Frozen Out - fancy living on nothing for a month?
The recent announcement of end of the benefit freeze in April 2020 was met with relief by housing and anti-poverty campaigners. Surely this is good news? But as CIH policy and practice officer Sam Lister shows in his latest research, it follows years of below inflation increases, over which time benefits designed to cover the cost of essential living expenses have lost around nine per cent of their value.
That might not sound much but over the course of a year it’s equivalent to going over a month without any income at all. Ending the benefits freeze simply locks in the decline in their real value.
But that’s not all: those basic benefits don’t include any element for help with housing costs and since the local housing allowance (LHA), which sets the maximum rent paid by universal credit or housing benefit, also hasn’t been fully uprated since April 2012, private renters have potentially faced a double loss. Any shortfall between their actual rent and the LHA must be made up out of their other diminished benefit income. Worse, since LHA rates are tied to local rents, a commitment to end the benefit freeze doesn’t end the LHA freeze which requires separate legislation. Without a further commitment LHAs will continue to decline in value.
Prior to 2013, LHA rates were calibrated to local rents in such a way that they covered the full rent on a fixed proportion of the market, originally 50 per cent, or from 2011, 30 per cent (the ‘30th percentile rent’). That benchmark was chosen as being roughly the proportion of private renters on benefit – so the freeze guarantees that some private renters face a double loss. Although we already knew that over 90 per cent of LHA rates were below the 30 per cent benchmark it was not known by how much their real value had declined. This year the data for England was released for the first time. CIH has analysed it and published the results in its new report: Frozen Out.
The results are alarming. In six out of every ten housing market areas in England, the LHA now covers less half the number of properties (less than 15 per cent) it did prior to the freeze. In over one third of areas less than ten per cent of the market is available for all but the largest sized homes. In London and the south east less than half the number of homes are available in nine out of ten housing market areas. In the north, although the acute shortage is less widespread, Manchester, Sheffield and Leeds are badly affected, and there is a severe shortage of shared accommodation in one in three areas.
On its own ending the benefit freeze merely locks in the rising tide of poverty that has seen thousands turn to food banks when faced with the stark choice between feeding their family or paying their rent. And for hundreds of thousands of private renters these household budgetary pressures are compounded even further reducing their resilience to homelessness. And in many local council areas the continuing LHA freeze threatens to close altogether the option of finding a private rented home to house a homeless family.
If the next government is serious about reducing homelessness it isn’t enough to end the benefits freeze – it needs to go much further. We are calling on all the parties to commit to take the steps needed to restore the link in the first post-election budget of the next Parliament.
Read Frozen Out.