Benefit Cap and DHP – Oh what a mess!

Why don’t councils give DHP for benefit cap cases as local councils will save a fortune on temporary homeless costs?

I’ve lost count of the times I have been asked that perfectly valid question in recent weeks and the argument is simple:  Local councils should pay the average £76 per week housing benefit shortfall as not doing so will cost them £500 or £700 or even more per week.

The answer is local councils are NOT ALLOWED to do this!  Eh what are you on about Joe?

I again use Liverpool to explain and again the same goes for any and every local council in England who are prevented by Westminster from doing this.

Liverpool receives £2 million per year in DHP from central government and Liverpool is allowed to put a further £3 million to that DHP pot but no more than that as central government stipulate a maximum added local figure as a condition of the DHP allocation they give.

Below is the Housing Benefit circular from central government which details this:


The first highlight is the column entitled “Overall Limit (x 2.5) which is the total maximum amount that each local council can have and pay out in their DHP pot.

So if a council receives £2 million then it can spend £5 million by adding up to £3 million of its own money to the total DHP pot.  Liverpool with nearly £2m DHP allocated can therefore spend nearly £5m – the actual figures of £1.93m gives a maximum of £4.83 million in the above.

Now lets turn to the amount of housing benefit cut in the Liverpool City Council area which I have discussed many times


This reveals that in bedroom tax and benefit cap cuts Liverpool has had nigh on £7 million per year cut (£6.518m + £0.304m) from just these two benefits at September 2016 and was given £2 million to mitigate this and could have added £3m of its own money to give £5 million to deal with a £7 million problem.  This is a £2 million per year problem.

Yet with the huge increase in the amount of housing benefit that is cut with the new benefit cap reduction we see that Liverpool now has a £14 million or so problem yet still can only spend £5 million and now Liverpool City Council now has a net £9 million per year problem.

Despite doubling the problem to Liverpool City Council we see central government still only allowing them to spend the same maximum amount to mitigate this problem!

Long live Localism!

I have no idea and I suspect neither does any local council or central government figure what are the consequences if any if Liverpool for example wished to add £12 million of its own money to the DHP to fully mitigate the bedroom tax an benefit cap.

I am not suggesting they or any other council would to be clear yet if Liverpool did add £12 million to their DHP allocation and in doing so saved the alternate cost of say £30 million more in homeless costs then it makes absolute logical financial sense for that council to do that.

If you put £12 into a savings account that would guarantee to make this £12 become £30 in a year you would be stupid not to do so and this is the position.

I don’t know whether the LGA or any other local government lobby has lobbied central government to remove this limit that they impose but if not then they should.  I mean specifically in England as we have seen the Scottish Government be allowed to top up the DHP pot of all their 32 local councils in the bedroom tax which they have devolved powers to do an presumably the Welsh Assembly would be able to do the same.  Yet this does not apply to English local councils.

Just another example of how this government’s ‘welfare’ policies are ill-conceived and ill-considered and back of a fag packet superficial ideological bull.


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