The Mayor of Tower Hamlets John Biggs has attacked the Government for cutting Discretionary Housing Payments (DHP) nationally by 22%. DHP is an extra payment made to residents who are struggling to pay rent, which is paid by councils but funded by central government.
DHP is often paid because a resident is struggling to pay their rent due to local housing allowance (LHA) rates leaving them with a shortfall, the benefit cap, or the bedroom tax. LHA rates, which are set by the government and are used to calculate Housing Benefit for tenants renting from private landlords, have failed to keep pace with the rising cost of rents leaving many people unable to pay their rent. In Tower Hamlets, the gap between LHA rates and the actual cost of rents can mean nearly a £200 shortfall every month for a 3 bedroom home. A reduction in DHP leaves local councils less able to help residents with these shortfalls.
This year, the Government has decided to allocate funding to councils for DHP in two tranches, with the first £100m pot allocated to councils at the beginning of the financial year and the second pot of £40m being allocated mid-year as a ‘top up’. The overall £140m national funding available is 22% less than last year, but the first tranche of money available to Tower Hamlets Council is a shocking 45% less than last year, and it is currently unknown how much extra funding will be allocated mid-year as part of the top up.
Mayor Biggs and Cabinet Members Cllr Mufeedah Bustin and Cllr Danny Hassell have written to the Housing Minister to call for the cut to be reversed and for more investment to be made in DHP so that councils can provide additional support to residents as the country emerges from the pandemic and as the ban on evictions has been lifted.
Mayor of Tower Hamlets John Biggs said: “The Government’s decision to cut discretionary housing payments has come at the worst time. Our residents are really struggling with the economic impact of the pandemic, and with the evictions ban now having ended and the furlough scheme due to end in September, people need support more than ever.
“I’m calling on the Housing Minister to at least restore the funding available to what it was, but in reality we need much more funding to be able to support residents during this extremely challenging time, and to continue doing our bit to tackle the housing crisis.”
Cllr Mufeedah Bustin, Cabinet Member for Planning and Social Inclusion (Job Share), said: “We do a lot of work to tackle poverty in Tower Hamlets, but the Government’s cut to DHP will really hurt many households in Tower Hamlets and only worsen poverty.
“Local councils simply do not have the resources to make up for the financial impact that many households will face with the cut to DHP, particularly with so many residents still facing the economic impact of the pandemic and struggling with housing costs.”
Cllr Danny Hassell, Cabinet Member for Housing, said: “The cut to DHP is deeply disappointing and it will hurt many residents in Tower Hamlets. Our residents are struggling with the effects of the housing crisis, and we’ve already warned the Government that lifting the evictions ban is likely to lead to more homelessness and pressure on council’s housing services, and the reduction in support available through DHP is likely to exacerbate this even further.
“The decision to withhold £40m funding until mid-year is also a huge challenge for us, as it leaves us unable to plan for the future and unsure about how we can support residents who are struggling to pay their rent over the coming year.
Text of the letter sent to the Minister of State
Dear Minister of State
We were hugely disappointed that the Government decided to cut back discretionary housing payments (DHPs) this year, particularly as the cut comes as so many households have been hit by the economic impact of the pandemic and are struggling to meet housing costs, and on top of various other harmful policies such as the benefit cap and the planned cut to Universal Credit which will mean a £500 a year cut to family finances this year with a £1000 cut the year after that.
We were also disappointed that this year the Government chose to allocate the total DHP budget of £140m on the basis of £100m being allocated at the beginning of the financial year, with the remaining £40m allocated mid-year based on levels of demand, as this has left many local councils unable to plan for the future.
These changes have been brought in at the very worst time. As we emerge from lockdown we are doing everything we can as a local council to support our local residents and to help them back into work, but we need your support with this so that we can offer more support as residents adjust to the lifting of restrictions and the opening up of our economy.
DHPs provide a lifeline to many households to help them with housing costs, including those who have been affected by the benefit cap and the Local Housing Allowance (LHA) rates freeze. Indeed, we wrote to the Secretary of State last year to warn that the increase in LHA rates did not go nearly far enough for areas such as Tower Hamlets where rents are far higher than elsewhere in the country. As you know the LHA rates were the subject of a series of cuts and a four-year freeze which left a significant gap between the LHA support offered and the actual cost of rents leaving many people unable to pay their rent.
As an inner London borough with very high housing costs, we have certainly seen an increase in demand for DHP over the last year, and in February 2021 we ran out of funding from the allocated fund for 2020/21 and therefore had to delay further payments until we had received the funds for 2021/22 to pay those received in the previous year.
We are also concerned that the lifting of the ban on evictions last month will have a huge impact on many residents in Tower Hamlets and add even more pressure onto the council’s homelessness service. The effect of many of your government’s policies, including the benefit cap, the LHA freeze, failure to act on the housing crisis, and now the cut to DHPs, has been to make areas like Tower Hamlets completely unaffordable for many who were born and grew up here.
Local councils simply do not have the resources to make up for financial impact that many households face with the cut to DHPs, particularly as so many more households are struggling with the aftermath of the pandemic.
We would urge you to reverse the cut to discretionary housing payments and instead invest much more, so that we can offer vital support to residents in need who are struggling at this extremely difficult time.
Given the significant public interest in this matter we will be publishing this letter.
Mayor John Biggs, Cllr Mufeedah Bustin & Cllr Danny Hassell