Autumn Statement 2023: chancellor to unfreeze LHA rates and increase Universal Credit

LHA rates were restored to the cheapest 30th percentile in response to the COVID-19 pandemic in 2020, but they have been frozen since then and have not kept pace with inflation. 

They often do not cover rents in the private rented sector, meaning families are often sent out of area or remain stuck in poor temporary accommodation. 

Homelessness charities, housing associations and councils have been calling for the rates to be increased for years. 

Cross-party group London Councils pointed out earlier this month that restoring LHA to cover at least 30% of local market rents would save the capital’s public finances alone more than £100m annually.

Mr Hunt said: “Firstly, for those on the lowest incomes, I understand the concern some have about the effect on work incentives of matching benefit increases to inflation. 

“I know there’s been some speculation that we would increase benefits next year by the lower October figure for inflation. But cost of living pressures remain at their most acute for the poorest families. 

“So instead, the government has decided to increase Universal Credit and other benefits from next April by 6.7% in line with September’s inflation figure, an average increase of £470 for 5.5 million households next year. Vital support for those on the very lowest incomes from a compassionate Conservative government. 

“Second, because rent can constitute more than half the living costs of private renters on the lowest incomes, I’ve listened closely to many colleagues, as well as the Institute for Fiscal Studies, the Resolution Foundation, Citizens Advice UK and the Joseph Rowntree Foundation, who said that unfreezing the Local Housing Allowance was an urgent priority. 

“I will therefore increase the Local Housing Allowance rate to the 30th percentile of local market rents. This will give 1.6 million households an average of £800 of support next year.”