Councils spent millions helping people with housing costs

Figures from the department for work and pensions have revealed that local authorities in the area handed out a combined £4.7 million in discretionary housing payments in 2020/21.

These payments are top-ups given out by councils to help people on benefits experiencing financial difficulty with housing costs, with the aim of preventing an increase in homelessness.

They may go towards paying rent where housing benefits or Universal Credit do not cover the full amount, or to cover the cost of other necessary housing expenses, such as rent deposits.

The amount awarded had increased from £4.4 million in 2019/20.

Thomas Cave, policy and public affairs manager at anti-poverty charity Turn2us, said: “Too many people have to top up their rent after they have received the housing element of their benefits.

“Covid support schemes – including furlough, the Covid Local Grants Scheme, the £20 increase to Universal Credit and the eviction ban – have now ended. Paired with rising living costs and the energy crisis, this has created a perfect storm of financial crisis.

“Our research has shown that, following the £20 cut to Universal Credit, one in four people will not be able to afford their rent or mortgage. It is very likely the number of people needing discretionary housing payments will rise further this winter.

“The Local Housing Allowance is just too low. This rate, raised during the pandemic, should have mitigated the situation to an extent, yet there has been a rising tide of DHPs. This suggests many people have struggled to keep up with their rents during the pandemic.

“We applaud the efforts of local authorities to support people during the pandemic. This has been an invaluable lifeline over the last 18 months.

“However, we urge the government to step in and make up for the shortfall people are experiencing by keeping the increase to the Local Housing Allowance rate and commit to reviewing whether this is enough in the long term.”

In the majority of cases, the payments in 2020/21 were made to people in financial difficulty because they had been hit by welfare reforms.

It is estimated that more than £0.1 million went to people who had been affected by the benefit cap, which was introduced in April 2013 to limit the amount of benefits a household can receive.

A further £1.9 million was given to those affected by the removal of the spare room subsidy, also known as the “bedroom tax”, which reduces housing benefit payments if a household has at least one spare room.

An additional £0.6 million went on those affected by Local Housing Allowance Reforms, which restrict the amount private renters can claim through housing benefit.

Meanwhile, nearly £13,000 was spent on helping those affected by a combination of these benefit reforms, and £1.7 million was handed out for reasons unrelated to welfare changes.

Every council is allocated an amount in central government funding towards discretionary housing payments, but in many cases local authorities are required to top this up with their own funds.

Councils in the Black Country were allocated £4.5 million between them, meaning they had to shell out a net total of more than £0.1 million of their own money.

Discretionary Housing Payments In The Black Country. Graph made using data from DWP. Copyright Rhi Storer. With permission for all LDRS to use.

Dudley, Sandwell, and Walsall councils all had to top up their government contribution. Wolverhampton spent less than the allocated amount.

Across England and Wales, councils spent £171.4 million on discretionary housing payments last year.

Excluding councils that did not provide data for both years, the amount awarded increased by 22 per cent from £129.6 million in 2019/20 to £158.0 million in 2020/21.

Of the 327 councils covered by the data, 104 had to top up their government allocation with their own funding to the tune of £7.7 million, while 210 underspent and 13 spent their exact allocation.

A Government spokesperson said: “We’re spending almost £30 billion supporting people with their housing costs in 2020-21 and are boosting funding through the Local Housing Allowance by almost £1bn, benefitting more than a million households across the whole of Britain by £600 on average over the year.

“The action we’ve taken since the start of the pandemic has also helped keep renters in their homes – through banning bailiff evictions, extending notice periods and providing an unprecedented package of financial support.”