Housing body says policy would increase homelessness and that cost savings would be short-term
The Conservative Party’s plan to cut local housing allowance (LHA) to help fund defence spending would increase homelessness, according to the Chartered Institute of Housing (CIH).
LHA rates are used to calculate housing benefit for tenants renting from private landlords and are calculated based on market rents within a particular area.
On Thursday, Kemi Badenoch announced a plan to reduce rates to the 10th percentile, as part of a wider plan to reduce the benefits bill by £10bn per year.
Currently, LHA rates are mandated to be set at the 30th percentile of local private market rents. In theory, this means three out of 10 properties of a particular type in each area would be affordable to someone who requires support with their rent. Under the Conservatives proposals, this would reduce to one in 10.
However, Rachael Williamson, director of policy, communications and external affairs at the CIH, said savings would be short-term, arguing that increased hardship and homelessness as a result of the policy would ultimately show up in other forms of public spending.
“Cutting housing benefit by reducing Local Housing Allowance to the 10th percentile risks taking us back to a situation where support bears little relation to the real cost of renting,” she said.
“At a time when record numbers of households are already struggling with housing costs, this would almost certainly increase financial hardship and homelessness.
“Any short-term savings to the welfare bill could quickly be outweighed by higher costs to councils, the NHS and other public services dealing with the consequences of people losing their homes.”
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