The chancellor billed this week’s budget as good news, the government delivering ‘prosperity with a purpose.’ While there are some positive measures, we’re deeply concerned about the chancellor’s failure to do anything to tackle the homelessness crisis which is engulfing renting families and local authorities across the country.
The Local Housing Allowance (LHA) freeze is a false economy
This was a vital chance for the government to reverse its decision to extend the local housing allowance freeze for the 2023/24 financial year. LHA determines the amount of housing benefit or universal credit housing allowance that private renters can receive. It has been frozen since 2020 while rents have rocketed at record rates. This terrible decision will cause and prolong homelessness.
As we showed in our blog before the budget, the gaps that have opened up between the amount 1.8 million renters can claim in support and the real cost of renting now mean people on low incomes face impossible choices. Over half of the renters receiving housing benefits have a shortfall, on average a whopping £151 per month. Renting a home that costs more than LHA means putting yourself at risk of rent arrears if you can’t cut back enough on other essentials to keep a roof over your head.
The human cost to those who inevitably become homeless will be terrible. But rising homelessness is also expensive for the government: the cost of temporary accommodation for people who are homeless is 1.6 billion, up 61% in just five years. By contrast, the Institute for Fiscal Studies estimates that the cost of restoring LHA would be £650m.
The good news for low-income families
By changing the rules so that families receiving universal credit can claim childcare costs in advance rather than arrears, parents will no longer be forced into debt to cover upfront nursery fees. Some may be able to escape the punishing benefit cap which arbitrarily limits the amount families can claim if they do not work enough hours.
The extension of the energy bills until the end of June will also take some of the pressure off household budgets during the cost of living crisis.
The bad news
But the simple fact is, you can’t heat a home you don’t have.
And becoming homeless and moving into unstable, unsafe temporary accommodation damages children’s health and education. It often forces families to move away from essential services like nurseries, schools, and support networks of friends and family who can provide childcare. If your child’s nursery is suddenly a two-hour round-trip away, accessing work, which the chancellor cited as one of the major targets for this budget, will still be a huge challenge.
We are hugely disappointed by the government’s failure to invest in tackling rising homelessness – but we will keep up the fight for home so that one day we can end the housing emergency for good.