Local Housing Allowance: Poverty
(asked on 30th May 2025) - View Source
Question to the Department for Work and Pensions:
To ask the Secretary of State for Work and Pensions, what assessment her Department has made of the decision to freeze Local Housing Allowance on rates of poverty.
No assessment has been made using current economic assumptions and methodological practices.
However, the department has previously produced a poverty impact assessment using OBR economic assumptions from 30 October 2024 on an outdated version of the model. Using this methodology, the department has estimated the poverty impact of uprating the Local Housing Allowance (LHA) to the 30th percentile of rents in a broad rental market area compared to freezing it. Uprating the LHA to the 30th percentile in each year has been estimated to decrease the number of individuals in relative poverty after housing costs by 50,000 (0.1%) individuals in 25/26 and 100,000 (0.1%) individuals in 28/29 compared to freezing it at April 2024 levels.
Estimates have been rounded to the nearest 50,000 and are on a UK basis. The poverty impacts are independent of the underlying trends in poverty, so they are not an estimate of the total change in poverty over time.
Since this version of the model, the welfare policies announced at Autumn Budget and Spring Statement have been incorporated into the model and the economic assumptions have been updated to OBR's March 2025 assumptions.
At last year’s Autumn Budget, the Secretary of State’s decision to maintain LHA at current levels for 2025/26 was taken after a range of factors were considered, including rental data, the impacts of LHA rates, rate increases in April 2024, and the wider fiscal context. The April 2024 one-year LHA increase cost an additional £1.2bn in 2024/25, and approximately £7bn over 5 years.
Any future decisions on LHA policy will be taken in the context of the Government’s missions, goals on housing, and the fiscal context.
For those who need further support, Discretionary Housing Payments (DHPs) are available from local authorities. DHPs can be paid to those entitled to Housing Benefit or Universal Credit who face a shortfall in meeting their housing costs.