The Crisis and Resilience Fund has replaced Discretionary Housing Payments. What does that mean for housing and homelessness?

Why? Because DHPs were never meant to fully protect households from cuts and freezes to housing benefit. For a decade after their introduction in 2001, the annual DHP budget allocated to local authorities remained stable, at £20m.

During the 2010s, successive Conservative-led governments radically scaled up DHPs to mitigate some of the worst effects of cuts to housing benefit made as part of a major programme of welfare reform. This included the introduction of bedroom tax, the benefit cap and changes to Local Housing Allowance (LHA), a process some called “cut and devolve”.

Despite this sevenfold increase in the budget to plaster over major cuts to housing benefit, DHP spending represented only 6% of the total savings expected from those reforms over the same period.

“The poorest 5% of private tenants now spend almost two-thirds of their income on housing costs”

As a result of these cuts, over a million low-income households face gaps between the housing assistance they receive and their actual housing costs, leaving many at risk of financial hardship and homelessness.

In addition, rises in interest rates, a shortage of affordable housing and weak regulation have seen private rents soar over the last decade. The poorest 5% of private tenants now spend almost two-thirds of their income on housing costs.

Support for those struggling with housing costs has never been more important, but LHA, originally designed to cover rent for the cheapest third of properties in a local area, has failed to keep up with the real cost of renting due to successive freezes. LHA rates were reset in 2024 – the first increase in four years – and have since been frozen. They are expected to remain so until at least 2030.

This affordability crisis is contributing to, and exacerbating, a homelessness crisis. The number of households being placed in temporary accommodation has more than doubled since 2010, and we are seeing more reliance on some of the worst-quality and most expensive forms of temporary accommodation.

This puts unsustainable financial pressure on local authorities. Last financial year alone, local authorities spent £2.8bn on temporary accommodation, contributing to several local authorities issuing Section 114 notices, effectively declaring bankruptcy.

In its National Plan to End Homelessness, the government recognised that the “gap between housing costs and income has placed many individuals and families at risk of homelessness”, but included no actions to plug this gap.

At this critical juncture for DHPs, we explored their role over the last 10 years, drawing on interviews with DHP scheme managers as part of the Safety Nets project, and longitudinal surveys of English local authorities as part of the Homelessness Monitor study.

Local authorities closely guard DHP budgets, as they’re seen as playing an “invaluable”, “crucial” and “essential” role in mitigating the impacts of welfare reform and preventing – or at least delaying - homelessness. But it’s also clear that DHPs have significant limitations as a tool to assist low-income families.

First, limited budgets mean stretched local authorities are forced to choose which households to help in a context where demand radically outstrips supply, leading to concerns about access and the means of prioritisation used.

Second, the devolved and localised nature of DHPs means there is wide variation in the support available to households across England, raising questions about equity and fairness.

Third, and perhaps the core limitation of DHPs, is that they are ill equipped to tackle the systemic causes of households struggling to afford housing costs, which put them at risk of rent arrears, eviction and, ultimately, homelessness.

From the perspective of local authorities, there is insufficient affordable housing to meet need, private rents are high and increasing, and low-income households face shortfalls in support for housing due to the benefit cap, bedroom tax, and LHA caps and uprating policies.

“The surest way to help low-income households avoid homelessness is to restore an adequate social security safety that reliably covers people’s rent”

As one local authority participant in the South East put it: “One-off funding pots do little to prevent the root cause of homelessness. The government needs to upstream homelessness prevention and the DHP is of strategic importance in achieving this.”

So, while the Crisis and Resilience Fund includes some welcome changes, it is hard to see it as a game-changer in homelessness prevention and responses to housing precarity.

As the world reels from unpredictable conflict in the Middle East, a deepening cost of living crisis could put additional pressure on the fund which, unless Housing Payments are ringfenced, could eat into this vital source of support.

What is clear is that the Crisis and Resilience Fund cannot address the underlying gaps in the benefits system driving housing insecurity. The surest way to help low-income households avoid homelessness is to restore an adequate social security safety that reliably covers people’s rent.

Policies like the removal of the benefit cap and the relinking of LHA rates to actual rents are clear and effective means to reduce homelessness risk at the population level and address child poverty – explicit aims of the current government.

Until then, funds like the Crisis and Resilience Fund are, as one local authority respondent from the East Midlands put it, “a sticking plaster over a bullet hole [and] will not resolve the problem”.

Rhiannon Sims, research associate, Heriot-Watt University