Welfare reform - housing and social security: second follow-up paper

4. Scottish Government mitigation and devolved powers

Scottish Government has acted to support the housing sector as a whole through mitigation, including direct financial mitigation to individuals and households, with expected spending of over £100m in 2019/20 on welfare mitigation and measures to help protect those on low incomes including the Scottish Welfare Fund and Discretionary Housing Payments.

Scottish Welfare Fund

The Scottish Welfare Fund is a vital lifeline for people across Scotland providing £38 million per annum to councils, and plays an important role in terms of general welfare reform mitigation. Between 1 April 2013 and 30 June 2019, 681,055 Crisis Grants were awarded. The most common Crisis Grant expenditure was on food, essential heating expenses and other living expenses, with the average spend being £78. Crisis Grants provide a safety net when an emergency situation occurs, and where there is an immediate threat to health and safety. During the same period 260,600 Community Care Grants were awarded. The most common Community Care Grant expenditure was on floor coverings, beds and bedding, and white goods, with an average award of £602. This kind of support through Community Care Grants has a direct impact on housing in that it helps enable people to establish and maintain a settled home in the community.

Discretionary Housing Payments

DHPs more directly mitigate the impact of welfare reform on the sector. Total budgeted spend for 2019/20 is £63.2m. Of this £52.3m has been budgeted for the direct and full mitigation of the bedroom tax. This funding has supported individuals directly, and allowed them to meet their rent payments, preventing a build-up of rent arrears which would have had a negative impact on landlords as well as the households affected. Given the demand-led nature of the support, the Scottish Government sets its budget each year in line with projections provided by the Scottish Fiscal Commission, with a reconciliation process after the year-end once final figures are provided by local authorities. By the end of the current financial year (2019/20) the Scottish Government will have spent over £366m on DHPs since 2013/14.

In addition to bedroom tax mitigation, DHPs are also available to support those affected by other aspects of welfare reform, largely the benefit cap and LHA rates in the private rented sector. Since 2017/18 the annual budget for Other DHPs in 2019/20 is £10.9m. This includes £8.1 million of funding to local authorities to provide support to benefit capped families. There is a risk that the unfreezing of benefits will place additional pressures on this mitigation funding, as more families become subject to the cap and seek support through Discretionary Housing Payments.

In addition to the £10.9m, the Scottish Government is currently developing plans to provide additional DHP funding to support care experienced young people with their housing costs. Further announcements will be made, and funding will be available from April 2020.

Scottish Choices

The Scottish Government is using its powers over UC payment arrangements to give people in Scotland more choice about how they manage their household budget by making UC more flexible. The UC Scottish choices provide people with the option to receive their UC award twice monthly and have the housing costs in their award paid direct to their landlord in both the private and social rented sector. The UC Scottish choices were made available from 4 October 2017 to people making a new claim in full service areas and this was extended to everyone receiving UC in full service areas from 31 January 2018.

Twice monthly payments can help people on a tight budget to better manage their finances and direct payment of housing costs to landlords should help prevent or reduce rent arrears and eviction proceedings, which will ultimately safeguard tenancies. However these changes do not increase the level of award or address all of the concerns with UC, which are outwith the Scottish Government's current powers. The take-up rate of the UC Scottish choices remains high with around 46% of people taking up one or both choices when they are offered.^[20]

The Scottish Government is also committed to delivering split payments of the Universal Credit award in Scotland, to give everyone access to an independent income and to promote equality in the welfare system. The Scottish Government and the DWP are working together to assess the feasibility of different options for delivering split payments. We are making good progress and the Scottish Government will make an announcement in due course.