Local Housing Allowance: Commons Committee calls for annual uprating

The Commons Work and Pensions Committee has published a report calling for the Government to introduce a new ‘uprating guarantee,’ to uprate working-age benefits and the Local Housing Allowance (LHA) rate each year, to end the uncertainty faced by people claiming benefits. In respect of LHA, the Committee concluded:

“The evidence is clear that support for housing costs cannot be viewed in isolation from wider support provided through other benefits. When and if claimants experience a shortfall in rent, this can impact other parts of household budgeting and erode income otherwise intended for daily living costs. The Government should make a commitment to uprate annually Local Housing Allowance so that it retains its value at the 30th percentile of rents in a Broad Rental Market Area (BRMA).”

This report addresses the adequacy of benefit levels for working-age people in the UK, focusing on whether these levels meet the needs of claimants. It follows up on previous recommendations made by the committee regarding the review of benefit levels’ sufficiency.

The inquiry finds that benefit levels are often insufficient for claimants to afford their daily living costs, especially considering the additional expenses associated with health conditions or disabilities. While recent cost-of-living pressures have exacerbated this situation, the inquiry delves into the historical setting of benefit levels and proposes ways to evaluate and potentially adjust them in the future.

A key challenge identified is the lack of clear objectives set by the government regarding what benefit levels should achieve. While there is an objective to incentivize work, there is no explicit objective addressing how benefits should support claimants with daily living costs. The report recommends that the government develop a framework of principles to guide discussions on benefit levels and establish cross-party consensus. This framework should include benchmarks and objectives linked to living costs to measure the effectiveness of benefit levels and guide annual uprating decisions.

Regarding the annual uprating of benefits, the report suggests improvements to ensure consistency, transparency, and accountability. It recommends implementing an ‘uprating guarantee’ to annually adjust benefits based on a consistent measure, such as prices. Additionally, it advises uprating the Local Housing Allowance rate each year to maintain its value relative to local rents.

The report also acknowledges that benefit levels are influenced by various policies beyond annual uprating. It highlights previous work conducted by the committee and anticipates the impact of planned changes announced by the government, particularly those related to employment support and conditionality. It recommends that the Department for Work and Pensions (DWP) monitor and publish statistics on the number of Work Coaches and Disability Employment Advisers to ensure effective support for claimants.

Overall, the report underscores the need for a comprehensive framework to assess and adjust benefit levels, as well as improvements to the procedures for annual uprating and monitoring of related policies and support services.

For the report, click here. For a summary, click here. For the response to the report of Generation Rent, click here.

 

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