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Councils and charities have welcomed the chancellor’s decision to raise the cap on housing benefits in the Autumn Statement but said this alone would be insufficient to tackle a nationwide resurgence of homelessness and relieve pressure on local authority finances.
Jeremy Hunt announced on Wednesday that he would raise the cap on the local housing allowance, which is provided to people on low incomes, to reflect huge increases in the cost of renting privately.
By raising the allowance to cover the cheapest 30 per cent of properties on the market, the government would be giving 1.6mn households an average of £800 of extra support a year, he said.
He added that “because rent can constitute more than half the living costs of private renters on the lowest incomes”, unfreezing the local housing allowance was an “urgent priority”.
Recent research by homelessness charity Crisis and real estate website Zoopla found that the rental costs of only 4 per cent of properties in England were covered by the existing housing allowance, which has been frozen since 2020. This figure drops to just 2 per cent in London.
The decision to raise the cap meets one of the demands made by 119 councils who wrote to Hunt earlier this month warning him that a chronic shortage of social housing coupled with rising demand for temporary accommodation was threatening to bankrupt many local authorities.
Stephen Holt, leader of Eastbourne Borough Council, who co-ordinated the letter welcomed the unfreezing of the housing allowance but said the chancellor had failed to address other demands from struggling local councils.
“We warned the chancellor that frontline services are at real risk of failing and regrettably there is little in the Autumn Statement to now stop that from becoming a reality,” he said.
The housing advocacy group Shelter said that increasing the allowance would help the 1.7mn private renters in England who rely on it for their rent. But the charity criticised the chancellor for deferring the uplift.
Polly Neate, chief executive of Shelter, said: “Unfreezing housing benefit to cover the bottom third of local rents is an essential lifeline to keep people in their homes. However, pushing this to April 2024 will leave many families facing an uncertain winter.”
The Autumn Statement also included an additional £450mn of funding for local authorities towards the building of 2,400 homes, including new temporary accommodation and housing for Afghan refugees. Separately the government is extending its affordable homes guarantee scheme — a state-backed lending programme to support the building of affordable housing — with an additional £3bn to help deliver 20,000 homes.
For local authorities facing a wider crisis in financing with demands on services including housing and social care outstripping their financial means, the statement gave little comfort.
Jonathan Carr-West, head of the Local Government Information Unit think-tank, said councils have been pulling every lever available to them to balance their books including raising council tax, cutting services and spending finite reserves. Measures aimed at the sector announced on Wednesday amounted to “tinkering round the edges”, he said.
“Each year citizens are paying more and getting less from their councils, and without significant structural changes to the way funding is allocated it is difficult to imagine these dire straits ending.”
