Government auditors say housing benefit freeze is a driver of homelessness

A National Audit Office report, published today, finds that the freeze on housing benefit is “likely” driving the increase in homelessness.  Shelter is calling on the Chancellor to show the Government is serious about homelessness prevention and announce an end to the freeze.

“The decrease in affordability of properties in the private rented sector, of which welfare reforms such as the capping of Local Housing Allowance [housing benefit in private rented housing] are an element, have driven the increase in homelessness.”

“The Government has not evaluated the impact of its welfare reforms on homelessness, nor the impact of the mitigations that it has put in place.”

This is the stark verdict of today’s report by the National Audit Office, having investigated whether the Government is achieving value for money in tackling homelessness.

The NAO’s report comes hot on the heels of recent Local Government Association commissioned research, which warned that “rising rents, without an increase in housing support, will lead more people to approach local government for help, driving up temporary accommodation and homelessness support costs.”

With Government auditors, local government, Chartered Institute of Housing, Savills and JRF and many organisations working with homeless people all now echoing Shelter’s analysis that welfare reform is stopping people from accessing their own private rental and driving costly homelessness, the Chancellor cannot afford to ignore the urgent need to end the Local Housing Allowance freeze in this Autumn’s Budget.

We fully support the NAO’s recommendation that the Government must take much more strategic and interventionist responsibility to tackling homelessness than the recent “light touch” support given to local councils, and in particular set out the contribution it expects from different programmes across government, such as the DWP.

The ending of a private tenancy now accounts for over a third of all statutory homelessness cases and the NAO say that in all likelihood this is the result of a lack of affordable tenancies, linked to welfare reform.  We predict that more than a million private renters are at risk of homelessness by 2020 because of rising rents, benefit freezes and a lack of social housing.

Frontline homelessness staff told the NAO that increases in people seeking help were due to increases in rents in the private sector, and a decline in people’s ability to pay these rents. This decline in ability to pay was said to be partly due to welfare reforms.

As we said in our submission to the NAO’s inquiry, LHA is one of the most important means of homelessness prevention, allowing people who are experiencing financial difficulties to bridge the gap between their income and the rent to avoid falling into arrears and facing possession proceedings. 

As we at Shelter have been highlighting for some time, the NAO found that the ability of local authorities to respond to increased homelessness is constrained by the limited options they have to house homeless families.

Councils reported a fall in the amount of social housing they could access to house homeless families and fewer private landlords were willing to work with them, with some areas reporting an “extremely limited supply of private landlords willing to house homeless families”.

There are now only seven months until the Government intends to implement the Homelessness Reduction Act, introducing new legal duties on local councils, with a renewed emphasis on early advice and assistance to prevent families from losing their homes.

But the new legislation is unlikely to be effective in reducing homelessness unless the affordability of accommodation is addressed.  In Wales, where similar legislation was introduced two years ago, Shelter Cymru caseworkers are finding that homelessness prevention can be extremely challenging, due to a fatal combination of welfare reform and a large number of private landlords either leaving the market or refusing to take on benefit claimants.

If it’s serious about reducing homelessness then the Government must end the freeze to Local Housing Allowance in the Autumn Budget.   Please support us in making sure this happens.