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Ending the LHA freeze could lift over 35,000 children out of poverty, says Crisis
Restoring the Local Housing Allowance (LHA) rates could lift more than 35,000 children out of poverty in the next three years, analysis from Crisis has shown.
A new report from the homeless charity has said that more than 6,000 individuals and families will be prevented from becoming homeless if LHA rates were restored to cover the cheapest third of private rents.
The report predicts that restoring LHA rates would cost the government £3.3bn over a three-year period but would lead to net savings of £2.1bn, due to the reduced costs for homelessness services, health services and the criminal justice system.
Roughly £124m could also be saved by reducing the need for temporary accommodation, the report argues.
Crisis commissioned Alma Economics to model several LHA rate investment scenarios, including increasing LHA rates annually by the Consumer Price Index and restoring all LHA rates to the 50th percentile, where rates fall behind rents the most.
LHA rates have been frozen since 2016. Before that, rates were set to cover the cheapest third of local private rents.
Crisis are among several sector figures, including the Chartered Institute of Housing (CIH), which are calling for changes to LHA rates ahead of the government’s Spending Review.
Tomorrow, chancellor Sajid Javid will unveil his one-year Spending Review in parliament.
Jon Sparkes, chief executive of Crisis, said: “The UK government has made commitments to end rough sleeping and reduce homelessness, but without addressing the root causes behind homelessness, it will sadly continue to rise.
“Long-term solutions like building more affordable social homes will take time so, in the meantime, we need to invest in LHA, so it covers the true cost of rents, provides the quickest and most effective opportunity to help those already homeless back into housing and for thousands more, prevent it from happening in the first place.
“Over the coming weeks we urge the government to prioritise investment in LHA as part of its upcoming spending decisions – this research makes a clear-cut case that doing so will have an immediate financial and human impact.
“Ending homelessness for good is truly within our capabilities but will only be made possible by taking steps like this.”
Terrie Alafat, chief executive of the CIH, said: “The CIH is pleased to join Crisis and so many other organisations in calling on the government to restore Local Housing Allowance to cover the most affordable 30% of rents.
“It is a national shame that thousands of families face being made homeless and councils are spending £1bn a year on temporary accommodation because LHA is failing to do its job. Addressing this issue will bring the government significant savings in the benefit bill, as well as giving some of our most vulnerable fellow citizens a more secure environment in which to live.
“A staggering 97% of private rents in England are currently simply unaffordable under benefit rules. This leaves thousands of families having to choose between paying their rent and feeding their children. The social and economic cost of this broken system simply cannot be justified.”
A government spokesperson said: “Since 2011, we have provided local authorities with more than £1bn in discretionary housing payments to support the most vulnerable. And, this year, the government increased more than 360 LHA rates, targeting extra funding at low-income households.
“There are no current plans to extend or maintain the benefit freeze after March 2020. Specific decisions on the uprating of LHA from April 2020 will be made as part of wider government fiscal planning in due course.”
