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Housing Benefit

Volume 508: debated on Thursday 8 April 2010

To ask the Secretary of State for Work and Pensions with reference to the consultation document entitled Supporting people into work: the next stage of housing benefit reform, (1) what assessment she has made of the effects of the implementation of local housing allowance on the expenditure on housing benefit; and what estimate she made of the cost to the public purse of local housing allowance at the time of its implementation; (322155)

(2) what her Department's (a) original estimate was and (b) most recent estimate is of the effect on the overall level of expenditure on housing benefit of the introduction of local housing allowance.

On 15 December the housing benefit consultation, ‘Supporting people into work: the next stage of housing benefit reform', was launched. The consultation concluded on 22 February 2010. We are now considering the responses and we will set out how we will take forward our proposals in due course.

In 2004-05 nine Pathfinder local authorities piloted the local housing allowance. In 2005 the pilot was extended to cover a further nine local authorities, so as to cover a total of 18 local authorities.

In the pre-Budget report 2006 it was confirmed that,

‘subject to the successful passage of the Welfare Reform Bill, the Government will introduce the local housing allowance across the private rented sector for all new housing benefit claimants and those who move house from April 2008’.

At this time the estimated impact of the national roll-out of local housing allowance alone, all other external and market factors equal, on the Annual Managed Expenditure (AME) was an additional £20 million in the first year, against a total expenditure in the private rented sector of £4.3 billion for 2006-07.

This estimate is now likely to be out-of-date due to a number of factors, including the impact of the recession on the caseload size and composition, and changes in the boundaries of the areas from which local housing allowance rates are calculated. Due to the complexities involved in adjusting for such factors, and the lack of administrative data covering part of this period, a current estimate of the effect of the introduction of local housing allowance on the overall level of housing benefit expenditure is not available.