Discretionary housing help held back to stop bedroom tax ‘buy out’

Councils asking for additional cash to support tenants hit by welfare reform had their funding capped because the government believed they would buy their way out of the bedroom tax.

Iain Duncan Smith, work and pensions secretary, offered councils £20 million in additional discretionary housing payment funds in July because of ‘exceptionally’ high demand for the emergency help as a result of the bedroom tax.

After bids from 86 local authorities, 27 were refused the full funds they had requested, with 18 turned down on the basis that a full award would allow ‘excessive buy out’ of the policy, a response to an Inside Housing Freedom of Information request has revealed.

Eventually, only £12.9 million of this pot was allocated, with the remaining £7.1 million going unspent. The Department for Work and Pensions has previously cited this underspend as evidence that DHP funding was sufficient to meet demand.

Birmingham Council, which received 15,827 applications for help, requested £2 million of additional funding but only received £1.3 million.

James McKay, cabinet member for housing at Labour-led Birmingham Council, described the idea that Birmingham’s request could amount to a ‘buy out’ of the policy as ‘absolute drivel’.

He said: ‘In Birmingham the bedroom tax took £11 million of housing benefit away from social sector tenants.’

Sam Lister, policy and practice officer at the Chartered Institute of Housing, said he would be ‘surprised if the figures denied allowed [councils] to buy their way out in any significant way’.

The 27 councils bid for £7.1 million, but were paid £3.5 million, while those denied on the grounds of ‘excessive buy out’ bid for £4.6 million and were paid £2.6 million.

A DWP spokesperson said: ‘All bids were scrutinised and councils were awarded as much as we considered they needed, on top of £160 million already available last year in DHP. The fact that money was left in the pot shows that we got this about right.’