Local Housing Allowance and Homelessness

Anneliese Dodds Excerpts

Wednesday 24th July 2019 Westminster Hall

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

My hon. Friend is making a very good speech. Although the problem may be most acute in London and the south-east, it applies right across the UK, as he points out. In my constituency there is not a single four-bed, three-bed or two-bed property that fits within the LHA, and the only one-beds are caravans or the odd sheltered housing flat. It applies everywhere.

[Dr Drew]

I agree. My hon. Friend’s example shows, in a nutshell, what it is like out there. It is not only that housing is not available, but that the limited amount available is of such poor quality that families in a desperate state are being forced into even greater poverty. They then almost certainly have to top up.

The figures in the Gloucester-Stroud area show a shortfall of £27.24 for a single room, which rises to £112.46 for a four-bed property—if there even are any, which I suspect there are not. I make a heartfelt plea to the Minister that this cannot go on. Such is the difficulty we face with the dislocation in the housing market. We have to accept that private renting is there for people who do not stand a chance of getting a council property or any other form of social housing, because they are so far down the band system as a result of whatever may have happened in their past, their inability to pay the rent or their not being local to the area. They end up renting in the private sector; they get penalised because they cannot find anything; if they do find something it is poor—and then they have to top up.

Please, Minister, can we look at this as a crisis and start doing something about it?

--- Later in debate ---

[Will Quince]

The right hon. Gentleman refers to rough sleeping. Often people lump homelessness and rough sleeping together, but there is a huge difference between them. The Government are taking considerable action on rough sleeping. I will happily meet him, or arrange for the Housing and Homelessness Minister to do so, in order to discuss it in more detail. I know that he cares hugely about this issue, and contributes to debates on it. I share his passion. The Government are taking significant action, but he is right that we must look at LHA rates. I hope I made it clear at the outset that I am doing that with the Secretary of State, and ahead of the next fiscal event we are looking very closely at what more we can do.

Between 2000 and 2010, housing benefit expenditure rose by more than half in real terms, reaching £25 billion in today’s prices. Left unreformed, by 2014-15 housing benefit would have reached £29 billion. That was clearly not sustainable. The measure to freeze local housing allowance rates for four years from April 2016 built on reforms introduced in the previous Parliament, which saved £6 billion in total by 2015-16. Savings from freezing LHA are estimated to be around £655 million for Great Britain over the four-year period of the measure. Our reforms are part of our wider goal to move people from welfare and into work.

We recognise that some places have seen higher increases in rents than others, and have made provision to help people further in those areas, as the hon. Member for Westminster North (Ms Buck) mentioned. We have used a proportion of the savings from the freeze to reduce the gap between frozen LHA rates and the 30th percentile reference rent in the areas of greatest rental growth. Initially, 30% of the savings from the freeze were used for targeted affordability funding, but we invested an additional £125 million in that funding for the final two years of the freeze. That was based on 50% of the savings rather than 30%.

[Anneliese Dodds]

Has the Department conducted any kind of cost-benefit analysis of the measure’s overall impact? In practice, it is leading to additional health and education costs, and to huge impacts on families that have to be sucked up by already strapped local authorities. Has there been any kind of 360° review of the measure’s overall impact across Government, including local government, and not just on the benefits bill?

[Will Quince]

I have been a Minister for only three months and I keep all the policies in my remit at the Department under very close review. I regularly meet and have conversations with key stakeholders in policy areas such as this, to ensure that we are aware where policies are and are not working, and that we are alive to the issues. It will not come as a surprise to the hon. Lady that stakeholders in this area have flagged LHA rates as an issue. That is why we are looking at it very closely indeed.

The additional funding enabled us to increase 213 LHA rates—there are 960 rates in total—by 3% last year. This year, a total of £210 million has been made available: the highest amount of targeted affordability funding since its introduction in 2014. That has enabled us to increase 361 LHA rates by 3%. As a result, it is estimated that 500,000 households this year will benefit from an increase of around £250 a year.

In addition to that targeted affordability funding, the Government have provided more than £1 billion in discretionary housing payments to local authorities since 2011, which the hon. Member for Westminster North referred to. Discretionary housing payments allow local authorities to protect the most vulnerable claimants and support households affected by different welfare reforms, including the freeze to the LHA.