LHA cuts to cost £120m a year

10 September 2010

A family

The Government will face costs of up to £120 million a year because of the huge rise in homelessness caused by cuts to local housing allowance (LHA), Shelter has revealed today.

Research undertaken by the University of Cambridge to investigate the true impact of the cuts, both on households and on the government’s own finances, shows that 134,000 households will either be evicted or forced to move when the cuts come in next year as they will be unable to negotiate cheaper rents.

Of these, an estimated 35,000 households will approach their local authorities for housing assistance, and where councils have a legal duty to help they will face costs of up to £120 million a year for providing temporary accommodation such as hostels or bed and breakfasts.

The costs would cancel out a fifth of the £600 million the Treasury has said it will save from the cuts in 2012, the first full year they are in force.

There will also be additional administrative costs to councils in processing the thousands of homelessness applications they are likely to receive.

Shelter’s chief executive Campbell Robb said: ‘Shelter’s research clearly shows that not only is the Government’s budget regressive, it doesn’t even add up. The devastating impact of cuts to local housing allowance on some of the poorest families in Britain will mean the government will not save anywhere near as much as it has claimed.

‘Now that the true cost of these proposals has come to light, the Government must urgently rethink these reforms and develop an alternative that protects the most vulnerable and delivers real savings to the housing benefit bill.’

Read more about the impact of the changes in our research paper

If you're worried about how the LHA changes will affect you, you can get advice and information here