Briefing: LHA Impact Assessment

By: Stephanie Kleynhans and Jenny Pennington  Published: March 2020


Summary

Due to a series of welfare reforms since 2011, including the most recent and damaging four-year freeze (2016-2020), LHA is no longer fit for purpose in the majority of the country. The rates no longer cover adequate levels of rent, leaving people with incredibly high shortfalls between their housing benefit and the rent they have to pay. For those on passported benefits, these shortfalls are on average £113 per month; a staggering amount to have to make up out of other limited means of income. This can leave families with no option but to cut back on essentials such as food, heating or school uniforms as well as having to borrow money, use credit cards or sell possessions just to cover the cost of their rent. This unsustainable lifestyle can ultimately put people at risk of accruing rent arrears and homelessness. 

The impact of the reforms to LHA and the four-year benefit freeze has been disastrous for so many individuals, families and their children. Despite this, there was little due regard for the impact these policies were going to have when they were being designed and implemented. Reasons were provided for the original changes made to LHA in 2011 and various impact assessments have been carried out for this and subsequent reforms. However, when it came to the four-year benefit freeze in 2016, an impact assessment of the overall policy was carried out, but this did not include a specific assessment of the freeze on the LHA rates.

This January, the government announced it would be ending the LHA rate freeze by lifting the rates by the Consumer Price Index (CPI), or 1.7%. This is by no means adequate. As part of these regulations, there was an explicit statement that the Department for Work and Pensions (DWP) will not be undertaking a full impact assessment. This is because they foresee ‘no, or no significant, impact on the private, voluntary of public sector’.

We have therefore conducted our own impact assessment, which explores the reforms to LHA in more detail. The document looks at what impact assessments have been carried out by the government in relation to these reforms before undertaking our own assessment of the impact to individuals, families and local authorities of having such low LHA rates. It will address some of the stated reasons the government enacted these reforms and why these have not been achieved.

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