Mind the (housing benefit) gap — it’s growing
New IFS research shows a growing number of renters face a gap between their rent and the Housing Benefit they receive. The Autumn Budget must end the benefits freeze.
Remember 2012? The London Olympics. The Euro 2012 final was held in Ukraine. Mitt Romney was the Republican nominee for US President. It was also the last time that the Local Housing Allowance — the amount of Housing Benefit available to help you pay your rent — increased in line with real local rents. In fact, since 2015, the rate has been frozen altogether.
This has led to more low-income renters facing a gap between their actual rent and the amount of Housing Benefit that’s available to cover it. New Institute for Fiscal Studies (IFS) research, supported by the Joseph Rowntree Foundation, shows that since 2011, changes to Housing Benefit mean the number of private renters facing a gap has grown by 200,000 households. Half those households are families with kids.
That’s 600,000 more people who are having to dip into income intended to cover other essentials, just to keep a roof over their heads. Without action, the number of low income private renters affected by this gap is set to grow. If the current policy continues, then by 2025 another 200,000 people will face a gap between their rent and the amount of housing benefit they receive. About half of that growth will occur between now and 2020, when the freeze is due to end.
The gap people are having to bridge isn’t small and for many people on low incomes they aren’t able to afford alternative homes in the private rented sector, or access social housing. The IFS reckons tenants on low incomes spend an average of 35% of their other income to pay the proportion of their rent that’s not covered by Housing Benefit.
Of course, Housing Benefit isn’t the only benefit that’s currently frozen — most working age benefits are frozen until 2020. Rising costs and frozen benefits means low-income families are struggling to make ends meet. Separate JRF analysis shows that the four-year freeze will result in almost half a million (470,000) more people experiencing poverty in 2020/21.
That’s why JRF is calling for Phillip Hammond to use his Autumn Budget to end the freeze on means-tested benefits. Whereas most benefits should be uprated in line with CPI (Consumer Prices Index) inflation, local housing allowance needs to be re-set so it covers the bottom third of local rents (as it’s intended to) and then uprated in line with local rents.
A lot has changed since 2012. There was much talk at this year’s party conferences about helping those affected by our broken housing market. There’s broad agreement that we need a long-term plan to build more affordable homes, and that’s great news. But thousands of ordinary working age families need help now. The Autumn Budget must #endthefreeze.