Government’s spending watchdog warns on effect of benefit cuts

There will be a huge shortage of affordable private rental accommodation for tenants on housing benefit if reforms go ahead next spring as currently suggested.

The warning has come from the Government’s spending watchdog, the National Audit Office.

It says the danger comes from Local Housing Allowance – which is paid to benefit tenants in private rental accommodation – being calculated in line with the Consumer Price Index rather than local market rent inflation.

The National Audit Office says this could ‘lead to a divergence between local area rents and benefits’.

It warns that by 2017, nearly half of local authorities (48%) will have double the number of LHA applicants than now looking for two-bedroom homes – but which they will not be able to afford.

From April next year, the Government is going to change the way LHA increases are calculated, shifting its sums away from the 50th percentile of local market rents to either the Consumer Price Index or the 30th percentile of local market rents, whichever is the lower.

But knowledge among LHA recipients about the changes is minimal, warns the report. It says that surveys of those living in private rented accommodation show 87% know either nothing or very little of the changes.

The report, ‘Managing the impact of Housing Benefit reform’, underlines that the National Audit Policy only analyses policy impact, but makes no comment on the policy itself.

It has, however, made a series of recommendations, in particular that the Government should increase awareness of housing benefit changes, particularly among those living in the private rented sector. 

You can see the full report here: