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Local Housing Allowance

Volume 724: debated on Monday 5 December 2022

1. What assessment his Department has made of the potential impact of real-term reductions in local housing allowance rates on levels of poverty. (902572)

2. What assessment his Department has made of the potential impact of real-term reductions in local housing allowance rates on levels of poverty. (902573)

5. What assessment his Department has made of the potential impact of real-term reductions in local housing allowance rates on levels of poverty. (902576)

6. What assessment his Department has made of the potential impact of real-term reductions in local housing allowance rates on levels of poverty. (902577)

13. What assessment his Department has made of the potential impact of real-term reductions in local housing allowance rates on levels of poverty. (902585)

First, on behalf of the whole House, may I welcome the hon. Member for City of Chester (Samantha Dixon) to this House, and wish her every happiness and a productive time in the House?

The Government have maintained the uplift they provided in the local housing allowance in 2020, at a cost of almost £1 billion, targeting the 30th percentile of rents. Those who need assistance with housing costs also have recourse to the discretionary housing payments administered by local authorities.

I welcome the Secretary of State’s comments about my new colleague, my hon. Friend the Member for City of Chester (Samantha Dixon), but that is as far as I can go.

The local housing allowance is a lifeline for tenants to access the private rented sector. The Government have accepted the need to uprate most benefits in line with inflation, so why have they chosen to freeze the local housing allowance, which will have a disproportionate impact on constituents in my constituency of Merthyr Tydfil and Rhymney? Will he commit to reviewing that situation urgently?

As the hon. Gentleman will know, annually I review all benefits, including LHA—indeed, around this time next year, I will do precisely that. It has to be borne in mind that we are currently spending almost £30 billion a year on housing allowance and that figure is expected to increase to around £50 billion by 2050, so there are cost considerations.

The ongoing impact of the freeze on LHA is that more people are effectively being priced out of the private rental sector, with more and more housing becoming unaffordable. Research by Crisis showed that just 4% of three-bedroom homes advertised in Manchester were affordable on LHA rates. Tenants are forced to use increasingly larger proportions of their income on rent, at the height of a cost of living crisis. Will the Minister commit to annually raising the local housing allowance in line with inflation?

As I have just indicated, I will review that in just under a year. There are of course the discretionary housing payments, which are administered by local authorities for those who feel that they need additional support, and I also point the hon. Gentleman in the direction of the significant cost of living payments that we are providing at the moment to support those in most need.

As my hon. Friends have said, the very least the Government must do is to raise the local housing allowance to keep pace with the real rate of rent inflation. The Department has also cut the funding of last resort, namely, that given to the Welsh Government to provide discretionary housing payments—a cut of 18% last year and a whopping 27% this financial year. Will the Secretary of State now commit to reversing that latest cut, so that local councils in Wales can at least offer some help to those in most dire need and avoid further evictions?

I would just say to the hon Lady that there is the household support fund as well, which she did not mention. That is there to provide support in the circumstances that she described, along with the discretionary housing payments that I set out and the fact that, in 2020, we did indeed raise LHA to be in line with the 30th percentile of local rents.

The reality is that a family in one of the cheapest three-bedroom homes in Luton have faced a shortfall of about £2,300 over the last year, and that gap increased by £650 from five months earlier. That proves that the growing gap between housing benefit and the cost of the cheapest private rents is forcing people into poverty. When the Secretary of State chose to freeze local housing allowance for another year, did he consider how that might make more and more families across the country homeless?

I did of course very carefully consider the points that the hon. Lady has made, just as I very carefully considered the extent to which there should be an uprating of benefits more generally; they went up by 10.1%—the level of the consumer prices index at that time. I also considered very carefully what the uplift in pensions should be and, again, that was 10.1%, the level of CPI. For pensioners, we also stood by the triple lock.

In Liverpool, the shortfall between housing benefit and the cheapest rents has now risen to £1,360 over a year. Outside London, private sector rents are rising across the country at an average of 11.8%, yet no one from the Conservative party seems to recognise that rent increases also cause inflation. Conservative Members are frequently eager to call for pay restraint and for benefits to be held down but never for landlords to heed the same advice. My constituents now face homelessness. Does the Secretary of State recognise that high housing costs and completely inadequate housing benefit lie at the root of the cost of living crisis and that the choice for the Government should be between capping rents and raising support?

The hon. Gentleman rightly raises inflation, which we are all having to contend with at the moment. That is why my right hon. Friend the Chancellor came before the House at the time of the autumn statement and set out a clear plan as to how to bring inflation down. The Office for Budget Responsibility forecasts that it will be half its current level in a year’s time. A large amount of support has been put forward, with the £650 cost of living payment this year to those low-income households that he describes, covering some 8 million people up and down the country.

May I also warmly welcome my hon. Friend the Member for City of Chester (Samantha Dixon) to her place?

Fifty-nine per cent. of private renters on universal credit—844,000 households—have rents above the maximum level that local housing allowance will cover. That means that they have to make up the difference, which, as we have heard, is often substantial, either by reducing spending on other necessities such as food and heating, or by getting into arrears, risking homelessness. With homelessness already rising, local authorities predicting how much more they will have to spend and the Government only today announcing an extra £50 million having to be spent on the homelessness prevention grant, does the Secretary of State accept that what the Government are saving through the freeze on housing allowance is merely popping up in additional spending elsewhere and that it is time to get a grip?

As I set out, the amount being spent on housing and housing support is almost £30 billion a year. That has grown strongly over the last decade or so and is on a trajectory to reach £50 billion by 2050. The Government are therefore putting huge support into that area. In addition to LHA, there are, as I have said, discretionary housing payments. When it comes to the homeless, we have brought forward a £2 billion package to help to resolve those issues.