This week's Budget should make sure housing benefit will cover the cost of rent
None of us can be certain about the future. Jobs come and go, our health can decline and a host of other life changes can come out of the blue. Thankfully we are not on our own. From cradle to grave our social security system is supposed to be there to support and protect us all when we need it, no matter where in the country we live.
However, when it comes to housing that promise is no longer true. Across a growing proportion of our country, a pillar of our social contract has been knocked down. What has changed is the cut to the Local Housing Allowance (LHA). Whilst other benefit cuts have hit the headlines this one has to a large degree slipped below the radar, yet the impacts are profound. The new Chancellor has a chance to correct in the upcoming Budget this week.
The LHA caps the amount you can receive through benefits to cover the cost of your privately-rented home, setting a maximum rate for each size of property in each area of the country. In 2011 the allowance was cut from covering fifty per cent of rented homes in each area to just thirty per cent. In 2016 it was then frozen. Rent rises since mean that in my borough of Southwark it is now all but impossible to find a home in the private rented sector that is affordable within the LHA. The gap between the LHA and the median advertised monthly rent for a two-bedroom property in Southwark is over £1000. The Government’s announcement in January that the LHA will increase with inflation from April will do little to help. Private renting will continue to be just as out of reach.
In Southwark, we are lucky enough to have the highest proportion of social housing in the country, with 38,000 council and 11,000 housing association homes. However, fewer than one thousand of these become available each year. With 11,000 people on our social housing waiting list, renting privately is the only option for many, yet the current LHA rate means that is now out of reach too.
All too often the only answer is to move further away. But while ‘further away’ may promise cheaper housing, it can disconnect families from their support networks, friends and schools. It can also take people away from their jobs putting further pressure on making the rent.
This stark impact on families is putting pressure on councils too, with local authorities footing the bill in order to keep people from losing their homes. At Southwark Council, this funding gap is already running into the millions. With budgets squeezed as they are, it’s a boiling pot of pressure, scalding councils. The Government say they are addressing the problem by providing ‘Discretionary Housing Payments’ to help councils cover the shortfall. But as the name suggests, a ‘discretionary’ payment is not a long-term fix to this broken system.
It is also a false economy. Crisis’ recent report, Cover the Cost, shows that whilst the Government would need to invest £3.3bn over three years to restore the LHA to the 30th percentile of rents, this would in fact deliver wider benefits of £5.5bn through reduced use of homelessness and health services. Restoring the LHA to this level would support those on the very lowest incomes to afford, at the very minimum, the 30% cheapest properties in their local area. It would also deliver huge savings to the taxpayer.
The roots of the housing crisis of course go much deeper. To solve it we need to build more homes people can afford, create fairer private tenancies, drive up wages and more. We are determined to help our residents through the housing crisis, and have committed to building 11,000 new council homes by 2043, including 2,500 by 2022.
In the meantime it is not right that families in Southwark and in so many other parts of the country cannot find a home in their community. With so many people now at risk of losing their home, now more than ever we need a housing safety net that is strong enough to catch us when we fall. At this month’s Budget the Chancellor has a chance to correct this wrong with a simple measure that would also save the taxpayer money, by raising the Local Housing Allowance to a level that actually covers the cost of a home.
This is a guest blog from Southwark Council.
To find out more about the Cover the Cost campaign please visit: www.crisis.org.uk/coverthecost
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