Guidance

Section 10: Administration costs

Published 21 April 2021

Introduction

1400. Authorities were notified of their DWP HB administration subsidy allocation before the start of the relevant year. The overall DWP HB administration subsidy is cash-limited and there is no provision for any adjustment to be made to individual LA allocations. The DWP HB administration subsidy distribution for the relevant year are shown at Appendix D and Appendix E.

1401-1409

Details of the DWP administration subsidy distribution in the relevant year

1410. For 2020 to 2021 the total distributed amount of administration subsidy for HB is £195.39 million (rounded). Appendix D shows the individual allocations for each LA in England, Scotland and Wales.

1411. This funding is calculated by deducting the Universal Credit reduction to the 2020 to 2021 HB administration subsidy, which is consistent with DWP’s baseline funding.

1412. For 2020 to 2021 no departmental efficiency reduction was applied.

Universal Credit roll out

1413. The 2020 to 2021 HB administration subsidy funding takes into account the estimated volume of HB claimants moving to Universal Credit. Universal Credit reductions of -£0.724 million have been applied to the total amount of the 2020 to 2021 HB administration subsidy for Great Britain. This is in addition to the -£26.979 million deducted from the baseline in 2019 to 2020 which was a cumulative Universal Credit reduction value up to, and including, 2019 to 2020.

1414. Universal Credit reductions are profiled across a number of financial years. The 2020 to 2021 Universal Credit reductions continue to reflect current polices.

Distribution methodology

1415. This funding is a contribution to the cost of administering HB. DWP, in consultation with the LA Funding Group (which consists of LA Chief Finance Officers and LAA representatives), decided to change the methodology for allocating HB administration subsidy from 2019 to 2020.

1416. The 3-year methodology, which commenced in 2019 to 2020, uses HB caseload data as at May 2019 and Universal Credit housing element caseload volumes. This combined total is used to determine the proportion of core HB administration subsidy allocated to each LA, irrespective of where the LA was on the Universal Credit rollout schedule.

1417. The Universal Credit reductions were calculated based on the amount of HB Working Age caseload moving to Universal Credit. SHBE (Single Housing Benefit Extract) data and Universal Credit data was used to determine the expected change in workloads due to Universal Credit in 2020 to 2021.

1418. The second year of the 3-year allocation methodology was applied to distribute the 2020 to 2021 HB administration subsidy to LAs. Furthermore, the transitional arrangements for 2020 to 2021 is the second and final year these are applied. This is to prevent LAs experiencing a large change in their allocation relative to the previous 2018 to 2019 methodology.

1419. Allocations are rounded to the nearest pound.

Details of the DWP additional administration subsidy distribution in the relevant year

1420. For 2020 to 2021, the Government provided £20.175 million of additional administration subsidy. This funding is in addition to the 2020-21 HB administration subsidy funding announced in HB Subsidy Circular S1/2020. Appendix E shows the additional individual allocations for each LA in England, Scotland and Wales.

1421. This additional HB administration subsidy is a one off funding payment to reflect additional work LAs undertook in maintaining their HB services during the COVID-19 pandemic in 2020 to 2021. Further, it also acknowledges the impact the pandemic has had on the cost of HB service delivery throughout this period.

1422. DWP developed an allocation methodology to reflect the varying COVID-19 related impacts and costs across LAs. DWP consulted with LAAs and LA representatives on the allocation methodology.

1423. The allocation methodology takes into account the:

• Working Age HB caseload in February 2020, pre-pandemic, weighting for the relative size of an LA’s HB caseload
• relative uptake in Universal Credit housing element between August 2019 and August 2020, a proxy indicator for how the local labour market has been affected by the COVID-19 pandemic, accounting for changing levels in unemployment
• Indices of Multiple Deprivation (IMD), correlating with how an area has been adversely affected during the COVID-19 pandemic by providing a proxy indication of poverty, by area, in the UK. This takes into account income, employment, education, health, crime, barriers to housing services and living environment

1424. This additional, one off funding, will not form part of future baselines.

1425. Allocations are rounded to the nearest pound.

1426. This additional DWP HB administration subsidy for 2020-21 was a one off payment paid in March 2021 and announced in HB Subsidy Circular S1/2021.

1427-1429

Payments of subsidy

1430. Payments of HB administration subsidy were made in 12 monthly instalments beginning in April 2020. The overall subsidy available to support HB administration costs is cash-limited and so there is no provision for any adjustments to be made to individual LA allocations.

1431-1439

Queries

1440. If you have any queries concerning the content of this section, contact:

Local Authority Partnership, Engagement and Delivery division

Email: [email protected]