Announcement follows Scottish housing minister’s letter urging UK government to reverse cap
The Scottish government has announced a £9m investment to “mitigate” the UK government’s freeze on local housing allowance (LHA) rates as part of a new package of support for low-income parents.
The measure announced yesterday (12 March) in the government’s ‘Tackling Child Poverty Delivery Plan 2026-2031’ aims to help families access and sustain private tenancies.
The additional funding will be used to boost discretionary housing payments (DHPs), which are awarded by local authorities as short‑term financial support to help cover rent or housing costs when housing benefit or the housing element of universal credit doesn’t meet the full amount.
Ashley Campbell, policy manager at CIH Scotland, who gave evidence at parliament in January this year in support of additional DHPs, said: “CIH has long called for more to be done to meet the shortfall in LHA caused by repeated UK government benefit freezes which is making the private rented sector unaffordable and pushing thousands of households into poverty and homelessness.”
She added that the £9m boost will “certainly go some way to help, but in the long term we urge the UK government to commit to providing social security at a level that covers the real cost of renting, providing certainty and security for low-income households.”
The announcement comes shortly after Scotland’s housing minister urged the UK government to reverse its decision to freeze LHA rates into 2026-27.
In a letter to housing secretary Steve Reed, Màiri McAllan said she was “deeply disappointed” by the news that LHA rates will face the second consecutive year of no uplift and warned of a “detrimental impact” on homelessness and child poverty.
LHA rates are set by the Department of Work and Pensions (DWP) and are used to calculate the maximum amount of housing support a private sector tenant can receive if they claim universal credit (housing element) or housing benefit.
Maeve McGoldrick, head of policy and communications at Crisis Scotland, said the charity welcomes the efforts to “plug the gap” left by the DWP’s LHA cap but said that the government “must continue efforts to expand this support to everyone at risk of or experiencing homelessness.”
She added that all political parties involved in the upcoming Holyrood election in May “must commit to ending homelessness for good by 2040.”
The £9m in new funding is part of the Scottish government’s social justice portoflio and includes £5m from the ‘Tackling Child Poverty Fund’ and £4m from the ‘Housing Support Budget.’
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