Housing Benefit/Council Tax Benefit subsidy – FAQs

Q. How is Housing Benefit/Council Tax Benefit currently funded?

A. From April 2004 the DWP paid subsidy at the rate of 100 per cent to local authorities (LA) to reimburse them for Rent Allowance, Rent Rebates and Council Tax Benefit (CTB). One uniform subsidy rate has been introduced for all types of benefit.

Q. What is correctly paid benefit?

A. For the purposes of setting LA error overpayment thresholds, correctly paid benefit is defined as benefit which attracts 100 per cent subsidy.

Therefore all elements of subsidy which attract subsidy at lower rates are excluded from the calculation of “correctly paid benefit”. We recognise that there are some elements of subsidy which attract lower rates which is correctly paid benefit in a broader sense. For example expenditure above subsidy thresholds, i.e. the non HRA rent rebate thresholds and caps and the old Regulation 11 threshold (60 per cent subsidy rate). However these areas are not material in terms of overall subsidy expenditure at a national level so therefore they have been excluded from the calculation of correctly paid benefit.

Non Housing Revenue Account (HRA) rent rebates

Q. My authority uses non HRA accommodation in another local authority’s area to house homeless persons. Which threshold and cap is used when calculating the subsidy?

A. The threshold and cap used are those of the placing authority even if the accommodation in another authority.

Q. If a person is placed in temporary accommodation that is subject to the non HRA threshold and caps, for only two days, are the thresholds and caps adjusted, when calculating the subsidy?

A. No. The thresholds and caps are not adjusted if the period of liability is less than one week.

Housing Benefit/Council Tax Benefit administration subsidy

Q. Why did you decide to change the way in which you distribute Housing Benefit/Council Tax Benefit administration subsidy and funding for counter fraud activities.

A. The previous distribution formula had been in operation for a number of years. We needed to ensure that the formula has regard to policy changes and properly reflects the key components that make up HB/CTB workloads. So in 2005 the DWP, convened a working group together with Local Authority Association representatives to consider where improvements could be made to the existing formula for distributing administration subsidy from April 2006.

Q. What are the main advantages of the new distribution formula for HB/CTB administration subsidy?

A. The new distribution formula

• is a fairer system of distribution as it provides for turnover of cases and recognition of different costs for different aspects of LA claim maintenance
• enables your authority to know in advance the level of funding for counter-fraud work
• is based on more up to date data than the previous distribution.

Q. Why do you no longer provide a breakdown of the funding that local authorities receive for administration subsidy and counter fraud activities?

A. From 2006/07 administration subsidy is announced as a single annual figure for individual local authorities. By combining core administration subsidy and funding for anti fraud measures this gives LAs the flexibility to fund their administration and security of benefits in accordance with local circumstances.

Q. Can you give some indication of how much Housing Benefit/Council Tax Benefit administration funding DWP expect should be devoted towards anti-fraud measures?

A. As a guide we expect LAs to direct around a third of their total allocation to security of benefits through effective reviews, visits and counter fraud-investigations.