Source · Select Committees · Public Accounts Committee
Recommendation 20
20
Accepted
DWP acknowledges 45% of households face Local Housing Allowance shortfall amid rising rents
Conclusion
The LHA sets the maximum amount of housing support that claimants of housing benefit and universal credit can usually receive, to help with housing costs in the private rented sector.26 Since 2011, DWP has introduced welfare reforms designed to reduce overall welfare spending and incentivise benefit recipients to take up employment. These reforms, including periodically capping and freezing LHA rates, have reduced the income that households can derive from benefits in real terms. At the same time, rents in the private rented sector have increased faster than wage growth and LHA rates in much of the country.27 DWP acknowledged that 45% of households now face a shortfall between the LHA they receive and the rent they pay.28
Government Response Summary
DWP wrote to the Committee on 21 February 2025, setting out its justification for the levels of Local Housing Allowance it has set, both for individuals and for local authorities with regard to the temporary accommodation subsidy.
Government Response
Accepted
HM Government
Accepted
4. PAC conclusion: We are not convinced that, in setting Local Housing Allowance (LHA) rates, the Department for Work & Pensions (DWP) has given due consideration to the impact on homelessness. 4. PAC recommendation: Alongside the Treasury Minute response, DWP should write to the Committee setting out, in detail, its justification for the levels of LHA it has set, both for individuals and for local authorities with regard to the temporary accommodation subsidy. 4.1 The government agrees with the Committee’s recommendation. Recommendation implemented 4.2 The Department for Work and Pensions wrote to Committee, on 21 February 2025, setting out its justification for the levels of Local Housing Allowance it has set, both for individuals and for local authorities with regard to the temporary accommodation subsidy.