Homelessness charity calls for LHA increase

Local Housing Allowance:

Crisis, the homelessness charity, is calling for the
government to restore housing benefit to its former levels to prevent thousands
from becoming homeless.

Restoring the levels of housing benefit, otherwise known as
Local Housing Allowance (LHA), so they truly cover market rents, says Crisis,
“has the potential to prevent more than 6,000 households from being pushed into
homelessness and also lift more than 35,000 children out of poverty in the next
three years in the UK.�

£2.1 billion net benefits would be delivered over the next
three years according to a new report from Crisis

As part of the organisation’s “Cover the Cost� campaign, its
new research released today, conducted by Alma Economics, outlines the
three-year cost and benefit analysis of a Government investment of £3.3 billion
in LHA for immediate net benefits of £2.1 billion (1). More specifically, the
charity is calling for £820 million in the next year as part of upcoming
spending decisions.

Lifting the benefits freeze and investing in LHA would help
thousands currently on the brink of homelessness, argues Crisis, as they could
truly cover the cost of the cheapest 30% of market rents.

Restoring levels of LHA would also help those already
homeless to afford a rented home and significantly reduce the number of
families and individuals turning to their local council for help – reducing the
use of homelessness services and extremely expensive temporary accommodation,
thinks Crisis.

In addition to these immediate net benefits of £2.1 billion
over the three years, “this would also give the Government time to build a
sufficient supply of truly affordable housing in the years to come whilst
ensuring that homelessness across the country doesn’t continue to rise,� says
Crisis.

LHA, which is the housing benefit aspect of Universal
Credit, provides support to those on low incomes, those who are unable to meet
the cost of market level rents in the PRS. Originally, LHA rates were set a local
levels which ensured recipients of housing benefit could afford the cheapest one-third
of properties in there are.

However, after a series of cuts to LHA over the years LHA rates
have not kept up with the rise in private rents in most parts of the country. Families
and individuals therefore have to make up the shortfall, some doing this by accumulating
debt. Financial pressure then means some are easily forced out of their home
and into homelessness.

Crisis argues that LHA provides an opportunity to prevent
more people becoming homeless by providing the right support. “This potential
will only be fully reached though if it is sufficiently funded and helps
provide the right level of financial security to those in vulnerable
circumstances,� it says.

Jon Sparkes, Chief Executive of Crisis, has said:

“Everyone in our society should have the means to rent a
safe, stable home where they can build their lives. But every day at Crisis, we
hear of the agonising stress and anxiety people face, unable to afford their
rent and keep the roof over their head. Right now people are losing their homes
and being left trapped in homelessness, unable to get back into adequate
housing. We have to stop this happening.

“The UK Government has made commitments to end rough
sleeping and reduce homelessness, but without addressing the root causes behind
homelessness, it will sadly continue to rise. Long-term solutions like building
more affordable social homes will take time so in the meantime, investing in
LHA, so it covers the true cost of rents, provides the quickest and most
effective opportunity to help those already homeless back into housing and for
thousands more, prevent it from happening in the first place.

“Over the coming weeks, we urge the Government to prioritise
investment in Local Housing Allowance as part of its upcoming spending
decisions – this research makes a clear-cut case that doing so will have an
immediate financial and human impact. Ending homelessness for good is truly
within our capabilities but will only be made possible by taking steps like
this.�

Terrie Alafat CBE, Chief Executive of the Chartered
Institute of Housing, said:

“The Chartered Institute of Housing is pleased to join
Crisis and so many other organisations in calling on the government to restore
local housing allowance to cover the most affordable 30 per cent of rents. 

“It is a national shame that thousands of families face
being made homeless and councils are spending £1 billion a year on temporary
accommodation because LHA is failing to do its job. Addressing this issue will
bring the government significant savings in the benefit bill, as well as giving
some of our most vulnerable fellow-citizens a more secure environment in which
to live.

“A staggering 97 per cent of private rents in England
are currently simply unaffordable under benefit rules. This leaves thousands of
families having to choose between paying their rent and feeding their children.
The social and economic cost of this broken system simply cannot be justified.”

 (1) The
methodology

Crisis commissioned Alma Economics to model the total
costs and benefits relating to homelessness from 2019/20 to 2024/25 of
different scenarios to restore Local Housing Allowance rates. The full report
from Alma Economics is also available upon request.

•            the
costs and benefits of the scenarios are calculated in comparison to a ‘do
nothing’ situation, where the freeze continues

•            net
benefits refer to financial savings and welfare gains (whether there are any
health and social effects) minus costs to Government

•            the
approach is consistent with the HM Treasury Green Book principles, which
includes considering who will benefit most from the policy, and whether there
are any health and social effects (i.e. ‘welfare gains’).

(2) Additional quotes

Cllr Tom Beattie, District Councils’ Network Vice Chair
and lead member for Better Lives has said;

‘Districts are vital to preventing homelessness and
providing resolution when our residents are faced with no alternative. Councils
have faced an increasing tide of need where Local Housing Allowance has failed
to cover the increasing cost of rents, when resources have continued to be
under pressure.

‘We echo the asks of Crisis and jointly call on government
to end the freeze on Local Housing Allowance and lift the current rates which
are seeing too many people struggling to meet the shortfall at the detriment of
their health, wellbeing and independence.

‘We believe this immediate resolution will provide a
significant, positive impact but councils must be given the financial freedom
to deliver affordable housing, which will enable a more collaborative, long
term solution to a continually increasing and devastating problem.’

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