Region's councils braced for big housing bill as Covid-19 hits renters

Shropshire Council, Telford & Wrekin Council and Powys County Council each paid out more than £400,000 in Discretionary Housing Payments (DHP) in the year up to March, and their bills are likely to be significantly higher this year as the effects of the pandemic are felt in residents' wallets.

Experts have warned that more action will be needed to help struggling renters who have lost their livelihoods.

Department for Work and Pensions figures show Telford & Wrekin Council paid £486,100 in DHP to claimants in the year to March.

Meanwhile Shropshire Council paid £413,000 and Powys County Council paid £552,000 in DHP.

Of Telford & Wrekin's total, £308,000 went to helping people who were in difficulty because of reforms in the welfare system. The payments are given to people who qualify for Housing Benefit or the housing element of Universal Credit, and who are struggling with housing costs.

Karl Handscomb, senior economist at the Resolution Foundation think tank, said: “The current crisis has pushed three-quarters of a million employees out of work, increased the number of households impacted by the benefit cap, and seen more private renters falling into arrears.

"All of these factors will have in turn increased demand for Discretionary Housing Payments.

“The increased demand is likely to remain elevated while the crisis is still with us, highlighting both the need for the welcome additional housing support announced in March, and for more action to support renters struggling to pay for their homes.”

Telford & Wrekin Council's cabinet member for council finance and governance, Rae Evans, said that its council tax has fallen three per cent behind collection targets, with residents in the lower band A and B properties struggling the most to pay. The council predicts that its Council Tax Reduction Scheme for residents will cost it nearly £13m this year.

Unemployment support

Councillor Evans called on the Government to do more for people affected by changes to the welfare system, and said support is available locally for borough residents.

"We remain concerned that the reforms to the welfare system are affecting the most vulnerable of our residents, as council budgets are cut again and again and we as a council are forced to provide help, which the Government should be funding.

"The council has already taken action to help residents who are or may be facing unemployment in the coming months by providing tailored support through its Job Box service, which is available across the borough. We are particularly concerned about the young people of the borough.

"In addition we have increased our Hardship Fund, which people in need of one-off help can apply for directly from the council."

The Government sets DHP funding for local authorities each year, with councils having to dip into their own funds if demand exceeds their allocation.

Councils across England and Wales paid out £132 million in 2019-20 – but 24 authorities did not supply figures, meaning the total could be higher.

More than 40 per cent of councils had to spend more than the amount they got from the Government, including Telford & Wrekin.

Funding increase

Last year, Shropshire and Powys councils spent all of their allocation while Telford & Wrekin exceeded its allocation by one per cent, or £4,000.

Councillor Evans acknowledged that the council may well exceed its allocation again this year.

"We remain alert to this possibility. We are proud of our prudent financial management over the year, but the council is already facing significant financial pressures due to the actions which it had to take to support all of its residents during the early months of the pandemic, when the Government was slow to respond."

In May, the Government announced that funding for councils across England and Wales would increase by £40 million in 2020-21, to £179.5 million.

Telford and Wrekin Council is set to receive £618,000, an increase of 28 per cent, Shropshire Council £546,000, an increase of 32 per cent, and Powys County Council £585,000, an increase of six per cent.

A DWP spokesman said: “We have provided over £1 billion in Discretionary Housing Payment funding since 2011, enabling local authorities to support households that need additional help.

“Funding is allocated in consultation with local authority bodies based on local pressures and payments are intended as transitional while longer term solutions are found.

“In addition, this year we have increased Local Housing Allowance rates, including the Shared Accommodation element, benefiting over 1 million households by £600 a year on average.”