Matt Downie, Crisis chief executive, said: “The fact that the number of households who receive universal credit and face huge shortfalls between the cost of rent and the financial support they receive has almost doubled since the pandemic began highlights the shocking scale of the issue at hand.
“Every day that passes with local housing allowance being stuck at its outdated rate means that more and more people are being pushed closer to the brink. The impact of this, on top of soaring living costs and rents rising across the country, means the numbers simply don’t add up and that more people are at risk of homelessness over the coming months.
“We need the government to urgently invest in local housing allowance so that it covers the true cost of rents, to ensure people can remain in their homes. Without immediate action, many people across the country could find themselves unable to keep up with their housing costs, facing eviction and the threat of homelessness.”
The DWP figures were revealed following a parliamentary question from Westminster North MP Karen Buck.
According to the stats, 496,090 households across Britain receiving the housing element of universal credit saw their rent exceed local housing allowance as the pandemic hit in March 2020. That included 444,171 in England as well as 24,447 in Scotland and 27,472 in Wales.
At that time – a month before the Westminster government decided to raise LHA rates to 2018-19 rent prices – around 68% of renters on universal credit across Britain were struggling to cover rents.
The pandemic saw an influx of people turning to universal credit as Covid lockdowns disrupted lives and careers and thousands of non-essential workers were put on furlough.
That saw the number of private renting households where rent exceeds local housing allowance surge to 754,457 across Britain by March 2021 with the higher LHA rates seeing the proportion of households struggling to cover rents drop to 54% on average.
The number of people on universal credit also peaked at six million in March 2021, according to the DWP.
While the number of households remained broadly stable in March 2022 with around 748,708 households affected, the proportion went up to 56% on average as the number of households claiming universal credit fell to 5.7 million.
But, since then, as the cost of living crisis has stepped up, the number of households struggling to cover rents has surged.
Across Britain, 819,318 households – including 743,411 households in England, 33,747 in Scotland and 42,160 in Wales – are seeing rents exceed housing benefits as of February 2023, leaving families on low incomes forced to find the cash to make up the shortfall.
That shortfall has increased in the last three years too, according to the DWP figures. In March 2020, the median shortfall was £105 a month, rising to £107 in England. By February 2023, that shortfall was £120 a month and was, once again, higher in England at £125.
The proportion of households struggling to make ends meet has also risen. Across Britain, 60% of the households receiving the housing element of universal credit are seeing rents exceed LHA rates.
That comes as the cost of living crisis has seen the number of people claiming universal credit reach a new high of 6.1 million in July 2023.
Mims Davies, the DWP minister who answered Buck’s question, said the government spent almost £1 billion in raising LHA rates in 2020.
She added that the government is projected to spend around £30bn to support renters in 2022-23, amounting to 1.4% of GDP.
“We recognise that rents are increasing,” said Davies. “However, the challenging fiscal environment means that difficult decisions have been necessary to ensure support is targeted effectively. Overall, the government is providing total support of over £94 billion over 2022-23 and 2023-24 to help households and individuals with the rising cost of living.”
However, insufficient LHA rates are locking families on low incomes out of the private rented sector.
Analysis from Shelter and the Chartered Institute of Housing (CIH) revealed in June that fewer than one in five private rents in England were within LHA rates.
That means housing benefits are failing to cover the cost of the cheapest 30% of two-bedroom family homes in every area of the country.
Rachael Williamson, head of policy and external affairs at CIH, said: “This latest data confirms what we already know – that the failure of local housing allowance rates to keep pace with market rents is making the private rented sector even less affordable.
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“This is particularly challenging for people on low incomes, many of whom are only renting privately because there is not enough social housing. As the Levelling Up Committee said recently, if the government believes the private rented sector is the right place for those on the lowest incomes, it should at least make sure housing benefit does what it was designed to do and covers benefit recipients’ housing costs.”
That’s why The Big Issue has launched the End Housing Insecurity Now campaign.
We’re calling on the prime minister to make sure everyone can afford to stay in their homes and pay for the essentials. Will you join us and sign the petition?
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