Manchester City Council Report for Resolution. Review of Discretionary Housing Payment Scheme

Transcription

1 Manchester City Council Report for Resolution Report To: Executive - 29 June 2011 Subject: Report Of: Review of Discretionary Housing Payment Scheme City Treasurer Summary This report reviews the use of the Discretionary Housing Payment (DHP) scheme to supplement awards of Housing Benefit and Council Tax Benefit Recommendations The Executive is requested to approve the appended policy of Expectations of Discretionary Housing Payments. Wards Affected: All Community Strategy Spine Performance of the economy of the region and sub region Reaching full potential in education and employment Individual and collective self esteem mutual respect Neighbourhoods of Choice Summary of the contribution to the strategy No impact This policy assists a small number of families, reducing housing and financial pressures on them at key stages of a child s education. It also makes additional provision to support a successful move into paid employment. This policy contributes in a small way to enabling people to retain a home in the area they have chosen, supporting the stability of communities and participation in community life Implications for: Equal Opportunities Policy there are no specific Equal Opportunities implications contained within this report Risk Management No. 145

2 Legal Considerations there are no specific legal considerations contained within the report Financial Consequences Revenue The budget for Discretionary Housing Payments comprises ring-fenced funding from DWP. The City Treasurer expects to manage the increased demand for assistance from this scheme within the increased budget available for 2011/12 Financial Consequences Capital None Contact Officers: Richard Paver City Treasurer Julie M Price Head of Revenues and Benefits j.price2@manchester.gov.uk Background documents (available for public inspection): DWP Discretionary Housing Payments - Good Practice Guide (2011) at The Discretionary Financial Assistance Regulations 2001 (as amended) at 146

3 1. Introduction The purpose of this report is to enable the Executive to review the Discretionary Housing Payment scheme in the context of Government changes to benefits that will reduce entitlement and so increase demand for additional discretionary help through this scheme. The Government has allocated additional funding to this scheme in recognition of this. 2. The New Context The Discretionary Housing Payment (DHP) scheme has been in operation relatively trouble free for the past ten years. It enables the Council to pay, at its discretion, extra money towards housing costs to top up Housing Benefit and/or Council Tax Benefit. The Government provides funding for this up to a ceiling but local authorities can spend more than this from their own resources. Manchester s expenditure has generally been around, usually slightly above, the amount provided by the Government. This amount is very small in relation to the Council s total spend on benefits: in 2010/11 the Government funding is 334,966 compared with total benefit spending of over 300 million. Payments are made in line with a policy set by members. Payments address anomalies within the benefit system and assist where the standard benefit scheme proves harsh for people in exceptional circumstances. In practice the great majority of Manchester s expenditure over the years has been to private tenants whose Housing Benefit is too low for them to be able to pay their full rent. In 2009/10 and 2010/11 the Council has also used the scheme to assist claimants moving off benefits into low-paid work. The Government s changes to the Local Housing Allowance scheme will significantly reduce the amount of Housing Benefit paid to private tenants. Deductions taken from Housing Benefit and Council Tax Benefit for non-dependant members of the household have been increased sharply (by 27% for Housing Benefit). These and the general economic situation mean that a significant upsurge of demand for DHP is likely and the Government has increased its DHP funding significantly from 20 million nationally in 2010/11 (unchanged over ten years) to 30 million for 2012/13. Manchester s funding will increase from 334,966 to 420,570, an increase of just over 25%. However the increase is a tiny sum in relation to the impact of cuts to ordinary benefit entitlement. A review of the Council s current policy has considered the scope for increased demand, the likely circumstances that will lead to additional applications and any areas of the current approach that cause difficulty. We conclude that the present policy is robust and capable of coping with the issues likely to arise but that some additional principles could be made explicit. The policy would continue to assist people in unusual and anomalous situations, people moving into low paid work and people whose Housing Benefit fell short of what was needed to pay their rent but the level of help available is of necessity limited. 147

4 The following section considers a range of issues that have arisen, or which we expect to arise as result of changes. These are issues where expanded guidance or clearer direction would facilitate fair and consistent decision-making 3. Proposed Policy Changes 3.1 Duration of award Our approach seeks to foster independence rather than supporting arrangements that are only sustainable by long-term dependence on benefits topped up by discretionary awards. Although we have made some repeat awards of DHP, we seek to avoid this where it means keeping people in accommodation where the rents are unaffordable. Long term awards commit funds in a way that reduces our capacity to help others on a short term basis. We recommend that the policy should be extended to say that awards should normally be on a short term basis to enable claimants to consider and seek alternatives rather than to maintain them in unsustainable situations. To assist the maximum number of people we would look to make more awards for a maximum of six months. There will be some cases where the time taken to make and support the request means that much of that six month period has already passed. In such cases we would where appropriate allow the award to run for, typically, a further three months to give the claimant time in which to seek other solutions. We are also inclined to take into account education milestones (for example, making an award to the end of the school year in which a child has significant exams), expected periods of convalescence from illness, the birth of an expected baby, and so on. 3.2 Level of awards For those who request DHP towards rents above Local Housing Allowance rates or rent officer valuations, the size of the shortfall has been growing. From a time when DHP covered shortfalls of typically 10 to 20 we now commonly encounter shortfalls of 40 to 60 a week. Where we have awarded DHP to the extent of the full shortfall it has been common to receive requests for a further award at the same level or more and some of these claimants do not appear to have explored alternatives and may indicate that they have no intention of moving. With available funding so tight we cannot afford to meet high shortfalls in many cases, or to do so for a prolonged period. It would seem appropriate normally to expect claimants to have some financial stake in keeping accommodation above the level covered by the standard Housing Benefit scheme and to have some incentive to do something about it, whether by negotiating a lower rent or by moving. We therefore recommend that the policy should be that we should normally make only partial awards of DHP as a clear indicator to the claimant that the underlying situation needs to be addressed. 3.3 Rent shortfalls The extent of rent shortfalls the gap between the rent due and the level counted for Housing Benefit is so extensive and the level of shortfall so great that the DHP scheme can only assist in limited circumstances. Though the present policy has 148

5 proved adequate for dealing with this so far, we feel that it needs to include explicit recognition of several issues that currently cause difficulty. Manchester is an attractive and welcoming city and it is not surprising that people choose to come to live here. However, we receive a number of requests for DHP from people who have moved to the city for no compelling personal reasons and who take on unrealistic and unsustainable rent liabilities. We recommend that the policy gives priority to assisting claimants to retain an established home, and secondarily to people whose present difficulties are likely to be short lived but who are in situations likely to be sustainable long term. By contrast, the policy would give no priority to claimants taking on new and unsustainable liabilities. 3.4 Separated parents Parents who have separated may rent accommodation larger than needed for themselves alone because they regularly look after children who normally live with the other parent. Also some will rent larger accommodation while they are trying to agree arrangements for their children to come to stay regularly. We receive requests for DHP from separated parents in situations of this sort. The Council recognises the value of this type of arrangement and would seek to support it. However, in its review of the Local Housing Allowance size criteria, the Government has decided not to make provision for this difficult situation, and indeed, to do so would be expensive and difficult administratively. In addition, the Government is currently progressing its proposals to restrict single claimants aged 25 to 34 to a rate of Housing Benefit for shared accommodation rather than self-contained single room accommodation typically a week instead of the present 100 a week. This is likely to hit absent parents hard and the Council cannot hope to protect them given the limited funding available. We therefore recommend that the policy recognises with regret that it will usually only be able to help absent parents with the costs of larger accommodation on a short term basis where there is already an arrangement for substantial and regular childcare. 3.5 Women expecting their first child We receive requests for DHP from single women expecting their first child who find accommodation that will be suitable for them, and affordable, once their baby is born. Typically their Housing Benefit will be assessed as the Local Housing Allowance shared accommodation rate in the region of a week and they will rent small two-bedroom accommodation for which the LHA rate is in the region of 125 a week. We have made numerous awards in these circumstances but given the extent of the shortfall, often over 60 a week, we have made awards only for the last few weeks of the pregnancy and recommend that the policy be amended to recognise and support this approach. Couples expecting their first child and meantime assessed on the one bedroom or shared accommodation rate face similar problems and the same approach would apply. 3.6 People moving from social sector accommodation We receive a small number of requests for DHP from people who have left a social sector tenancy voluntarily to take what they see as more suitable or more desirable 149

6 accommodation in the private rented sector but at a much higher rent that cannot be met by Housing Benefit. We propose that the policy be amended so that we would not normally make an award where the claimant has moved from affordable to unaffordable accommodation without proper exploration of other alternatives. 3.7 Non-dependant deductions The scheme expects non-dependant members of a household to contribute to the rent and Council Tax as well as towards household expenses. The tenant s Housing Benefit and Council Tax Benefit are reduced by a range of deductions set at levels based on the non-dependant s earnings that mean they should be affordable. Even after the sharp increase from April 2011, the deductions should be affordable though it may seem unfair if in practice it means the non-dependant pays the majority of the tenant s rent. Some claimants experience difficulty because the non-dependant does not contribute in line with the deduction made for them, or indeed, at all. We do make awards for DHP where the imposition of a deduction seems inappropriate or there is a reason why the non-dependant cannot afford the level imposed but in general we do not award DHP where the problem is simply that the non-dependant won t pay or won t disclose their income to enable us to assess a lower amount. Given a 27% increase in deductions from April 2011 with further increases of a similar size in the following three years, it would appear appropriate to reflect this explicitly in the policy. 4. Conclusion and recommendation The existing statement of Expectations of Discretionary Housing Payments originating in 2001 and updated in 2009 has been amended in accordance with the discussion above. The Discretionary Housing Payments scheme provides local authorities with such a wide discretion that it has been necessary to set out a range of situations in which the Council would not normally expect to provide help rather than trying exhaustively to define when help would be appropriate. Members are asked to approve this policy to guide the City Treasurer and his staff in their exercise of the discretion delegated to them. 150

7 Manchester City Council Appendix 1 - Item 11 Expectations of Discretionary Housing Payments Appendix The Discretionary Housing Payment scheme exists to deal with situations where normal Housing Benefit and Council Tax Benefit do not cover all the rent or Council Tax due. To qualify for some consideration for assistance under this scheme the customer must already qualify for some Housing Benefit and or Council Tax Benefit. Many people have difficulty paying their rent and Council Tax. Among these are those whose benefit is restricted because their rent is considered too high; those whose benefit is reduced by deductions for non-dependants who may not contribute adequately to cover those deductions; those whose benefit is reduced by the taper for excess income; those who for all sorts of reasons have other calls on their income (additional expenses or outstanding debts) which they prioritise ahead of rent and Council Tax payments; those who have general difficulty managing the income they have; those who are returning to work after a long period of unemployment who have difficulty in managing finances during the transition from benefit to a stable in-work income when the continuing level of net earnings is known and any Working Tax Credit entitlement is secured (see Annex); and those who are in affordable housing but at risk of becoming homeless due to difficulty in meeting their full rent liability because of severe financial difficulties resulting from the effects of the current economic climate or their attempts to take up paid employment. Awards of Discretionary Housing Payments should focus on enabling people to secure or retain and pay for appropriate and sustainable accommodation through temporary difficulties or in anomalous circumstances not addressed by the benefit system to reduce the risk of homelessness and support the stability of families and communities. Discretionary Housing Payments should not seek to undermine the purpose and nature of the Housing Benefit and Council Tax Benefit schemes, nor support irresponsible behaviour, nor should they assist in situations so common that a consistent approach to such payments would involve expenditure above the maximum permissible. The Council therefore expects payments to be made in unusual or extreme circumstances where additional help with current rent or Council Tax liability will have a significant effect in alleviating hardship, reducing the risk of homelessness or alleviating difficulties that may be experienced in the transition from long term benefit dependence into work, for example: Circumstances unusual/exceptional among customers in that tenure; Costs that are beyond their control and do not arise through the actions or failures of others; 151

8 Manchester City Council Appendix 1 - Item 11 Housing choices which are forced on the customer by urgency or significant health requirements; Extreme and temporary situations which make it difficult to move in the short term or where decisions had to be made in an emergency; Imminent loss of the home where meeting some or all of the current shortfall between the benefit and eligible rent will prevent the customer from becoming homeless. However in considering awards under this provision the Council will have regard to: the reasons that the debts arose. the involvement of other advisory services engaged in providing assistance to the customer to manage debt in order that any arrangement to accommodate agreements for re-payment of debt might be realistically obtained and sustained. whether any proposed Discretionary Housing Payment award will have the desired effect of preventing the customer from becoming homeless. the consequences of any potential increased demand on the fund in the event that the award was not made (such as having to move from affordable accommodation into highly priced private sector accommodation with reduced security of tenure). temporary hardship and difficulties which may arise during the transition for those who are coming off long term benefits into work. Payments and awards Payments are expected to be made to meet current needs rather than past debts. No significant degree of payment for past periods is anticipated as requests for payment should be made promptly within the benefit period of the main benefit to which they relate and within a reasonable time of knowing the outcome of a claim for the main benefit. However, retrospective payments may be appropriate to reduce rent arrears to avert eviction where there are grounds for confidence that this will enable the claimant to deal effectively with their remaining arrears in the longer term. Awards are expected to last for a fixed period, of between four weeks (under the Manchester Commence Work scheme see Annex) and typically 26 weeks and exceptionally up to 52 weeks depending on the individual circumstances. Awards may take into account the need to allow the claimant a short future period to adjust or to take into account milestones in the family s life like significant exams or the end of a period of convalescence. Given the limited scope of the scheme and the funding available, awards are expected to be at a modest level other than for very short periods in extreme circumstances. Awards to claimants with high rents will usually be below the maximum possible so that the claimant makes some contribution to the shortfall. The Council expects to give higher priority to assisting people (and particularly families with children of school age given the importance of stability in their education) to retain an established home and to relieving temporary difficulties where the arrangement is likely to be sustainable longer term; and low priority to assisting people who take on housing costs which because of the nature, location or price of the property, are unaffordable and unsustainable from the start. 152

9 Manchester City Council Appendix 1 - Item 11 The Council recognises the difficulties faced by absent parents who regularly look after children normally living with the other parent or who hope to make such arrangements. The benefit system does not provide for this situation. It is a common situation. The Council will therefore only rarely be able to assist with discretionary payments, mainly where existing arrangements are threatened by difficulties that are likely to be short-lived. The Council also recognises the difficulties faced by single women and couples expecting their first child who find two-bedroom accommodation suitable for their new family while still assessed on the one-bedroom or shared accommodation rate but would only expect to provide discretionary help for a short period of a few weeks before the baby is due. The Council recognises that sharp increases in the level of non-dependant deductions are likely to cause difficulties for some claimants but reaffirms its view that it should normally only make discretionary payments where the non-dependant deduction is anomalous or unreasonable and not where the non-dependant is unwilling to pay or to cooperate in assessing a lower contribution. Where a request for payments has been refused, it is not expected that repeated requests will be considered unless the customer can demonstrate that the situation has worsened significantly or a substantial period of time has elapsed. Discretionary Housing Payments are normally expected to be credited to rent or Council Tax accounts or paid with a private tenant's rent allowance. The Council recognises that there will be circumstances in which Discretionary Housing Payments may be made other than as set out above. 1. Exclusions Regulations provide that the Council can not make an award of Discretionary Housing Payment if the customer is not in receipt of an award of Housing Benefit or Council Tax Benefit. A Discretionary Housing Payment can not be made to accommodate the cost of any services which are not eligible for help under the Housing Benefit scheme such as ineligible service charges, water & sewerage, fuel and heating charges. It is not normally expected that Discretionary Housing Payment payments will be made because of significant overcharging by a landlord; the ordinary impact of rent restriction either resulting from a Rent Officer decision or the use of Local Housing Allowance rates; the effect of the Rent Officer's local reference rents and Local Housing Allowance rates putting accommodation in parts of the city beyond the means of many customers; the preference for a size or type of accommodation or location which is not strictly necessary for pressing reasons; 153

10 Manchester City Council Appendix 1 - Item 11 the failure of non-dependants to make up the deduction attributable to them when they have the means to do so; the inadequacy of benefits for disability to cover the costs of disability towards which they are paid; the unwillingness of the customer to use other available resources or to apply for other more appropriate forms of assistance; or a move from social sector accommodation to unaffordable private accommodation, other than for the most compelling of reasons The Council is aware of calls for discretionary funding to cover the cost of deposits, advance rent, removal costs and other expenses to assist a person to move to affordable accommodation. Given the limited nature of the funding available and the risk of landlords levying such costs where they may presently waive them, the Council would not normally expect to help with items of this sort. 2. Reporting and reviewing process The Revenues and Benefits Unit will report Discretionary Housing Fund expenditure to the City Treasurer quarterly. The City Treasurer, in compliance with the Council s delegated responsibilities, as laid down by the Executive on 25 July 2009, shall review this document periodically, and make recommendations to the Executive for amendment where necessary. Any recommendations for amendment must have due regard for any Changes in legislation; Changes to Discretionary Housing Payment funding; and Compliance with the Council s anti-poverty strategy. 154

11 Manchester City Council Appendix 1 - Item 11 Discretionary Housing Payments Manchester Commence Work Scheme This subsidiary discretionary scheme assists local residents who are coming off benefit because they are starting work but who still qualify for a reduced amount of Housing Benefit and/or Council Tax Benefit. Annex The Discretionary Housing Payment Manchester Commence Work scheme aims to make an award of Discretionary Housing Payments for a period of up to 4 weeks following the expiry of an extended payment when a customer or partner comes off long term benefit (such as Jobseekers Allowance) to start work. In effect, this will raise Housing Benefit and or Council Tax Benefit up to, or towards, the amount that the customer was awarded during their in benefit claim for the first 8 weeks in work. The Council recognises that customers who have been reliant on state benefits for prolonged periods of time do experience considerable difficulties in the transition from being benefit dependant to starting work. These difficulties may arise because the customer has not had to budget for the payment of rent and Council Tax out of their income for a prolonged period of time; the customer has to adjust to income coming from different sources and in different pay periods when starting work; the customer incurs additional expenses, for instance in travelling to and from work, meals at work, child care cost and provision, paying for school meals and so on; the customer has to wait for in work benefits to come through after starting work, for example Working Tax Credit. Payments under the Discretionary Housing Payment Manchester Commence Work scheme can only be awarded to those customers who make a claim and are awarded some Housing Benefit and or Council Tax Benefit once they have started work. This is because regulations prescribe that a Discretionary Housing Payment can only be made where there is some actual entitlement to Housing Benefit or Council Tax Benefit. The Council monitors the effectiveness of this scheme as its aims are to encourage customers of Manchester off long term benefits and back into work, to ease that transition and to prevent customers from giving up working. Without this help, the transition into work can prove unmanageable because there is not enough time to adapt to the change once the initial four week extended payment expires. Monitoring includes customer surveys of the effect of the award in helping them back into work and checking six months after the claimant started work whether the customer is still in work. 155