Housing

Chancellor Jeremy Hunt announces raise in local housing allowance for first time in three years

Chancellor Jeremy Hunt faced pleas from anti-poverty and housing campaigners, including Big Issue, to increase local housing allowance at the Autumn Statement

Jeremy Hunt announcing local housing allowance rates at the Autumn Statement

Scores of housing and anti-poverty campaigners, including Big Issue, urged Chanceller Jeremy Hunt to unfreeze local housing allowance rates at the Autumn Statement to help low-income renters. Image: HM Treasury / Flickr

Jeremy Hunt has unfrozen housing benefit at the Autumn Statement to give a boost to millions of low-income renters after months of Big Issue campaigning.

The chancellor announced the government would invest £1bn to ensure that local housing allowance (LHA) rates would cover the bottom 30% of market rents for the first time since 2020.

The Big Issue’s End Housing Insecurity Now campaign has been calling on Rishi Sunak to protect renters by unfreezing LHA, bringing through the Renters Reform Bill and to reform universal credit to provide an ‘essentials guarantee’.

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Hunt also announced that universal credit and other benefits would rise along with the 6.7% inflation rate in September in Wednesday’s financial statement.

The chancellor said: “Because rent can constitute more than half the living costs of private renters on the lowest incomes, I’ve listen closely to many colleagues as well as the Institute of Fiscal Studies, the Resolution Foundation, Citizens Advice UK and the Joseph Rowntree Foundation who said that unfreezing the local housing allowance was an urgent priority.

“I will then increase the local housing allowance rate to the 30th percentile of local market rents. This will give 1.6 million households an average of £800 of support next year.”

Reacting to the announcement, Lord John Bird, founder of the Big Issue and crossbench peer, said: “The change to the local housing allowance is great news and will make a huge difference in keeping a roof over many people’s heads. The Big Issue has been campaigning for this and are pleased to see the chancellor listen to the voices of the thousands of people that recently signed the Big Issue petition.

“It’s also good news that the chancellor will be increasing universal credit by 6.7% – while this still doesn’t touch the sides of the difficulties many households are feeling, a little more cash in pockets can only be a good thing. However, it still doesn’t go far enough and I urge the chancellor to look at this closer and encourage the Treasury to engage in more creative thinking.

“At the very least, they should be implementing the call, backed by the signatories to the Big Issue’s ‘End Housing Insecurity Now’ petition, to uplift universal credit to £120 a week for a single adult, or £200 for a couple, to provide an ‘Essentials Guarantee’.”

Hunt’s decision comes after two cabinet ministers – housing secretary Michael Gove and work and pensions secretary Mel Stride – wrote to the chancellor to ask for local housing allowance to be unfrozen, according to the BBC.

Rents have skyrocketed since the government last froze LHA in 2020 – in the year up to October alone, private rents rose by 6.1% across the UK on average, according to the Office for National Statistics.

In London that surge was even greater with a 6.8% average annual rise. 

The LHA freeze has seen housing benefits fail to keep up with rents and that has left people on low incomes looking to rent privately with nowhere to turn. In the meantime, the number of people living in temporary accommodation has continued to rise to a record high and homelessness has continued to rise.

In some parts of England, no properties are affordable to rent for people who receive housing benefit, research from the Chartered Institute of Housing and Shelter found this summer.

They found fewer than one in five typical two-bedroom rented homes on the market in England were viable within LHA rates with renters facing an average shortfall of £151 a month.

With renters also facing rising energy bills and food costs as part of the cost of living crisis, housing campaigners had urged Hunt to raise LHA rates to support them with housing costs.

Matt Downie, Crisis chief executive, said: “Today’s announcement to increase housing benefit is, in the short-term, the single biggest step the chancellor could take to prevent and end homelessness for tens of thousands of households.

“The three-year freeze on housing benefit has had devastating and far-reaching consequences, with people on the lowest incomes being completely priced out of renting. At the same time, we now have over 100,000 households in England alone trapped in temporary accommodation, while the number of people sleeping rough is climbing fast. Many councils are on the verge of financial collapse trying to cope with the demand.

“While the chancellor’s decision to tackle homelessness in the short-term is a positive step, there is no room for complacency. The next UK government must sustain this investment, otherwise we will see homelessness rise again.”

The Big Issue’s End Housing Insecurity Now is still calling on the government to protect low-income renters. Will you sign our petition?

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