Tory ministers have been told to “get a grip” over a slipped-out benefit cut that will make “more and more families homeless”.
Labour MPs today blasted the decision to freeze housing benefits for the third year in a row, despite inflation hitting 11.1%.
'Local Housing Allowance’ (LHA), the amount of Universal Credit people get to cover private rent, was raised in 2020 to cover the cheapest 30% of homes in each area.
But it has been frozen in cash terms ever since - and will now be frozen for another year until April 2024.
The latest freeze was confirmed in two lines of text on page 66 of a “policy costings” document released alongside last month’s Autumn Statement.
Work and Pensions Secretary Mel Stride confirmed the freeze today, saying he will only review LHA “around this time next year”.
He also signalled it could be frozen for even longer, saying: “I think it has to be borne in mind that we are currently spending £30bn a year on housing allowance.
“And that figure is expected to increase to around £50bn by 2050, so there are cost considerations.”
The freeze means housing benefits are being cut in real terms as rents rocket, despite other benefits rising 10.1% in April.
The average monthly rent for a three-bed home in the North West has risen from £690 to £750 in two years.
Labour MP Dan Carden warned housing benefits are “completely inadequate” and “my constituents are now facing homelessness”.
Labour MP Rachel Hopkins said a family in the cheapest 3-bed homes in Luton face an annual shortfall of £2,300 - up £650 in a few months.
She said the “growing gap” between benefits and rents is “forcing people into poverty”, and she fears it will make “more and more families across the country homeless”.
Labour MP Gerald Jones said LHA “is a lifeline for tenants” and the freeze would have a “disproportionate impact” on his constituents in Merthyr Tydfil. He called for an “urgent review”.
Labour MP Afzal Khan warned “more people are being effectively priced out of the private rented sector, with more and more housing becoming unaffordable”.
He said research had shown just 4% of 3-bed homes advertised in Manchester were affordable on LHA rates.
Shadow DWP minister Karen Buck warned 844,000 households - or 59% of private renters on Universal Credit - have rents above the LHA maximum.
“They have to make up the difference by either reducing spending on other necessities like food and heating or getting into arrears at risk of homelessness,” she warned.
“It is time to get a grip.”
Mr Stride admitted “clearly the higher the rate of inflation… the more pressure is put on that particular allowance.”
But he added: “The amount that is being spent on housing and housing support is almost £30 billion a year.
“That has grown very strongly over the last decade or so and is now on a trajectory to reaching £50 billion by 2050.
“So the Government is putting huge support into that area.”
It came as the government announced a £50million top-up for councils to its Homelessness Prevention Grant.
Crisis chief executive Matt Downie said he feared the “welcome” cash “still won’t be enough to stem the tide”.
The Local Government Association welcomed the cash but added: “Government should also urgently review LHA rates to ensure that at least a third of the market is affordable for people claiming housing related benefits.”
