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Freud announces £35m for 'bedroom tax' costs

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Additional funding totalling £35m is to be handed to councils for residents who have been affected by the ‘bedroom tax’.

The Department for Work & Pensions set aside the extra cash as part of its “rolling review” of its welfare reform policies, according to a letter from welfare reform minister Lord Freud.

The majority of the funding is forming a £20m pot of additional discretionary housing payments for which councils can bid.

There is to be “some flexibility” about how the money can be spent according to Lord Freud’s letter. He suggests subsidising people’s rent and outreach work as one approach but the exact details of the grant scheme are to developed “over the coming weeks”, Lord Freud told council chief executives.

Another £5m of discretionary housing payments has been ring fenced for remote rural areas and is to be distributed to the 21 most sparsely populated areas of the country.

“Over recent months we have worked to understand the additional impacts of the policy upon remote and fragile communities in rural areas. The £5m of new discretionary housing payment funding is in recognition of this,” Lord Freud wrote.

There is also a £10m of in-year transitional funding for councils administering the changes to housing benefit.

Local government advisers to the DWP have been pressing for months for information on how councils will be funded for the work they are carrying out as part of the government’s welfare reform programme.

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