Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 22
22
Acknowledged
Paragraph: 117
The failure of local housing allowance (LHA) rates to keep pace with market rents is...
Recommendation
The failure of local housing allowance (LHA) rates to keep pace with market rents is quite obviously making the private rented sector even less affordable for many people who are only there because the social housing sector has been cut back and can no longer accommodate them. If the Government believes the PRS is the right place for those on the lowest incomes, it should at least make sure housing benefit does what it was designed to do and covers benefit recipients’ housing costs. For this reason, it should increase LHA rates to realign them with the 30th percentile in each broad rental market area, and commit to conducting a review as soon as possible into whether they should once more be aligned with the 50th percentile.
Government Response Summary
The government acknowledges the issue but does not commit to increasing LHA rates to the 30th or 50th percentile, instead highlighting Discretionary Housing Payments and a commitment to reviewing LHA rates annually.
Paragraph Reference:
117
Government Response
Acknowledged
HM Government
Acknowledged
The Local Housing Allowance (LHA) determines the maximum housing support for tenants in the private rented sector. It ensures that claimants in similar circumstances living in the same area are entitled to the same maximum rent allowance regardless of the contractual rent paid. In April 2020, we boosted investment in LHA rates by nearly £1 billion providing 1.5 million recipients of Housing Benefit or the housing element of Universal Credit with around £600 more housing support in 2020/21 than they would otherwise have received. We have maintained LHA rates at this same cash level so that everyone who benefitted from the increase will continue to do so. However, LHA rates are not intended to cover all rents in all areas. Support is available for those who face a shortfall in meeting their housing costs. Discretionary Housing Payments are available from local authorities. Since 2011 the government has provided nearly £1.6 billion in Discretionary Housing Payments funding to local authorities. Local authorities have broad discretion to spend in line with their local priorities, supported by non-statutory guidance, which provides a list of priority groups to assist with their decision making. At Autumn Statement 2022 the government took the difficult decisions needed on tax and spending to restore economic stability, support public services and lay the foundations for long-term growth. It is vital the government sticks to its plan and maintains economic stability. The challenging fiscal environment means that difficult decisions have to be made to ensure support is targeted effectively. We must continue to take a responsible and disciplined approach to public spending, while supporting vulnerable people and protecting vital public services. A substantial package of targeted support was announced at last year’s Autumn Statement for those on low incomes. In the Spring Budget the Chancellor announced further support to households with the cost of living and the Secretary of State for Work and Pensions has committed to reviewing LHA rates annually.