Cuts to councils temporary housing funding

  • Under the new universal credit system, local authorities could lose their funding.

    Research has suggested that cuts to the funding of council-owned temporary accommodation which will cost local authorities across the UK millions of pounds. /images/houserise.jpg

    At the moment councils use their own housing stock as temporary housing and pay for the accommodation themselves. They can later claim the money back from the Department for Work and Pensions through a rent ‘rebate' system, reports Inside Housing.

    A circular released by the DWP on Monday has revealed that under universal credit, the amount of rebate councils will be able to claim will be restricted to the rate of local housing allowance, with an extra £45 per week. This is similar to temporary accommodation owned by private providers and housing associations, which is already limited to similar restrictions. Councils argue that this doesn't take into account furnishing and maintenance costs.

    These new rules will affect the whole of Britain, however Scotland will see the greatest impact as they have a larger proportion of temporary accommodation owned by councils there.

    This change is expected to come into effect as universal credit is rolled out by 2017 and means that £49.1m of this bill will be funded by the DWP, which leads to a £25.6m shortfall for these 23 councils.

    Jim Hayton, policy manager at Scotland's Association of Local Authority Chief Housing Officers, said the change meant councils would have to make ‘difficult choices'.

    A DWP spokesperson said councils have known for ‘a long time' about the changes, adding it has ‘been supporting them'.

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