Challenging discretionary housing payments by way of judicial review

Desmond Rutledge looks at the role discretionary housing payments (DHPs) have assumed in the wake of the Government’s welfare reform programme and examines the scope for challenging DHP decisions.

The changing role of discretionary housing payments

The discretionary housing payments (‘DHP’) scheme was established in 2001 under sections 69-70 of the Child Support, Pensions and Social Security Act 2000 to enable local authorities to provide further financial assistance to claimants in receipt of housing benefit who required additional help with their housing costs due to a shortfall in the rent due and the amount of housing benefit they receive.  Historically, DHPs have provided short term help to allow applicants extra time to consider their housing options and take reasonable steps to resolve their situation. 

When the Coalition Government came to power in 2010, it introduced a radical welfare reform scheme designed to control the cost of the social security budget.  A series of measures have been introduced which has reduced the amount of housing benefit paid to tenants, including:

▪      the maximum size dwelling for Local Housing Allowance (LHA) was reduced from 5 to 4 bedrooms and the amounted of LHA was capped (April 2011);

▪      restriction of general LHA rates to the 30th percentile rather than the median (April 2011);

▪      above inflation increases in non-dependant deductions (2011 to 2014);

▪      the extension of the shared room LHA rate for single people  from 25 to under 35 years of age (Jan 2012);

▪      the introduction of the size criteria for the social sector (also known as  the spare room subsidy, the under occupation charge and the ‘bedroom tax’) (April 2013); and

▪      the overall household benefit cap (July-September 2013).

Consequently, those currently claiming DHPs include: (i) private housing tenants facing re-possession on grounds of rent arrears due to reductions in the LHA rates; (ii) social housing tenants facing re-possession on grounds of rent arrears due to the bedroom tax or the benefit cap; and (iii) those in temporary accommodation (which is subject to the benefit cap) awaiting an offer of affordable housing from their local authority.  DHP funding has increased dramatically as a result; from £20m in 2010-11 to £165m in 2014/15.

Despite these increases in DHP funding the policy aim remains the same – that DHPs are available to assist claimants on a temporary basis through a “transitional period” whilst the Welfare Reforms are being introduced.  But the same cannot be said about the role given to DHPs for those affected by the ‘bedroom tax’.  Throughout the development of this policy, it has been apparent that: (i) there is a lack of available suitable homes in the social sector for ‘under-occupying’ claimants to downsize into; (ii) two thirds of those hit by ‘bedroom tax’ are disabled; and (iii) a strong case could be made for exempting disabled claimants where significant adaptations had been made to their properties and it was not reasonable to expect them to move.  Despite all of these problems, the Government’s view is that DHPs are the most appropriate means of mitigating any hardship disabled claimants might experience due to the policy.  This is apparent from the following:

(1) The Written Ministerial Statement made on 12 March 2013, in which the Secretary of State said that he was issuing guidance to local authorities emphasising that DHPs remained available for other priority groups “including the needs of people whose homes have had significant disability adaptations and those with long-term medical conditions that create difficulties in sharing a bedroom“. He added that he would continue to closely monitor and adjust the implementation of the policy “to ensure that the needs of these groups are effectively addressed in the longer term“.  This sentiment was repeated in HC Circular A10/2014, where after referring to the significant increase in the Government’s contribution towards DHPs in order to help local authorities support people affected by some of the ‘key welfare reforms’ it states that: “This will give local authorities the confidence to make long term awards to support those with ongoing needs”.

(2) The DHP Guidance Manual (April 2014) at Section 2 of the Good Practice Guide advised that for those affected by the removal of the spare room subsidy:

2.4 The Government has committed additional funding to the DHP fund to continue to support disabled people living in significantly adapted accommodation, including any adaptations made for disabled children.

2.5 For claimants living in specially adapted accommodation, it will sometimes be more cost-effective for them to remain in their current accommodation rather than moving them into smaller accommodation which needs to be adapted. We therefore recommend that local authorities identify people who fall into this group and invite an application for DHP.”

On the issue of the length of time over which a payment can be made, the DHP Guidance Manual at paragraph 5.3 states:

“ … if you were to award a DHP to a disabled claimant who lives in significantly adapted accommodation in the social rented sector but who is subject to the removal of the spare room subsidy, you should consider making the DHP on a longer-term basis, including an indefinite award subject to a relevant change in their circumstances. DHPs should also be considered on a longer term basis for claimants who have a medical condition that makes it difficult to share a bedroom. Long term awards could also be made in cases where a disabled child who would normally be expected to share a bedroom under size criteria rules requires a separate room, and provides evidence that this is the case but does not meet the HB criterion of being in receipt of the Middle and Higher rates of DLA Care.”

(3) The judgement in R (MA & Ors) v SSWP [2014] EWCA Civ 13, where the Secretary of State told the Court of Appeal that any discrimination under Article 14 of ECHR that disabled claimants may be subject to by the operation of the bedroom criteria was objectively justified given the availability of DHPs to provide assistance in hard cases:

“ … the Secretary of State has explained in detail his reasons for structuring the scheme in the way that he has. In particular, he has explained why he has decided to provide for the disability-related needs of some disabled persons for additional accommodation by means of the 2012 Regulations (as amended) and the needs of other disabled persons by means of DHPs.  In combination, his reasons are far from irrational. Central to his thinking is the idea that there are certain groups of persons whose needs for assistance with payment of their rent are better dealt with by DHPs than HB.  …”  (At para [82]).

DHPs have therefore, in effect, become the new welfare safety net for those disabled claimants affected by the bedroom tax/spare room subsidy policy.  How DHPs are being administered by local authorities has been the subject of a number of stories in the media, particularly when it emerged that some local authorities had not spent all of the DHP money allocated by central government: see The £155m hardship fund that local councils fail to spend – Guardian, 13 March 2014; New chapter in ‘bedroom tax’ saga – now councils run out of emergency funds to help worst cases – Independent. 5 April 2014; and Councils fail to spend almost half of crisis funds – Inside Housing 22 April 2014.  Against this background the question arises – what legal remedies are available to those who wish to challenge a local authority’s decision on a DHP claim?

The DHP framework and guidance on priority groups

The legislation governing DHPs does not confer an entitlement to a payment.  It leaves it to local authorities to decide whether someone requires further assistance having regard to the applicant’s financial circumstances and any other relevant factors on a case by case basis (Child Support, Pensions and Social Security Act 2000, s.69  and the Discretionary Financial Assistance Regulations 2001 (SI 2001/1167).  The statutory framework for DHPs is brief but sufficiently broad to enable an authority to develop its own approach.  The legislation makes provision for: when someone is eligible for a DHP and how much and for how long a DHP payment can be made (reg 2); when a DHP can and cannot be made (reg 3); the form and manner an authority can receive claims for DHP (reg 6); the provision of information by a person claiming DHPs (reg 7); when an authority can cancel further DHPs; and the circumstances in which it can recover DHPs already made (reg 8).  DHP decisions do not carry a right of appeal but there is provision for an internal review.  If the decision to refuse a DHP is upheld on review then the only legal remedy available to the claimant is by way of judicial review.

The DWP has issued guidance to local authorities which contain advice and recommendations on all of these issues: see Discretionary Housing Payments Guidance Manual – Including Local Authority Good Practice Guide (April 2014).   In addition to the guidance issued by the DWP, each local authority will have its own local DHP policy, which will normally be available on the authority’s website – for example, Bristol CC, Corby BC, Derby CC, Hackney BC, Wandsworth BC and Westminster CC.

The DHP refers to groups of people that the local authority may wish to give priority to when awarding DHPs (para 6.15).  These include:

  • families with children at a critical point in their education;
  • young people leaving local authority care;
  • families with kinship care arrangements;
  • families with a child temporarily in care but who is expected to return home;
  • families with a social services intervention;
  • families with a disabled child not in receipt of upper or middle rate DLA but whose condition makes sharing a room difficult;
  • people who have had to flee domestic violence or have moved because of the threat of violence in another area;
  • ex-homeless people being supported to settle in the community;
  • people with health or medical problems who need access to local medical services or support that might not be available elsewhere;
  • people with disabilities who receive informal care and support in their current neighbourhood from family and friends which would not be available in a new area. In this respect you may also consider families who have a child with a disability who rely heavily on local support networks;
  • the elderly or frail who have lived in the area for a long time and would find it difficult to establish support networks in a new area;
  • people who need to live near their jobs because they work unsocial hours or split shifts; or where moving home may mean living in an area where public transport would be inadequate to enable them to sustain their current job.

DHP discretionary decisions and public law principles

A local authority administering DHPs has to act in accordance with public law principles.  This means that it must follow the law, not do things they do not have legal authority to do, act reasonably and follow fair procedures.  It must also comply with the Human Rights Act 1998, with the rights conferred on EEA migrants by European Union law and comply with the Equality Act 2010.

Judicial review is the process by which the High Court reviews the lawfulness of a decision or action made by a public body.  The courts have developed a number of principles which identify when a decision based on the exercise of a discretion by a public body is unlawful as a matter of public law.  These include: –

Public law challenges by way of judicial review come within paragraph 19(1) of Part 1 of Schedule 1 to the Legal Aid, Sentencing and Punishment of Offenders Act 2012 and public funding is therefore available under the category of Public Law.  If the claimant’s home will be under the threat of possession for rent arrears without an award of DHPs, then the judicial review challenge could be covered by the Housing category: see  Standard Civil Contract 2013, Category Definitions paras 6 and 13.

Potential DHP challenges

The public law principles can be used to help identify whether a DHP decision is open to challenge by way of judicial review.  These may arise out of a decision in an individual claim or be in relation to a policy which affects a class of individuals.  Some of the challenges that may be available are considered below:

(i)        A refusal of a DHP award may be susceptible to challenge if, for example, the local authority bases its decision on a precondition in its policy and refuses to consider whether the circumstances of the individual case merit departure from that policy.  Where the person making the claim comes within one of the priority groups identified in the DHP Guidance Manual, then a challenge may be possible on the basis that the authority has failed to take a relevant circumstance into account or it has failed to have regard to its own policy without good reason.

(ii)       A local authority may refuse to entertain a claim for DHP made towards the end of the financial year on the basis that it has already fully allocated its DHP budget and hence ‘cannot’ make a payment.  But the DHP scheme is only partially funded by central government and a local authority has the power to make payments from its own funds up to an overall limit (which is set at 2.5 the amount allocated by central government: the Discretionary Housing Payment (Grants) Order 2001 (SI 2001/2340), reg 7).  Accordingly, if a local authority has a policy of not spending money on DHPs, over and above that which has been allocated by central government, this would be susceptible to challenge on the basis that the authority has unlawfully fettered its discretion.

(iii)      Most local authorities have a policy of only awarding DHPs for fixed periods of several months at a time and of never making an indefinite award.  But this is at odds with the advice given to local authorities by the DWP  – that  in respect of people with disabilities who need, or have had, significant adaptations made to their property, payments can be made for an indefinite period until the claimant’s circumstances change (DHP Manual, para 5.2).  It is therefore arguable that a policy of never making an indefinite award can be challenged on the basis of fettering a discretion and/or failure to promote the objective of the DHP scheme.

(iv)      Many local authorities have a policy which treats income from a claimant’s disability benefits as providing them with sufficient income to make up any shortfall in their housing costs.  This would appear to undermine what the DWP told the Court of Appeal in MA & Ors – that DHPs provide the most effective means of mitigating the effects of the spare room subsidy on disabled claimants who cannot be expected to move.  This was accepted by the Court as the principle reason for holding that the application of the bedroom criteria did not breach the human rights of disabled persons adversely affected by the policy.  According to reports, a disabled couple has been granted permission to judicially review Sandwell Council’s policy of including DLA as income when determining a disabled person’s application for DHPs.

(v)       Some local authorities have adopted a policy of imposing conditions on those affected by the benefit cap who claim DHPs, such as requiring them to show engagement with work programmes or taking highly specific steps to find alternative accommodation.  It is arguable that imposing such ‘conditionality’ on the payment of DHP exceeds the powers granted to local authorities under the DHP legislation, where the only express provision for imposing a condition is the requirement to provide information (see Child Support, Pensions and Social Security Act 2000, s.69(2)(f), and the Discretionary Financial Assistance Regulations 2001 (SI 2001/1167), reg 7).  Hence, the policy would be challengeable on the basis that it is ultra vires.  It is understood that a challenge is currently being pursued against Westminster Council on this basis.

(vi)      A failure to publicise the existence of DHPs may be unlawful (DHP Good Practice Guide para 4.5), especially if this puts a disabled person at a substantial disadvantage as this may represent a failure to make reasonable adjustments and thus fall foul of sections 20 and 149 of the Equality Act 2010.

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