Discretionary Housing Payments in Scotland: as at 30 September 2022

As of April 2017, full responsibility for Discretionary Housing payments (DHPs) has been transferred to the Scottish Government. The Department for Work and Pensions no longer provides any funding. Scottish Government allocates funding for DHPs to each local authority, and local authorities are also free to provide additional funding from their own resources.

Discretionary Housing Payments are made to people who for example:

• claim Housing Benefit but it doesn’t cover all their rent
• claim Universal Credit but they can’t afford their housing costs
• need help with removal costs
• need help with a rent deposit or rent in advance.

Local Authority Delivery

Discretionary Housing Payments (DHPs) are administered in Scotland by the 32 Scottish local authorities.

DHPs are awarded if a local authority considers that a housing benefit or universal credit (including the housing element) claimant requires further financial assistance towards housing costs. Local authorities have discretion to make DHPs, decide how financial hardship is assessed, the amount that is to be paid (within certain limits) and how long the payments are to be made for.

DHPs can be used to provide support to claimants affected by some of the key welfare reforms, including the introduction of the Benefit Cap, the Removal of the Spare Room Subsidy in the social rented sector (“RSRS”, also known as the “bedroom tax”) and reductions in Local Housing Allowance rates.

Further information on how DHPs are administered can be found in the guidance manual

Funding Methodology

The Scottish Government fully funds the mitigation of the Removal of the Spare Room Subsidy (RSRS), also known as the “bedroom tax”. The budget for “Bedroom Tax Mitigation” is based on the forecasted cost of reimbursing local authorities for mitigating tenant’s RSRS losses during 2022/23.

The local authority allocations for “Other DHPs”: “Core”, “Benefit Cap” and “Local Housing Allowance” are based on the previous year’s Housing Benefit expenditure and/or caseload in relation to each component, adjusted to account for Universal Credit.

An “Other DHPs” underspend of around £2.4 million was carried froward from 2021/22 and the amount allocated to “Other DHPs” for 2022/23 was £10.9 million. therefore the total funding available for “Other DHPs” in 2022/23 is £13.3 million. The estimated cost for “Bedroom Tax Mitigation” is in addition to this allocation. At the point at which allocations were made at the beginning of 2022/23 the estimate for the full cost of Bedroom Tax Mitigation was £68.1 million, and as such the estimated end year total funding for DHPs used in this document, for instance in Charts 1 and 2, is £81.4 million.

The agreed funding methodology is designed to ensure that funds to support RSRS mitigation are effectively allocated with flexibility to manage any variance in costs against estimates. The management information collected by the Scottish Government will be used to calculate Tranche 2 payments for the mitigation of the bedroom tax.

In parallel, an estimate of RSRS losses will be made by using eleven months of data taken from Stat-Xplore, and grossing up to twelve months. Stat-Xplore contains information on the number of claimants on Housing Benefit affected by the RSRS and the average deduction for each claimant, which together can be used to estimate the total funding required to fully mitigate RSRS losses in each local authority area. The additional funds needed to ensure full mitigation will then be calculated, taking into account funds already allocated and the requirement to preserve funding for “Other DHPs” i.e. Core, Benefit Cap and Local Housing Allowance components of funding.