Swindon Council has been given approval by Housing
Minister Mark Prisk to establish a £420,000 fund within the HRA to
help tenants affected by welfare reform, it was reported this
week. Some councils may wish to explore the option of similar
action where they find their allocation for discretionary housing
payments (DHP) is inadequate to meet local need.
DWP announced DHP
allocations to councils in January. The national DHP budget for
2013/14 is set at £155 million. The 2012/13 budget of £60 million
has been increased to reflect the impact of the reforms coming into
effect this year - £30 million for the bedroom tax and £65 million
for the benefit cap. Councils may claim subsidy on DHP payments
made up to their allocations, and are free to make additional
locally-financed DHPs up to a further two and a half times their
allocations. These payments normally have to be financed from the
Councils may face two difficulties with these arrangements.
Firstly, allocations may be insufficient to meet local need. The
national DHP budget is equivalent to only six per cent of the
expected saving in benefit, or 21 per cent if councils were to use
their full discretion to make locally funded payments. The second
problem is that locally-funded payments are a solution councils may
be unable even to contemplate given overwhelming pressure to make
savings in spending supported from the General Fund.
Given this, the option of funding discretionary payments from the
HRA may be attractive to some councils. It seems that the Swindon
fund is intended as an alternative to General Fund-financed DHPs,
not additional to them, and presumably payments from the HRA will
be restricted to council tenants so DHP payments to private and
housing association tenants would still fall on the General Fund
once the DHP allocation is used up.
Ring-fence purists may argue that it is inappropriate in principle
for help for some council tenants to be paid from rent provided by
other tenants, rather than raised from general taxation. In an
ideal world this would be right; if the only choice available is
between HRA-funded help and no help at all, it may sometimes be
better to waive the principle and provide the help.
In considering whether to follow Swindon's example, councils will
need to consider the long-run business plan impact of using a
proportion of rent income in this way. However, if the fund is
targeted on cases where tenants are in real hardship, it seems
likely that making a relief payment and writing off an amount of
that tenant's rent as uncollectable come down to much the same
thing - albeit entered differently in the accounts. Some may see
the alternative of a calibrated response to rent arrears
accumulating because of benefit withdrawal as a better response,
which also has the advantage of not requiring Ministerial
Other councils may wish to follow Swindon's example. In giving his
approval to the Swindon arrangement, Mark Prisk is quoted as saying
he found Swindon's case for establishing their fund "compelling".
This should mean that he is open to equally compelling arguments
from other councils.