Source · Select Committees · Public Accounts Committee
Recommendation 6
6
Rejected
Implement solutions to reduce housing benefit subsidy loss experienced by local authorities.
Conclusion
Some local authorities face increasing gaps in their budgets because of the way DWP Housing Benefit regulations work. Local authorities pay housing benefit directly to providers and ‘subsidy loss’ is the gap between how much rent a housing provider charges to a local authority and how much of it the local authority can claim back from DWP under Housing Benefit rules. In some cases, local authorities cannot claim the full amount of rent back and must cover the remaining costs from their own budgets. Subsidy loss varies across different local authorities, but overall, the problem is increasing, while local authorities already face financial pressures. Local authorities in England experienced a subsidy loss of £108 million (cash terms) in 2021–22 compared with £53.8 million in 2017–18. Successful bids from local authorities for the Supported Housing Improvement Programme have included work to reduce subsidy loss in local areas. DWP says that local authorities can reduce subsidy loss by more scrutiny of Housing Benefit claims, but this alone is very unlikely to bridge the gap in funding that local authorities are experiencing. The Supported Housing (Regulatory Oversight) Act 2023 does not have any measures to deal with subsidy loss, so we are pleased that DWP has told us it will look at other solutions. Recommendation 6: As part of the consultation with local authorities on the Supported Housing (Regulatory Oversight) Act 2023, DWP should consider how to reduce subsidy loss, and then implement solutions. 8 Supported housing 1 Challenges in supported housing
Government Response Summary
The government explicitly disagrees with including subsidy loss in the Supported Housing Act consultation because it is outside the Act's scope, though they expect stakeholders to raise the issue and will monitor contributing factors.
Government Response
Rejected
HM Government
Rejected
The government disagrees with the Committee’s recommendation. DWP agrees that it should consider feedback from LAs on subsidy loss. As subsidy is not part of the scope of the Act there is no plan to ask an explicit question as part of the consultation, but DWP fully expect that some stakeholders will raise this issue in their responses, and it has previously received representations from LAs on this issue. This is a complex area with a range of contributing factors many of which are not within DWP's control. DWP anticipate the Act may address some of the contributing factors and this will be monitored closely as part of the department’s continual review. The Housing Benefit subsidy rules and how these are administered are reflected in the Income-related Benefits (Subsidy to Authorities) Order 1998.