DHP actual spend reveals it is time to radically rethink the impacts of welfare reforms

Last month central government released a report showing how local councils spent the £160 million of DHP money they were given for 2013/2014 to mitigate the welfare reform policies such as the bedroom tax.  Where did that money go and how it was spent by councils (LAs) is very revealing indeed as it supports the view that social housing differ markedly from one council to the next and because of that these welfare reforms will impact very differently in different local areas.

I don’t just mean inter regionally – between London and the North West for example – I also mean intra regionally with major different housing variables giving significantly different welfare reform impacts within London or within the North West and any other region.

Hence anyone of the (literally) scores of research reports which came out a few months back claiming to comment on how the bedroom tax impacted are flawed.  This is because the bedroom tax like the benefit cap and LHA reforms impact differently inter regionally and intra regionally and those impacts depend upon the markedly different housing conditions in each local authority area or council.  In simple terms to say the bedroom tax did ‘X’ to downsizing or did ‘Y’ to HB savings can only be a generalism that may hold in London but not in the North West or may hold in Oldham in the North West but not in neighbouring Rochdale.

An in-depth look at actual data in the payments of DHP exposes the radically different housing variables in each council and proves the impacts of welfare reform differ in Oldham as to Rochdale, Brighton as to Hastings or Eastbourne, Liverpool as to Wirral, Merthyr as to Blaenau or Westminster as to Southwark.

So what are DHPs?

DHP or Discretionary Housing Payment is money given from central government for local authorities to spend helping those caught by (housing) welfare reforms, that in 2013/14 were expected to save £1,682 million from Bedroom Tax (£465m); Benefit Cap (£275m) and various LHA reforms (£942m). In short the coalition attempted to take £1,682 million away in welfare reform housing cuts and gave local councils £160 million to sort out the inevitable housing mess.

Welfare Reform is housing cuts!

Make no mistake the major welfare reforms are housing reforms.  The bedroom tax is a social housing welfare cut.  The LHA reforms are private rented housing cuts.  The Benefit Cap which affects 54% private tenants and 46% social tenants is both and administered through Housing Benefit.

Therefore DHP is to mitigate greater housing benefit expenditure

So how did LAs spend this money given to mitigate the cuts to housing benefit and what does this reveal?

dhpswiped1

Firstly the bottom of column 3 reveals that councils spent just over £162 million from the £160 million allocated.  So local councils spent more on DHP than they were allocated.

Yet how many reports have you read that DHP was underspent and councils gave money back to central government?  Remember these are the official DWP figures hence we must note that much political spin is used over them which can only highlight the political significance of them. Welfare Reform, like most political issues, tends to surround itself with political hyperbole and superficial statement and tends to ignore actual fact that official data such as this gives.  Two plus two is always four unless you are a politician!!

Column 3 also reveals that in 2013/14 some £26.320 million was spent supporting tenants with the Benefit Cap and £80.805 million was spent on RSRS (Removal Spare Room Subsidy) or Bedroom Tax and £21.128 million on LHA or supporting private tenant housing benefit cuts.

Housing Benefit circular S1 of 2013 gave very different allocation figures of what DHP was intended to be used for.  The bedroom tax was allocated £55 million yet £81 million was spent by councils for example and some 50% more than expected meaning less has to be spent than intended on other purposes of DHP such as LHA reforms of benefit cap.

I have highlighted that £29.764 million of the £160 million was NOT spent on welfare reform policies as it was intended. Or at least that is what the figures suggest and that caught his eye and made me lookat each individual LA to see who had NOT spent these DHP monies on welfare reform policies and to try to investigate a bit further.

What appears to have happened to this £30m is that councils – and interestingly those councils who retain the homelessness or housing options service in-house – have spent considerably more on rent deposit or bond schemes.  They have used (raided?) DHP budgets to bolster bond schemes which in simple terms pay for deposits of private sector tenants.

Yet the detail is sketchy an does NOT say what this non welfare reform spending was on and merely states how much each LA did not spend on welfare reform policy.  I developed a simple spreadsheet to put the DHP spend by each council into percentage terms as below to see which councils had spent DHP on other things than the housing welfare reforms as below:

dhpbreakdown

As you can see from the figures in red there is a wide variation in percentage terms ranging from 3.15% in Aberdeen to 65.33% in Blackpool.  The full tables ranged from zero in some areas to 83.43% in Thanet.  Why is that?  The details of these official DWP monitoring tables do not say.

However by looking at the decisions made in percentage terms we see that Wirral made 44% of all DHP decisions on deposit bond schemes and so did Birmingham and in the amount of purported non welfare reform spend – which is how DWP categorise this not me – this is very high indeed compared to other councils.  Note here I am not saying a deposit bond scheme is a misuse of DHP funding at all and it is clear that DHP has always been used for them; rather I am saying a few related matters.  Firstly that in some councils the percentage of DHP spent on bond schemes must have rocketed. Secondly, that DHP by being additional money means local council budgets have had to find less local money for bond schemes.  Thirdly that raises the valid point that such spending is a result of the impact of welfare reform and not a preventative measure which DHP is meant to be.  That trend will only increase as more cases of homelessness or potential homelessness arise due to the welfare reforms policies.

Yet staying with the above table I noticed the final column on the right which revealed the amount NOT spent on DHP in money terms and he saw a huge £1.4 million in Birmingham of DHP monies NOT spent on welfare reforms and £453,106 in Blackpool.

Blackpool is in HB terms an outlier or extreme as it has 72% of all its Housing Benefit claimants living in privately rented housing and the highest in the UK.  Blackpool stands out from the average which is 68% of HB claimants in social rented housing and 32% in the private rented sector and so has atypical housing circumstances. Welwyn Hatfield is the other extreme with 88% of HB claimants being in the SRS and just 12% in the PRS.

Could it be that DHP payments simply mirror the unique HB circumstances in each council and the reason Blackpool has a high figure of purported non welfare reform DHP payments is due to its HB claimant proportions? I looked at other councils known to me to have a high proportion of PRS HB claimants and most of them have the same high % in this column such as Torbay.  Yet LB Barking & Dagenham in the table above has almost 38% and its HB claimants mirror the national average.

Being a numbers geek (Oi!!) this anomaly made me look further and the more I looked the more that anomalies occurred all over these figures in every council and in every area of spend.

I have looked at the DHP spend of all of the local councils which gave a breakdown to DWP and the vast majority did for anomalies.  I like anyone in housing would expect London councils to spend more than Northern councils on the benefit cap given that there are much higher rents in London than the North East and that is generally borne out in the data but with some unusual anomalies.  Similarly, I would start from the hypothesis and expect councils in the North West to spend a higher percentage of their DHP on bedroom tax than London councils as the bedroom tax affects 43% of social tenants there yet 22% or crudely half as many in London.

Such generalities are to be expected for those reasons yet nothing yet explains the missing £30m or so which councils did NOT spend as they should have done on mitigating the welfare reforms of bedroom tax, benefit cap and the various LHA reforms (LHA cap, shared accommodation rate to under 35s, below inflation rent increases etc.)

Yet the DHP spend is hugely revealing of the different housing conditions that are present right across the country and MUST mean that the welfare reform policies will IMPACT differently from area to area and I don’t just mean between London and the North east or North West or a regional basis but even between councils in the same region.  The more I looked the more this became apparent.

Much of the theoretical rationale behind the welfare reform policies is behavioural nudge theory – to incentivise the tenant to downsize or move from a high rent area to a low rent area – Yet such theory assumes a general impact across the purported uniform housing sectors and is highly superficial as it takes no account at all of the very different housing circumstances that pertain in each local authority area; rather it merely assumes that housing conditions are a constant in every LA area when they are not and the DHP spend starkly shows the diverse nature of housing conditions from one LA to the next.

As stated above you would expect a London council to spend more on the benefit cap and LHA reforms than on the bedroom tax and in a previous post I looked at the percentage chance of a social tenant getting a DHP for bedroom tax which in theory gave the social tenant a mere 6% chance of getting one yet the Westminster tenant the other extreme with a 169% chance of getting a bedroom tax DHP.  All that revealed was the perverse and unreliable nature of the allocation of DHP from central to local government and unreliable in a legal sense too with the courts ruling that DHP justifies the disability discrimination the bedroom tax has been legally found to give – see here for more detail on that aspect of DHP.

Yet the ACTUAL spend was vastly different as despite LB Westminster being allocated 169% of its total bedroom tax cut it spent just 1.72% of it total DHP on bedroom tax cases.  This must mean that the local choices taken by LB Westminster reflected LB Westminster housing conditions or threats to higher cost to LB Westminster through homelessness.

Logically the LHA caps on maximum housing benefit payments will impact far more on Westminster than in a low rent area in the NE and that is stating the obvious. It is also stating the obvious that all London councils would therefore spend more on LHA reforms and benefit cap than on bedroom tax to follow that argument.  Yet this is not the case as below we see Southwark spending far more on bedroom tax DHP than it did on benefit cap or LHA DHPs and both of them combined.

dhp southwark

Maybe, I thought, this is a reflection of political control of councils with Labour-led councils spending more on bedroom tax than on LHA yet political control is not a factor as anomalies stood out all over the country and within regions and political control did not play any real factor.

The more I looked the more it became clear JUST how divergent one council area is from the next and each had its own peculiar housing circumstances and that MUST force a rethink on the efficacy and likely impact of welfare reform policies upon which the world and his wife have speculated upon without this critically significant factor since day one.

Why would Hartlepool in the North East spend 19.81% of its DHP on benefit cap yet LB Southwark spent less at 18.12% or why would Sunderland spend 17.3% and Stockton 17.12% on benefit cap when other North East councils spent 5.15% in Newcastle or 3.44% in Redcar and just 1.55% in South Tyneside and even lower at 0.58% in North Tyneside.

Political control of councils is not an issue in the North East yet the spend on benefit cap is markedly different across the North East just as it is across North West councils and West Midlands councils.

Anomalies jump off the page all over the country as why would South Ayrshire spent 57% of its DHP allocation on LHA reforms compared to a low single percentage figure across the rest of Scotland, outside of Glasgow and Edinburgh? Why would Clackmannanshire spend almost 14% of its DHP on benefit cap and markedly different from other Scottish councils? Is there less central heating there that has created larger household sizes than normal?

Yet seriously Clackmannanshire has a massive 84% of its HB claimants being social tenants (Scotland average 79%) so all you housing commentators who believe the benefit cap only affects high rents areas and high rent private tenants its time to rethink that view. Worthy of note is the benefit cap impact assessment from DWP that estimated 46% of all households hit would be in social housing and of course the benefit cap only started in October 2013 meaning this 14% of total spend is for half a year and all other reasons such as bedroom tax and LHA reforms are for full years percentage spend.

To return to even more anomalies which keep turning up and strongly support that each LA has very different rented housing variables and so the welfare reforms WILL inevitably impact differently across the country…..

Why would Cheshire West spend 68% of its DHP on bedroom tax yet Cheshire East spend just 36%? Why would Hastings spend twice as much as neighbouring Brighton on bedroom tax DHP yet Brighton spend triple the amount as Hastings on benefit cap DHPs at 31.07 to 9.7%. And neighbouring Eastbourne spend over 50% of its DHP on non welfare reform policies too!

There are hundreds of similar anomalies all over the country and I inevitably began by looking at LA areas I am familiar with.  Why did Oldham in Great Manchester spend 29% of its DHP on LHA reform yet neighbouring Rochdale spend just 7.5% and Bolton also in Greater Manchester spent nothing at all?  It is not the percentage split of social tenants to private tenants as HB claimants as Oldham has 30.83% of its HB claimants being private tenants and Rochdale has 30.89% and Bolton which spent zero DHP has 29.91% of PRS HB claimants. All three councils are Metropolitan Councils and all 3 councils are strong Labour Party run councils.  So what explains the huge difference in DHP spending there as it is not political or a different set of housing circumstances?

Is it just that each DHP decision maker in each area has an overly subjective influence or just that more private tenants in some areas than social tenants applied for DHP?

In Merseyside there is a number of unexplained anomalies and a large swipe of DHP allocation being used for non welfare reform purposes.  St Helens spend 45% (£218,055) on non welfare reform purposes and Wirral 38% which is £406,598 not spent on welfare reforms yet Sefton just 0.57% or £4,317.  (And neighbouring Halton swiped 42% of its DHP budget too at £161,759 not spent on welfare reform policies)

Liverpool at £77.717 or 3.97% of its spend on non welfare reform purposes differs as Liverpool added significant amounts of its own funding to the DHP budget and evident in it spending 110% of its entire DHP allocation on bedroom tax DHP.  Yet strangely Liverpool which has far fewer PRS tenants as HB claimants orwith 33% than Wirral at 47% yet Wirral spent almost twice its DHP allocation on LHA reforms to Wirral at 11.7% to 6.7%.  But then Wirral has a very high percentage of DHP not spent on bedroom tax, benefit cap or LHA reforms and did make 44% of all DHP decisions for deposit bond schemes and has its homeless / housing options team in-house and not administered by the former council housing stock transferred organisation as many do.

This is getting rambling and far too long, yet I could easily go on with many more anomalies. However what can be said in summary is very revealing and provides strong grounds to rethink the welfare reforms.

Individually different housing conditions or variables exist in every council across the UK and that applies to socially rented housing and privately rented housing in each local authority area. To merely suggest that social housing differs between London and North is a chronic under consideration of what social housing is and fails to see its divergent variables.  As such it is way too simplistic and deeply flawed to say the bedroom tax means this for all social housing or the LHA reforms mean this for all UK privately rented housing.

YES that also means IDS or even a Labour MP saying the bedroom tax will do this will be talking out of their errant hat as no one can predict such impacts due to the divergent individual nature and variables that exist and the welfare reform policies will impact in very different from one neighbouring council to the next.

It’s time that MPs, researchers, tenants and social landlords woke up to that and begin to consider welfare reform in light of that.

 

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