Press release

Housing Benefit reforms continue as extra funding is given to Local Authorities

This news article was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Restoring fairness to the Housing Benefit system and providing extra support for those who need it is a top priority.

Restoring fairness to the Housing Benefit system and providing extra support for those who need it is a top priority, Lord Freud said today as he announced the first allocation to local authorities of an extra £130 million transitional fund set up to help those affected by the reforms.

In consultation with the Local Authorities Association, £30 million has today been allocated through the Discretionary Housing Payment Fund with over £8 million going to London, £2.5 million to Scotland, £1.5 million to Wales and £17.5 to the rest of England.

The fund, which Ministers have already boosted by £10 million, will give local authorities the flexibility to help the most vulnerable customers who might face a shortfall in rent because of the changes to Housing Benefit rules from April 2011.

Minister for Welfare Reform Lord Freud said:

The current way that housing benefit is administered is unfair and the changes we are making strike the right balance that is both fair to the taxpayer and those on Housing benefit.

It’s wrong for anyone to suggest that many people will become homeless because of our housing reforms - the Discretionary Housing Payments are there to provide a safety net for those who need it. “This year’s fund has already received an extra £10 million in funding, and we will triple Discretionary Housing Payments over the next three years to £60 million.”

A further £50 million will be allocated over the next four years which will go towards providing housing advice, helping local authorities work with landlords and tenants on renegotiating rents, or where needed helping with the cost of moving.

Ministers are keen that landlords from the private rental sector work with local authorities and tenants where appropriate to agree to reduce their rents in return for direct Housing Benefit payments.

This will mean that they reduce their rents to a level that is affordable to the tenant. In the majority of cases this will be the Local Housing Allowance rate.

In return landlords will receive a guaranteed income which will address their concerns about non-payment from Housing Benefit claimants and improve their credit ratings. This incentive will also bring an overall downward pressure on rents in the private sector, resulting in more properties becoming available to those on Housing Benefit.

Notes to Editors:

The impact of the recommended option on the LAs is below:

  • East Midlands £1,270,098
  • Eastern £2,203,059
  • Greater London £4,159,705
  • Inner London £4,021,349
  • North East £866,262
  • North West £2,986,408
  • Scotland £2,676,839
  • South East £3,797,937
  • South West £2,236,504
  • Wales £1,422,995
  • West Midland £2,345,663
  • Yorks and Humberside £2,013,181

Discretionary Housing Payments are only available to people who are entitled to Housing Benefit or Council Tax Benefit.

These payments are intended to make up shortfalls in entitlement to benefit where the local authority considers that the person concerned is in need of further help with their housing costs.

We are providing additional funding totalling £190m to smooth the transition over the spending review period: £130m Discretionary Housing Payments.