Article published: Wednesday, May 29th 2013
Manchester City Council has given back to the government a “substantial” amount of funding intended for people falling behind on housing costs after thousands of pounds went unspent in the last two years.
Nearly two thirds of the council’s “discretionary housing payment” (DHP) fund went unspent in 2011/12, with council officers estimating another huge underspend in 2012/13.
Households in financial hardship who are entitled to housing benefit can apply for the temporary payments to meet shortfalls in rent or other housing bills.
A total of £269,491 in unclaimed cash out of a £420,750 pot in March 2012 was allowed to roll over into 2012/13, leaving the council with nearly £1 million available to spend in 2012/13.
But by last January officials were predicting yet another “substantial underclaim”. Now, the council has to hand back unspent cash built up over the last two years to the government.
Nationally, Manchester was the local authority with the third biggest underspend of discretionary housing payments in 2011/12. But similiar errors were reported up and down the country, with councils leaving nearly £8.4m of the £30m scheme unspent at a time of severe housing crisis.
Manchester is rated the third worst eviction hotspot outside of London according to the housing charity Shelter, with a possession rate of one in 66 households.
More pain for struggling households is expected with the implementation of unprecedented welfare cuts by the Coalition government, including the hated “bedroom tax” which is expected to hit nearly 14,000 families in Manchester alone.
Local councils say the government is to blame, arguing that Whitehall first beefed up DHP funding in 2011 to temporarily cover a cap in housing benefit, only to then delay the cap’s implementation for nine months, leaving the extra money unused.
Councillor Jeff Smith, Manchester City Council’s Executive Member for Finance, said, “Government has set aside increasingly large Discretionary Housing Payment funding since 2011 to mitigate the worst effects of their changes to housing benefit and welfare reform.
“Funding for 2011/12 was allocated before transitional protection was offered to existing claimants, which meant Manchester, like most authorities, was allocated more funding than required, resulting in an underspend – which the government allowed councils to carry over to the next financial year.
“This meant in 2012/13 our allocation was £700,000, with an additional £200,000 carried forward from 2011/12. Even so, the funding available was nowhere near the amount cut from benefits, but enabled us to mitigate the worst effects.”
People who need hardship funds still don’t appear to be getting them however. A council report released in January noted that despite “a sharp increase in demand and in the number of awards made”, officers anticipated “a substantial underclaim against the funding available without any possibility of carrying this forward to assist in 2013/14.” Despite this, officials claim the scheme is “working well”.
Others have offered a different explanation for the much-needed payments not reaching people, arguing that councils are likely to be losing the staff required to process the claims competently.
Speaking to the website Landlord Referencing in 2012 in reaction to the revelation of huge underspends by councils across the country, the Director of the Landlord Information Network Clare Turner said, “Housing benefit services are being scaled down in preparation for Universal Credit (UC).
“The increased number of DHP awards that all councils will have to make to spend all the money available to them would mean they would need more staff.
“But able staff are leaving housing benefit departments in preparation for UC. Many are getting new jobs, believing that their present jobs will come to an end when UC arrives.”
Turner added that knowledge of the payments is often poor among landlords. “Landlords often just don’t realise that their tenants are entitled to it”, she said. “Particularly amongst social sector landlords, the knowledge just isn’t there”
The council says that this year it expects to fully spend its available £1.9m in discretionary housing payment funding. Eligibility criteria have been reviewed to account for some groups hit by bedroom tax such as disabled people and foster carers, although lone parents whose benefits are cut will be largely excluded from the hardship fund.
Councillor Smith added that the payment scheme would only have a small impact given the immense scale of welfare cuts. “We expect a significant spike in DHP applications throughout the next year as a result of the impact of the Government’s welfare reforms – such as the bedroom tax – but funding is starkly limited and can never be a cover-all solution to everyone’s financial shortfall.”
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