Revealed: Devastating impact of 'bedroom tax' sees huge leap in demand for emergency hardship handouts for tenants

Exclusive: Demand for emergency handouts increases by 338 per cent

The extent of the suffering inflicted by the “bedroom tax” can be revealed for the first time today as figures show a 338 per cent leap in the number of people applying for emergency handouts in the month since it was imposed.

In April, more than 25,000 people resorted to applying for discretionary housing payments (DHP) to help cover their rent, according to an analysis of 51 councils by The Independent. There were only 5,700 such claimants in the same month last year.

Demand on the emergency fund – which is intended to provide short-term help to housing benefit claimants who are unable to pay their rent – is now so great that people who would previously have been given help may receive reduced handouts. Some applicants have already had their claims refused altogether.

Although the Government has increased its emergency housing support fund, which it divides between councils, from £60m in 2012-13 to £155m this year, local authorities say this is not nearly enough to help everyone hit by the cut to the spare room subsidy – known as the bedroom tax.

The Department for Work and Pensions said it was “monitoring” the situation and did not take concerns about the surge in claims lightly.

In some areas, the influx of people seeking help has been so great councils are hiring extra staff to cope with applications and advise tenants. In Birmingham, which saw the number of DHP claimants jump from 496 in April last year to 2,601 last month, the city council reported that many of those hit by the welfare reforms were turning to “last-resort services” such as food banks.

“It’s a situation like the 1930s here in Birmingham,” said Councillor John Cotton, cabinet member for equalities. “We are a city that has a hill to climb in terms of deprivation. With the impact of changes like this, the hill just got even steeper. It’s putting more and more pressure on vulnerable communities.”  

In Glasgow, which saw the highest number of claimants of any council in the country, 5,501 people sought emergency help last month in the form of a DHP payment, while neighbouring North Lanarkshire has seen the number of claimants rise from just 37 over four months last year to 1,451 this April alone.

Under the welfare reforms, around 660,000 people have had an average of £14 cut from their housing benefit. Fourteen per cent of a person’s housing benefit is removed for having one spare bedroom and 25 per cent for having two or more spare.

The impact of the reform, and other reductions to people’s benefit payments introduced in April, has been felt nationwide.

Every council The Independent spoke to had seen an increase in the number of people seeking emergency help, ranging from 16 extra claimants in rural Bracknell Forest, to 4,064 more needing help in Glasgow.

A spokesman for North Lanarkshire Council said: “We wrote to tenants that would be affected [by the bedroom tax], telling them they could get support, but there’s a huge shortfall. We’ve given out only 74 payments so far – some are still being processed and some have had to be turned away. The money’s not there. Every case will be decided on its merits. It’s causing us huge concerns locally.”

Councils reported massive shortfalls in their emergency housing grants. Birmingham City Council believes it will have to support residents hit by a total cut of £11.5m to their annual benefits because of the bedroom tax, but only has a DHP fund of £3.7m.  Portsmouth only has a DHP fund of £475,000, but has to cope with a bedroom tax shortfall of £1.5m.

In Glasgow, where thousands marched to protest against the introduction of the bedroom tax earlier this month, Councillor Matt Kerr, executive member for social care, compared the Government’s DHP fund to “putting a sticking plaster on a weeping wound and hoping everything’s going to get better.”

Stuart Macdonald, editor of Inside Housing magazine, said: “The rise in DHP applications shows that many people affected by the bedroom tax are already struggling to cover their housing costs. It also raises questions about whether the £150 million DHP pot will be in anyway sufficient to cope with demand, particularly as the £26,000-a-year benefit cap has not even kicked in yet.”

The findings of The Independent’s investigation come as it emerged that a large number of social housing tenants have simply failed to pay the extra rent required.

In some parts of the country around half of those affected have not paid the amount previously covered by their benefit cheque and housing associations have warned of a growing threat to their income streams.

Julia Unwin, chief executive of the anti-poverty think tank the Joseph Rowntree Foundation said: “Despite paying below market rents, 43 per cent of social tenants are living in poverty after their housing costs have been paid. The bedroom tax heaps further rent increases on families and only adds to their hardship. Making up the shortfalls will be beyond most, with working hours under pressure, the cost of essentials rising fast and benefits falling behind inflation.”

A spokesman for the Department of Work and Pensions (DWP) attributed the rise in the number of emergency housing support claimants to better publicity about the DHP on the part of councils. – the same explanation that the Department offered for the increased number of people using the food bank network.

“Because the spare room subsidy came in in April, you will see a peak of people applying,” the spokesman said “Whether the peak continues this year is a different matter. Councils have let people know this is available so more people will have applied and there’s more money in the pot as well. It’s too early to draw a solid conclusion from what’s happening. It’s something we are monitoring and not something we take lightly.”

Additional reporting by Adam Barr

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