Housing Benefit exceptional hardship payments: the use of discretionary powers
A hard copy of this report summary can be obtained by contacting Paul Noakes [E-Mail: Paul.Noakes@dwp.gsi.gov.uk] or by writing to him at the 'Social Research Division, Department for Work and Pensions, 4th Floor, Adelphi, 1-11 John Adam Street, London WC2N 6HT'.
Research Report No. 91
By Roy Sainsbury
Local authorities have a range of discretionary powers which can be used in the administration of Housing Benefit. These include the power to make exceptional hardship payments to claimants whose Housing Benefit is less than their rent because of regulations introduced since 1996. These regulations incorporated the local reference rent and the single room rent into Housing Benefit calculations. This study evaluates local authorities use of exceptional hardship payments. Findings are based on telephone interviews with Housing Benefit managers. The Social Policy Research Unit at the University of York carried out the research.
The main findings are:
- Nearly a third of the authorities in the survey (90) spent less than ten per cent of their government allocation in 1997/98. A small number of authorities reported spending nothing.
- Most local authorities had to deal with very few applications for exceptional hardship payments in 1997/98. One in four authorities had less than one application per month; a few authorities reported receiving no applications at all in the year.
- The most common reasons for applying for a payment included inability to afford their rent, existence of a medical condition, inability to pay bills, need extra room for children to stay and need to escape domestic violence.
- Local authorities had a range of approaches for dealing with applications. Some used DSS guidance, others developed their own guidance based on their own policies, while others used their own policies alongside DSS guidance. Some instead judged applications on a case-by-case basis.
- Overall, the success rate for applications was 43 per cent. The mean number of payments in these authorities in 1997/98 was 38 within a range of between one and 664. One in five authorities were making some relatively high weekly payments, in excess of £50, and a small number had made payments of over £100 per week. However, almost all authorities reported “average” weekly payments of £30 or less.
- People whose circumstances are related in some way to their health (disabled people, those with mental health problems, or pregnant women) are the most successful types of claimant. However, the most numerous beneficiaries of exceptional hardship payments were lone parents.
Introduction
Local authorities have a range of discretionary powers which can be used in the administration of Housing Benefit. This study evaluates authorities’ use of discretionary powers in making exceptional hardship payments to claimants whose Housing Benefit does not cover the cost of their rent (under regulations in force since January 1996). The main objective of the research was to investigate how the system of exceptional hardship payments is operated by local authorities and, in particular, why expenditure has varied so significantly between authorities and, overall, has been lower than expected.
The research methods comprised visits to 18 local authorities during which face-to-face interviews were conducted with Housing Benefit managers and assessment staff, and a telephone survey of Housing Benefit managers in all authorities in Great Britain. Successful interviews were conducted in 305 local authorities, a response rate of 75 per cent.
Expenditure on exceptional hardship payments
Each local authority has an allocation of funds from central government for spending on exceptional hardship payments. An authority is also allowed to spend above this amount up to a ceiling, the ‘permitted total’.
In the first full year of the exceptional hardship payment scheme (1996/97) local authorities spent 27 per cent of the government allocation of £18.25 million. The results from the survey suggest that expenditure increased to around 48 per cent of the government allocation in 1997/98. The government funding for exceptional hardship payments was, therefore, still under-spent to a considerable degree, and overall expenditure was well below the aggregate ‘permitted total’ of £42 million for all authorities.
Nearly a third of the authorities in the survey (90) spent less than ten per cent of their government allocation in 1997/98. A small number of authorities (18) reported spending nothing. All the authorities reporting expenditure in excess of their government allocation, including the two highest spenders who had spent over twice the allocation, were still within their permitted totals.
Two out of three Housing Benefit managers thought that their allocation was ‘about right’, the most common reason being that it was expected that demand for exceptional hardship payments would increase in future.
Applications for exceptional hardship payments
Most local authorities had to deal with very few applications for exceptional hardship payments in 1997/98. One in four authorities had fewer than one application per month; eight authorities reported receiving no applications at all in the year. Application rates tended to be highest in the London Boroughs and Metropolitan authorities which have larger Housing Benefit caseloads than most other authorities.
The research findings suggest that applications are increasing but are still at a low level. From the data on Rent Officer restrictions, there is seemingly a very large pool of potential applicants whose rent is not met in full by their Housing Benefit.
There is some evidence from the survey that publicising the availability of exceptional hardship payments in a range of different ways, rather than relying solely on decision letters, could increase applications. Many authorities were using combinations of sometimes innovative methods to inform claimants about exceptional hardship payments.
Why claimants apply for exceptional hardship payments and how local authorities make decisions
Local authorities can make an exceptional hardship payment in any case where it judges that the claimant or members of their family would suffer exceptional hardship if the shortfall between the claimant’s Housing Benefit and their rent is not met. There is no statutory definition of ‘exceptional hardship’ but the DSS has issued guidance to local authorities in a circular (HB/CTB A7/96). The guidance says that ‘exceptional hardship’ is not defined by law but that the phrase should be construed in accordance with its normal everyday meaning and usage.
The most common reasons put forward by claimants in their applications were:
- inability to afford rent
- existence of a medical condition, illness or disability
- inability to pay bills
- being under 25 years old (and therefore being subject to the ‘single room rate’)
- need for room for children to stay
- pregnancy
- inability to pay for food
- need to get away from domestic violence.
Most claimants included a number of reasons in their applications rather than a single one.
Many authorities have developed their own approaches to deciding claims, reflected in written policy documents, guidance to assessment staff, application forms, and publicity materials. Some authorities relied mainly on the DSS guidance. Others reported in the survey that they used neither the official guidance nor their own policy. Accordingly, local authorities’ approaches to decision making could be characterised in the following ways:
- the ‘comprehensive’ approach, using both DSS and own guidance (adopted by 50 per cent of authorities)
- the ‘independent’ approach, principally using own polices (19 per cent)
- the ‘DSS-based’ approach, principally using the official guidance (23 per cent)
- the ‘case-based’ approach, using neither form of guidance (nine per cent).
Using this typology the findings from the survey included the following:
- Scottish authorities rely on DSS guidance the most; London Boroughs and Welsh authorities the least
- the independent approach is used most in London
- more metropolitan authorities adopt the comprehensive approach than other authorities.
The scope and content of the documentation used by local authorities in deciding applications varied enormously. Particularly striking was the number of authorities who require applicants to complete detailed expenditure forms as part of their application. Some authorities had devised scoring systems for assessing applications.
Housing Benefit claimants can ask a local authority to supply them with a “pre-tenancy determination” giving an indication of the likely amount of benefit they would receive if they took on a particular tenancy. The large majority of authorities take pre-tenancy determinations into account when deciding applications for exceptional hardship payments, although the existence of a determination would not be a sufficient reason to reject an application.
Outcomes of applications for exceptional hardship payments
Of the 305 local authorities in the survey, 288 authorities supplied figures for the number of exceptional hardship payments awarded in 1997/98. Of these, 248 were also able to supply figures for the number of unsuccessful applications. Aggregating the responses from these latter authorities shows that about 9,500 exceptional hardship payments were made from around 22,000 applications, an overall success rate of 43 per cent. The mean number of payments in these authorities in 1997/98 was 38 within a range of between one and 664.
One in five authorities were making some relatively high weekly payments, in excess of £50, and a small number had made payments of over £100 per week. However, almost all authorities reported “average” weekly payments of £30 or less. Exceptional hardship payment cases then tended to fall into one of two types: cases where the nature of the exceptional hardship was considered temporary, which would be removed when the claimant found more suitable accommodation; and cases where the nature of the exceptional hardship was considered permanent and which could not be alleviated by a move to other accommodation.
The survey data suggest that people whose circumstances are related in some way to their health (disabled people, those with mental health problems, or pregnant women) are the most successful types of claimant. However, the most numerous beneficiaries of exceptional hardship payments were lone parents. Applications from pensioners were seemingly low compared with the large number of pensioners in the population.
Wide variations between local authorities were also apparent in the range of exceptional hardship payments made and the average amounts paid to individual claimants. In some authorities apparently large weekly payments and large aggregate amounts were the norm rather than the exception.
Relatively few unsuccessful applicants pursued their cases to appeal (or internal review in the first instance). The success rate of about one in four is in line with success rates for other means-tested benefits.
Administering the scheme
Just under a half of the authorities in the survey had experienced some difficulties in the administration of exceptional hardship payments and a small number (eight authorities) reported that they had had ‘serious problems’. The most common difficulties were:
- lack of guidance on what constitutes ‘exceptional hardship’ (mentioned by 51 local authorities)
- computer problems, including setting up systems and with software (43)
- ensuring staff were sufficiently trained and equipped (22)
- length of time needed to investigate applications (20)
- keeping track of cases and expenditure (18)
- amount of work involved gathering information (17).
There was no consistent pattern in the types of difficulties reported by the eight local authorities with serious problems. Only one of the eight said that they had had computer-related problems.
Exceptional hardship payments - summary and discussion
Variations between local authorities in the ways they administer aspects of Housing Benefit policy are the norm rather than the exception. It is not surprising, therefore, to find wide variations in authorities’ administration of the exceptional hardship payment scheme.
On the basis of this research, it is fair to infer that applicants for exceptional hardship payments, and potential applicants, receive very different treatment in different local authority areas. Local variations in rent levels, the number and amounts of rent restrictions, and the demographic characteristics of the claimant population will all contribute to differences in application rates, success rates and value of exceptional hardship payments. However, these variations cannot explain why some authorities have zero application rates and zero success rates while other authorities attract hundreds of applications, and some have 100 per cent success rates.
There is some, though not conclusive, evidence from the study that the low level of applications and awards suggest that the guidance set out in Circular A7/96 could possibly be drawn too tightly. This means that local authorities are making decisions that exclude claimants who are suffering a degree of considerable hardship but not to the extent suggested in the guidance. The policy of exceptional hardship payments may, therefore, not be helping some of the people for whom it was intended.
The variations discovered in the documents supplied by local authorities in the course of the research suggest that there is a case for a ‘good practice’ guide. This could contain examples of high quality publicity materials, appropriate wording to be used in decision letters, application forms, and internal documents used in decision making.
The policy option of reducing the budget for exceptional hardship payments is always available. The research suggests that the demands on the budget are increasing and likely to continue increasing. Housing Benefit managers are also aware of this. Any proposed reduction in budgets is therefore likely to generate opposition from a large number of authorities.
“Views expressed in this report are not necessarily those of the Department or any other government department.”
Relevant publications
London Research Centre (1999) “Housing Benefit and the Private Rented Sector”. London: DETR