A new report from the charity Crisis is calling on the Government to save thousands of households from the brink of homelessness by ending its freeze on housing benefit.
The charity argues that, as well as helping to tackle homelessness, investing more in Local Housing Allowance (LHA) would also help alleviate poverty.
The Government would also gain a ‘breathing space’ in which more genuinely affordable homes can be built, to reduce pressure on demand for housing benefit over the longer term.
LHA, the housing benefit aspect of Universal Credit, provides support to those on low incomes who are unable to meet the cost of private rent. Rates were originally set to ensure that people could afford the cheapest third of properties in their area.
Over time, however, it has come to fall increasingly short of even the cheapest properties in the market. Cuts to LHA, and a four-year freeze in annual rises to the benefit introduced in 2016, has made it increasingly difficult for people to find housing they can afford.
Instead, households are left to make up the rent from other means, including getting into debt, leaving them in a precarious position and a risk of becoming homeless.
According to Crisis, if LHA rates were restored to cover market rents, then more than 6,000 could be prevented from becoming homeless, while more than 35,000 children could be lifted out of poverty over the next three years.
“Everyone in our society should have the means to rent a safe, stable home where they can build their lives,” said Jon Sparkes, chief executive of Crisis. “But every day at Crisis, we hear of the agonising stress and anxiety people face, unable to afford their rent and keep the roof over their head. Right now people are losing their homes and being left trapped in homelessness, unable to get back into adequate housing. We have to stop this happening.
“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, investing 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.”
Crisis is bolstering its argument with research carried out on its behalf by Alma Economics. Commissioned as part of the charity’s Cover the Cost Campaign, the report outlines a three-year cost-benefit analysis of a Government investment of £3.3 billion in LHA. It claims a net benefit of £2.1 billion would be achieved.
More immediately, the charity is calling for £820 million in the next year as part of upcoming government spending decisions.
According to the report, lifting the benefits freeze and investing in LHA would help thousands currently on the brink of homelessness as they could truly cover the cost of the cheapest 30% of market rents.
Furthermore, restored levels of LHA would also help those already homeless to afford a rented home and significantly reduce the number of families and individuals turning to their local council for help – reducing the use of homelessness services and expensive temporary accommodation.
Alongside the immediate net benefits of £2.1 billion over the three years, the report argue that the Government would gain the time to build a sufficient supply of truly affordable housing in the years to come whilst ensuring that homelessness across the country doesn’t continue to rise.
Sparkes added: “Over the coming weeks, we urge the Government to prioritise investment in Local Housing Allowance 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.”
The Chartered Institute of Housing (CIH) has backed Crisis’ call for investment in LHA. The organisation’s chief executive, Terrie Alafat CBE, said: “It is a national shame that thousands of families face being made homeless and councils are spending £1 billion 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.”
Councillor Richard Watts, chair of the Local Government Association’s resources board, said that ending homelessness remains a “top priority” for councils.
“The widening gap between incomes and rents and the freeze on Local Housing Allowance rates has led to financial hardship, in-work poverty and homelessness, placing unsustainable costs on councils in meeting their housing commitments,” he added.
“Giving councils the powers and funding to increase the supply of rented housing and provide a safety net are vital components of any long-term government solution to our homelessness crisis.
“Renters need access to homes that are affordable. We urge the Government to use this week’s Spending Round to commit to restoring LHA rates to at least the 30th percentile of rents when the freeze ends next year. This will give families across the country improved access to the affordable homes that they so desperately need.”