A prominent London politician, Sem Moema, a member of the Labour Party in the London Assembly, has strongly urged the UK Government to unfreeze housing benefits from pre-pandemic levels. Moema emphasised that failure to take action in this regard could exacerbate the homelessness crisis.
LHA Rates Struggling to Keep Up with Inflation
Moema pointed out that the local housing allowance (LHA) rates have been severely impacted by inflation, resulting in a situation where only a mere 2.3 percent of rental properties in the capital now qualify for full LHA coverage.
Government Response and Concerns Raised
The UK Government has indicated its commitment to combating inflation but has not made any promises regarding the unfreezing of LHA rates. In a letter addressed to the Secretary of State for Work and Pensions, Mel Stride, Moema expressed that by maintaining the freeze on LHA, the Government is imposing significant hardship on individuals and creating unjust disparities in support based on geographical location.
The Importance of LHA in a High-Cost City
LHA is a critical source of financial support for individuals with low incomes, provided either through housing benefits or as part of universal credit. However, these payment rates have remained stagnant since 2020, calculated based on the 30th percentile of rental prices recorded in September 2019.
Disparities in Rent Growth Across London
Sem Moema, who represents Hackney, Islington, and Waltham Forest in the London Assembly, noted that this approach disproportionately affects families residing in areas with substantial rental price increases since 2019. London, with its already exorbitant rents, has seen a 20 percent average rise in rental costs since 2019, according to Moema.
Impact on Affordable Housing Availability
The freezing of LHA rates has resulted in only 2.3 percent of private rental properties in London remaining affordable under these rates, compared to 5 percent across England as a whole, according to Moema’s analysis. London Councils, a collective of the city’s borough authorities, has identified approximately 125,000 low-income households in London at risk of homelessness due to insufficient benefit entitlements to cover rent.
Escalating Homelessness Crisis
Notably, rough sleeping in London has witnessed a staggering 21 percent increase in the past year, further underscoring the urgency of addressing this issue.
Government Response and Alternatives
A government spokesperson stated, “This year, we plan to spend more than £30 billion on housing assistance, in addition to a sizeable amount ($3,300) per household for cost of living assistance.” The spokesperson also referenced the £1 billion boost to Local Housing Allowance in 2020 and the availability of Discretionary Housing Payments (DHPs) as additional safety nets for those facing financial difficulties.
Concerns Echoed by Parliamentary Committee
The House of Commons’ Levelling Up, Housing, and Communities Committee echoed concerns similar to those raised by Sem Moema. The committee reported that the freeze on LHA rates had pushed many individuals into poverty, compelled some to accept substandard housing, and left others without viable housing options.
Call for Rate Realignment and Review
The committee further called for an increase in LHA rates to align them with the 30th percentile in each rental market area and urged a prompt review to consider alignment with the 50th percentile.
In a city where housing costs are already exceptionally high, Moema’s call to unfreeze housing benefits is a matter of paramount concern.