London boroughs have warned that the £40million cut in Discretionary Housing Payments (DHP) in 2022-23 risks undermining homelessness prevention work in the capital.
London councils said the funding was local authorities’ ‘main homelessness prevention tool’ and warned the cut comes at a time when boroughs are facing a ‘serious homelessness crisis’.
The government announced last week that councils in England and Wales will have £100m available in 2022-23 via DHPs, which is a marked drop from the £140m available in 2021 -22.
In London, DHP funding will be cut by 28%, from £38m to £26.7m.
DHP funding is available to anyone eligible for housing benefit or the housing element of Universal Credit who needs extra help.
Councils use the funding for things like paying a deposit on rent or making up for a shortfall between benefits and private rents.
The latest figures available show that in 2020 London boroughs issued DHP 32,338 to help households with their housing costs.
Meanwhile, government data shows that the number of Universal Credit claimants in London who do not receive enough help to cover their rent rose by 180% to 133,570 between August 2019 and 2021.
According to London Councils, between 2013 and 2021, local authorities in London spent an additional £17.6 million on DHPs on top of the money allocated to them by the government.
However, the body said budget pressures mean boroughs will struggle to keep DHP supply at the same levels after the latest government cuts.
It comes shortly after the Chancellor’s spring statement last week, which was criticized for not doing enough to support households struggling with runaway inflation.
London councils pointed out that while the Chancellor’s spring statement increased the household support fund from £500million to £1billion to help the most vulnerable residents meet their costs of daily subsistence, there were no measures targeted at the prevention of homelessness.
Muhammed Butt, Executive Member for Wellbeing, Empowerment and Inclusion of London Councils, said: “We are facing the worst homelessness crisis in the country and the boroughs are deeply concerned about the reduction in funding available for discretionary housing payments.
“These payments are the boroughs’ main homelessness prevention tool. They can be vital in helping low-income households pay their rent and keep a roof over their heads. With so many Londoners struggling to make ends meet, we worry what will happen if fewer discretionary housing payments become available.
A recent poll commissioned by the Mayor of London found that 80% of Londoners have seen their cost of living rise in the last six months, with 13% going without essentials or going into debt because they are struggling to make ends meet.
Mr Butt added: “We know the government shares our ambitions to tackle homelessness. Significant progress has been made in reducing homelessness, but we need the same focus and increased funding to prevent other forms of homelessness. A staggering number of Londoners are already living in temporary accommodation and we cannot afford these numbers to increase further.
A government spokesperson said: ‘This government is working across the country to help people meet their housing needs and is spending over £2billion to tackle homelessness and roughness in over the next three years.
“The change in the funding of discretionary housing payments also reflects the increase in Local Housing Benefit introduced at the start of the pandemic, which we are maintaining, and government spending on housing assistance remains higher than ‘before the pandemic.
In 2020 the government increased Local Housing Benefit to cover the cheapest third of rents in a local area, but the rate has since been frozen meaning Housing Benefit has not increased depending on inflation.