Why inaction on Local Housing Allowance marred the good news in the Autumn Statement

Z2K's Jamie Thunder explains that despite the headline increases to benefits, the Autumn Statement had a huge omission.

For us and our clients, last month’s Autumn Statement was something of a relief. After weeks of speculation, it was confirmed that Universal Credit, as well as disability and legacy benefits, would be increased by 10.1%, September’s annual rate of inflation.

We were disappointed that the increase won’t come until April next year, despite the Secretary of State’s support for more regular uprating before he took up his current post. But this was still positive news, as was an unexpected first ever increase in the level of the Benefit Cap.

It’s important to remember, however, that these increases aren’t an act of generosity – it simply means that the money people on social security have to live on will keep up with rising prices. Levels of social security benefits are inadequate today, and will still be inadequate after April.

And while the headlines were good, there was one key part of the social security system that was completely ignored: the Local Housing Allowance (LHA). This is the maximum amount of support you can get towards the cost of private rent in Housing Benefit or Universal Credit, based on your age, how many bedrooms DWP say you need, and the general area where you live.

When it was introduced in 2008, LHA was set at the 50th percentile of rents for a comparable property. In 2011, it was pushed down to the 30th, and has since been frozen several times. In April 2020, as lockdown kicked in, it was pushed back up to the 30th percentile, but has been frozen ever since. So as rents have continued to increase, its actual value has fallen.

The practical impact is that it’s harder and harder to find a privately-rented property that is fully covered by housing benefits. Recent research from Crisis has highlighted how few properties are actually available to rent at these levels, even before you get to the stigma many people relying on social security face when approaching landlords or letting agents.

And if, like 6 in 10 Universal Credit claimants, your housing support doesn’t match your rent, you have to find it from somewhere else. With private rents still rising, the Chancellor’s decision last month means that for more than a million households, some or all of the increase in other benefits will be swallowed up by housing, rather than being available for energy or food costs.

The alternative is to face eviction. As a recent ITV report showed, almost a million people are at risk of eviction – and the gap between rents and LHA rates is one of the biggest issues.

This hasn’t gone unnoticed. At this week’s DWP questions in the House of Commons, MPs lined up to ask about the continued freeze to LHA. The Secretary of State’s answer was to point to that 2020 decision, as well as to Discretionary Housing Payments (DHPs).

But this isn’t good enough. A decision about LHA taken nearly three years ago is of little comfort to someone struggling today. And DHPs are only paid to help you keep up the rent for a short period, to help you move, or to clear arrears. They are, as the name suggests, discretionary, and they’re no substitute for a properly-funded, guaranteed social safety net. In any case, councils received £40m less for DHPs this year than last – the lowest level in a decade.

The social security system is exactly that: a system. Cutting or freezing one part while increasing others just moves the problem around. Ministers must act to restore the link between rents and LHA rates, and opposition leaders must keep the pressure on until this happens. Otherwise, the ‘social security system’ won’t be worthy of its name.

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