Anti-Poverty Groups Say Failure To Increase Private Renter Benefit Is "Disappointing"
4 min read
Anti-poverty groups have lamented the decision not to uprate Local Housing Allowance (LHA) in Wednesday's Budget, warning it will leave private tenants facing financial hardship.
LHA is the amount of housing benefit provided to tenants renting from private landlords.
The benefit was frozen from 2020 until former chancellor Jeremy Hunt tweaked it in his Autumn Statement in 2023 to cover the bottom 30 per cent of market rents. Sharply rising private rents had led to rents significantly outstripping the LHA cap.
There was hope among stakeholders and anti-poverty campaigners that Chancellor Rachel Reeves would increase LHA again in the Labour Government's first fiscal event in order to keep pace with sharply rising market rents. She failed to do so, however, meaning LHA will remain frozen at 2023's level.
Private rents have increased rapidly in the UK in recent years, with data from the Office for National Statistics (ONS) in August showing average UK private rents increased by 8.6 per cent in the 12 months to July 2024.
Rachelle Earwaker, senior economist at the Joseph Rowntree Foundation (JRF), told PoliticsHome the decision was "really disappointing".
“There were definitely some positive steps that were taken today," said Earwaker.
"First of all, changing the level of deductions for Universal Credit is welcomed, as is help for carers, the boost in the Household Support Fund, and rises in the minimum wage.
"But the chancellor chose not to unfreeze Local Housing Allowance next year… it is really disappointing.
"We know that private rents are continuing to soar across the country…
"We know from our recent research it's going to force low income pricate renters into poverty, and if they don’t unfreeze by the end of the parliament, it will push 80,000 more people into very deep poverty, including 30,000 children.
"On average private renters on housing benefits will be £700 a year worse off."
Professor Ashwin Kumar, director of research and policy at the Institute for Public Policy Research, also criticised the Government's decision to keep LHA frozen, describing it as "not sustainable".
"What’s happened since the Conservatives started freezing the LHA is three or four years later they’d have to put it back, because even the Conservatives realised this wasn’t a sustainable policy," Kumar told PoliticsHome.
"We don’t think this is a sustainable policy and it needs to be addressed.”
However, like the JRF, they IPPR did welcome some of the measures taken in the Budget, including the decision to reduce the amount of debt deductions on Universal Credit.
“We were really happy to see the cap on deductions on UC brought down from 25 per cent to 15 per cent," said Kumar.
"Deductions are one of the ways that people get pushed into really severe poverty, and reducing the cap and how often that happens is really welcomed for some of the people on the lowest incomes."
Sumi Rabindrakumar, head of policy and research at the Trussell Trust food bank charity, told PoliticsHome there were "good first steps" in the budget on Universal Credit, carers allowance, and the Household Support Fund.
"We really wanted to see in this Government's first budget that it understood the scale of the problem and the fact that we couldn't delay action, and so that's why we really welcome the fact that the Government has recognized certainly to act," said Rabindrakumar.
"We've seen that with action on deductions, it makes a real difference to ease the burden of deductions, to repay debts for people receiving Universal Credit.
"We know that's a really big driver of food bank needs across the UK, and it's something that trust will been crawling on for a while. So that was a really welcome first step towards starting to tackle tackle the hardship that we see across our communities.
"Alongside that, the longer term investment in the Household Support Fund is again the positive step forward. We know that local crisis support is a real lifeline for people."
However, like JRF and IPPR, the Trussell Trust expressed concern that LHA remained frozen, as well as changes to the work capabaility assessment for disabled people.
"We're particularly worried about the fact that LHA is still effectively frozen according to today's Budget, that quite big cuts to support for disabled people with work capability assessment reforms are still on the books.
"These things that really matter, and we know that those are really big issues that drive food bank needs right across the UK.
"We welcome the changes today, but we know that that has to be swiftly followed up with further action. We can't stop here. This has to be the first step towards bigger change."
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