Local Housing Allowance: Supreme Court Ruling

Marsha De Cordova Excerpts

Thursday 13th June 2019 Commons Chamber

[Marsha De Cordova (Battersea) (Lab)]

(Urgent Question): To ask the Secretary of State for Work and Pensions to make a statement on yesterday’s Supreme Court ruling in the case of Samuels v. Birmingham City Council and the impact it will have on the Department’s setting of local housing allowance rates.

[The Parliamentary Under-Secretary of State for Work and Pensions (Will Quince)]

The ruling was not against the Department; it was a case against Birmingham City Council. I will look at the judgment carefully. The Court decided that the local authority had used the wrong test when deciding whether accommodation is affordable. The assessment is needed when deciding whether someone has made themselves intentionally homeless.

The decision is primarily one for local authorities to consider with regard to how they deal with applications for unintentional homelessness. However, I will undertake to consider the implications fully with my Department. LHA rates are not intended to meet full rental costs in all areas. The intention behind the welfare reform programme is that the same considerations and choices faced by people not in receipt of benefits should also face those claiming benefits. The LHA policy is designed to make the system fairer for all to achieve that.

The Government recognise, however, that the impact of freezing LHA rates may have different effects across the country, with rents in some areas increasing at different rates. In view of that, a proportion of the savings from the freeze to LHA rates is used to create targeted affordability funding. That funding is being used to increase those LHA rates that have diverged the most from local rents.

[Marsha De Cordova]

I am grateful to Mr Speaker for granting the urgent question.

Yesterday, the Supreme Court ruled on the case of Samuels v. Birmingham City Council, a case in which a single mother with four children was found “intentionally homeless” for not using her subsistence social security to pay the shortfall between her local housing allowance and her rent. Since 2016, the Government have frozen LHA, while private rents have continued to rise. That has meant that housing benefits no longer cover the cost of renting in the private sector.

Research by Shelter has found that for a two-bedroom home, even for the cheapest third of rents, LHA rates do not cover rental costs in 97% of areas in England. In the case that the Supreme Court ruled on yesterday, Ms Samuels was expected to use her social security to find an additional £150 a month to top up her local housing allowance to cover her rent. That put Ms Samuels in an impossible situation, essentially forcing her to choose between housing her family and feeding them. That is happening in the context of local authorities being forced to spend £1 billion a year on emergency and temporary accommodation, with the costs of preventing homelessness being pushed from national to local government.

The Government cannot continue to expect the poorest people in our society to find a way of paying for what the Government refuse to. The judgment sets a precedent. Will the Minister make a clear statement on the Supreme Court’s judgment and tell the House how the Government intend to respond? When will the Secretary of State reset LHA rates in response to the judgment? Finally, will the Minister tell us what assessment the Government have made of the hardship caused by the freeze in LHA rates?

[Will Quince]

The hon. Lady is right that LHA rates were frozen in the summer Budget in 2015 and have therefore been frozen since 2016. That was about getting our welfare bill under control. It was about ensuring that we provided the support necessary for those who needed it and fairness for those who pay for it, and making sure that our welfare system is sustainable in the long term. I can tell the hon. Lady that the freeze will end in March 2020. In all cases, the targeted affordability fund is available. We also have discretionary housing payments, and £1 billion has been made available since 2011.

Ultimately, it is a supply issue. LHA rates are one thing and supply is another. We need to look at successive Governments that have not built enough affordable—by which I mean council and social—housing. Nevertheless, the hon. Lady will be aware that I did a lot of work in this area before taking up my ministerial post. She would therefore expect me to undertake further work in post, and there will be more to come.