government funding. Across the 252 English councils to provide data for all three years, there were 268,355 applications for DHPs in 2020/21, falling to 250,431 the following year and 248,074 in 2022/23 – an eight per cent fall in applications at a time when the government slashed funding for DHPs by 44 per cent.
In 2020/21, three councils spent at least 50 per cent more than their government grant on DHPs. This figure rose to five councils in 2021/22, and then shot up to 22 councils in 2022/23, with Chichester and Sunderland spending more than double their government grant on DHPs.
This has accompanied real-terms cuts in the maximum value of housing benefit paid to tenants in private housing, which has been frozen in cash terms since April 2020 while rents have risen.
Polly Neate, chief executive of Shelter, said: “Housing benefit has been frozen since 2020, leaving hundreds of thousands of private renters with a huge shortfall and unable to afford the eye-watering cost of private rents. As a result, homelessness has hit a record high and 131,000 children are stuck in shoddy and unsuitable temporary accommodation, such as hotels and B&Bs.
“Discretionary Housing Payments are an essential sticking plaster measure to help struggling households bridge the gap between housing benefit and rent, but budget cuts have left local authorities unable to keep up with demand.
“To tackle rising homelessness, the government must step up so councils are not being left to pick up the bill for inadequate housing support. It must use the Autumn Statement to unfreeze housing benefit so people can keep a roof over their head this winter.”
“The level of support that is available from the mainstream benefits system to meet rising housing costs in the private rented sector is once again falling behind rents,” said Peter Marland, chair of the economy and resources board of the Local Government Association (LGA), which wants to see the housing benefit freeze reversed. “This has resulted in Discretionary Housing Payments increasingly being used to make up systemic shortfalls, rather than being used to help households through short-term financial difficulties.”
The impact of the DHP cuts can be seen through various measures. In 2020/21, councils in England spent on average 92 per cent of the DHP funding they received from the government, but in 2021/22 this rose to 100 per cent, meaning the average council was fully spending its DHP budget. In 2022/23 this figure rose again to 110 per cent – in other words, the average council was overspending its government DHP grant, meaning councils had to make up the difference from their own stretched resources.
And with shrinking DHP budgets, the average value of a DHP award has fallen by an average of seven per cent in the last two years despite rents rising in that time.
“Councils are seeing a rise in requests for financial support and advice from households who are struggling to meet their essential living costs,” said the LGA’s Marland. “Government permits councils to top-up their Discretionary Housing Payment funding from elsewhere in their budgets, which has enabled some to offer additional support. But given the deepening financial difficulties faced by local government many councils are finding this increasingly hard to do.
“Despite these challenges councils continue to do everything they can to prevent homelessness and support households’ financial stability.”
Many councils do not record the reasons for refusing a DHP application, but among those that do, common reasons are that applicants are deemed to have sufficient income, or do not provide requested information, raising the possibility that some are derailed by the application process.
It’s not clear if the funding cuts have driven councils to adopt an unforgiving stance to borderline cases that would have received DHPs during the peak of the pandemic, or if tenants with no shortfall between their housing benefit and their rent have applied for DHPs due to the broader cost of living crisis.
But some councils admitted that lack of funding had driven them to refuse DHP applications. Redcar and Cleveland refused 338 DHP applications in 2022/23 (compared to just 40 in 2020/21), of which 219 were due to the council running out of DHP funds.
DHPs exist across the UK. They are devolved to the Scottish government, which has maintained consistent funding for them. Westminster funding for DHPs in Wales have been cut to the same degree as in England, but the Welsh government used its own money to prop up council DHP budgets.
But in Northern Ireland, the wave of austerity enforced by the Westminster government in response to a budgetary overspend last year has seen the Northern Irish administration – effectively run by civil servants in the absence of a functioning Executive – time-limit DHP awards and terminate payments to more than 3,000 claimants, and impose a maximum £20 weekly payment under the scheme.
A spokesperson for the Department for Work and Pensions said: “We are investing over £30bn on housing support this year on top of record financial support worth an average £3,300 per household, while bearing on inflation to help everyone’s money go further.
“The government has provided nearly £1.6bn in Discretionary Housing Payments since 2011, providing a safety net for anyone struggling.
“These payments can be topped up by councils in England and Wales, which decide on applications informed by the needs in their area to ensure that the most vulnerable are supported.”
DHP funding for England and Wales has been maintained at £100m for 2023/24.
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