The Autumn Statement announcements have come with an air of victory for the homelessness sector, with headline wins that will reduce homelessness for many on low incomes. But, as it gives with one hand, Treasury has taken away with the other, and the wins are dampened by some worrying and punitive moves that will impact many of the people we support across the sector.
Local Housing Allowance uplift
The long-awaited restoration of Local Housing Allowance (LHA) rates comes as the result of tireless campaigning from charities across the sector. LHA, which sets the rate of housing benefit that can be paid to those living in the private rental sector (PRS), is designed to ensure the lowest 30% of the rental market is affordable to those in receipt of benefits. However, the benefit was frozen in 2016, in a move that rapidly became a new norm. The benefit was unfrozen in 2020 in response to the COVID-19 pandemic but had remained frozen since, falling well behind the spiralling cost of renting across the country.
In the run up to the statement, we joined charities from across the sector in our call for LHA to be unfrozen. We are therefore pleased to see the Chancellor has listened to our calls. Uplifting LHA will both prevent homelessness by ensuring more people can afford their homes and reduce homelessness by making the PRS accessible to thousands of people who are currently stuck in temporary accommodation because of an otherwise unaffordable market.
But we won’t be breathing a sigh of relief just yet. The uplift only comes into effect in April 2024, which will come too late for many who are already struggling to make ends meet. With only 5% of new tenancies affordable under current LHA rates, it also means many households spending another Christmas in temporary accommodation at huge expense to already struggling local authorities. And for many living in higher-cost areas, the Chancellor’s announcements are nothing but false hope as the benefit cap – which remains at 2023 levels – will nullify the LHA uplift.
The Autumn Statement is also explicit that this restoration is temporary, with LHA rates due to be frozen again from 2025. In the absence of sufficient social housing, the essential role of the PRS in housing those on low incomes is undermined by yet more short-termism, meaning our manifesto call to maintain LHA rates remains a vital ask of whichever party wins the next General Election.
Staff costs and minimum wage
A less-discussed impact of the budget comes alongside the increase to the National Living Wage. We of course welcome the increase to the minimum wage, which will come as much-needed relief to many of the hardworking staff in our sector and beyond. However, as outlined in our Keep Our Doors Open campaign documents, we are concerned that the increases come without an associated uplift to the contracts issued to homelessness sector providers, many of whom already face unsustainable staffing costs just to meet minimum service standards.
The changes to minimum wage will turn the screw on many in our sector who are already struggling to balance the books. As previously competitive salaries will now fall in line with the minimum wage, providers are expected to make up the shortfall despite delivering contracts on behalf of the Government. Staff costs make up a massive proportion of the spending in the sector, but commissioned contracts rarely allow for wage increases at anything like the rate of inflation. The welcomed increase to minimum wage may sadly mean more financial pressure and risk of redundancies across the sector unless services are able to secure additional funding.
Welfare benefits and conditionality
And then, of course, is the renewed fixation on benefit sanctions. With Cameron in Number 10 and Farage on the telly, you’d be forgiven for thinking we’d time warped to the early 2010s. In good news, the rumblings around benefit uprating being moved in line with the (lower) October CPI have proven false, and Government have upheld their commitment to raise payments in line with September’s 6.7% inflation rate. But this comes alongside a punitive regime of welfare conditions, showing that the lessons of the 2010s have been quickly forgotten and making the uplift a bitter pill to swallow.
The announcements focus particularly on those who are out of work due to sickness or disability – a group who are disproportionately more likely to face homelessness. They include changes to the Fitnote system, updates to the Work Capability Assessment and a ‘treatment rather than time off’ approach, the irony of which will be felt by anyone who has tried to make a doctor’s appointment in the last two years. The announcements also include the (re)introduction of Mandatory Work Placements for jobseekers, previous iterations of which were scrapped after DWP found them to be ‘largely ineffective at getting people into jobs’.
The reforms come alongside a renewed warning of welfare sanctions for those who do not comply. Previous analysis has found people experiencing homelessness to be over twice as likely to face welfare sanctions, with non-compliance primarily driven by ‘systemic problems and inappropriate requirements’ rather than a reluctance to work. Rather than incentivise work, sanctions increase poverty, homelessness and mental ill health, drive people further from the workplace and prevent them from engaging in support and recovery. Increased welfare conditionality will add fuel to the fire at a time when support needs are rising and services are struggling to meet the needs of the increasing number of people turning to them for support.
Overall, we are pleased to see the significant investments held within the Autumn Statement to improve living standards for those on the lowest incomes. Government have clearly listened to the sector and provided some much-needed breathing room for households across the country. However, the benefit announcements are a source of worry for those with multiple support needs and show we have a long road to travel on our journey to end homelessness. Doing so will require the whole of our next Government to address the root causes of homelessness together – investing sustainably in support rather than widening the cracks for people to fall through.