In advance of the Government’s Spending Review, I have written to the Chancellor of the Exchequer in support of Crisis’s campaign to see the current Local Housing Allowance raised. Sounds boring? Maybe, but it is one of the biggest changes which the Government could make to address homelessness in the UK right now.
The Local Housing Allowance is the maximum amount the Government will pay out in Housing Benefit in an area. This isn’t a problem in principle, public money should be used carefully in order to deliver the best result for the whole of society. The issue is that the level at which the allowance has been set won’t pay the rent on the vast majority of properties, making it next to impossible for people to wholly cover their rent using the benefit.
Now, I don’t think it’s ideal that the state has to pay people’s rent, but the mass sell-off of council housing coupled with an ongoing failure to build enough housing in the right places means that this is the price we pay to avoid large-scale homelessness. It is also worth noting that only a fraction of those in receipt of the benefit are on JSA, these are people who are in work and simply reflects the fact that the cost of living in the UK is now so out of control people cannot afford to live on what many employers are willing to pay. Clearly making housing more affordable and improving people’s employment conditions would be the best solution to all of this, but so long as the Government is only willing to pay lip-service to tackling the big problems we’ll just have to make do with more temporary fixes.
The sting in the tail for taxpayers is this. Councils have a duty to deal with homelessness, but because they can’t put people in housing above the Local Housing Allowance increasing numbers of people are placed in temporary housing. Temporary housing costs more than the Local Housing Allowance, but councils are legally obliged to provide it and it comes out of their local budget. While that isn’t the Treasury’s problem, it certainly is local residents who across the country are coughing up a billion pounds a year to prop up a system which is in practice increasing homelessness.
Add to that the human cost. Being left to live in a bed and breakfast for prolonged periods means people put their lives on hold. Worse, because there’s only so much of it at any one time, people can be moved far out of area making it hard to access support networks, keep kids in school or sustain employment. It’s appalling. It’s unnecessary.
Raising the Local Housing Allowance would be better for those at risk of homelessness, better for the public purse, better for society as a whole. It’s an obvious solution. That’s probably the biggest reason I’m sceptical that it will actually be implemented.
Wednesday 28th August 2019
Rt Hon Sajid Javid MP
Chancellor of the Exchequer
1 Horse Guards Road
Dear Mr Javid,
Following your announcement that a one-year Spending Review will be produced in September, I write alongside the leaders of other Housing Authorities to urge you to include the necessary resource for councils and other public agencies to best prevent homelessness, through investing sufficiently in Local Housing Allowance (LHA) rates.
Fulfilling the Government’s promise that it will end rough sleeping by 2027 requires substantial work to prevent homelessness in the first place, in addition to tackling the numbers of people already sleeping on our streets.
Increasing investment in Local Housing Allowance (LHA) rates will help councils and other public agencies to deliver results with immediate impact on the levels of homelessness across the country. As you will know, in 2011 LHA rates were reduced from the 50th percentile to the 30th percentile of the rental market and have since been subject to below inflation increases and a four-year freeze since 2016. The freeze is due to end in April 2020 and returning LHA rates to cover at least the cheapest third of private rents (the 30th percentile) – as called for by the national homeless charity Crisis and several other expert organisations as part of their Cover the Cost campaign – would mark a significant step change in successes in preventing homelessness and alleviating extreme pressures on local government in areas of high housing need.
Low levels of LHA rates are resulting in thousands of families currently unable to afford rent in the private sector and are therefore at increasing risk of becoming homeless. Losing a private tenancy is currently one of the most common causes of homelessness in the UK and has been the leading cause in England for the past six years. Research by the Local Government Association in England found that 86% of responding councils identified private sector affordability as a barrier to rehousing people.
This carries an unnecessary human cost and acts as a false economy for local and national government, with councils having to cover the difference in rent when placing households in expensive temporary accommodation, costing our residents £1bn a year.
Whilst in the long-term, measures that increase the supply of genuinely affordable housing will undoubtedly address the root causes of the affordability problems experienced by many, investing in LHA rates now, as part of the upcoming one year Spending Review, will result in an immediate impact on decreasing current levels of homelessness, and enable struggling families across the country to cover the cost of their rent and keep their existing homes.
I hope that this letter provides reassurance on upcoming investment decisions related to this matter and helps produce a Spending Review outcome that delivers on this vitally important issue.
Cllr Peter Lamb
Leader, Crawley Borough Council