LHA – a media view

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    Copyright The Herald November 2007

    “When the idea of a Local Housing Allowance (LHA) was introduced five years ago by the then Work and Pensions Secretary, Andrew Smith, it was billed as a radical agenda for housing benefit reform and given a proud New Labour phrase for its title: Building Choice and Responsibility. It is now clear that the implementation of LHA to replace Housing Benefit (HB) for tenants in privately-rented property in April next year is in danger of leaving the most vulnerable worse off, while some astute tenants, and their landlords, will gain financially. The problem will be exacerbated by a separate change which means that the allowance will be set at a flat rate across a wide area, such as the whole of Glasgow, despite a wide disparity in rents.

    The history of welfare reform is littered with laudable intentions that have been deflected by the messy reality of lives at the margins. Housing Benefit is a classic example. Designed to make it possible for people on low wages and minimal incomes (including pensioners, disabled people and the unemployed) to live in decent housing, in too many cases it prevented them taking a job or moving to another area for fear of making themselves worse off.

    Replacing HB with LHA was intended to remove that trap. The idea is that instead of calculating HB to reflect the actual rent, paying LHA at the same rate across a broad rental market area (BRMA) will encourage tenants to find the best-value accommodation. In Scotland, the BRMAs are so large – for example, the whole of Highland and the whole of Fife – that rent levels vary enormously. If the rent is cheaper than the allowance rate tenants can keep the difference (up to £15 a week) but if its more expensive, they must pay the difference themselves.

    The Department of Work and Pensions reports that in the nine areas where LHA has been introduced for a test, there have been few hitches and worries about homelessness have not materialised. One of the pilots was in Edinburgh, which was divided into two BRMAs, so the prospect of having only one in future is causing concern. In Glasgow, the council wants the city to be divided into three rental areas. This should be given serious consideration otherwise the scheme is likely to result in hardship for tenants in the west end of the city while providing a disincentive to work for people in the east

    On paper, it looks like a clever exercise in using the carrot rather than the stick to empower people who have very little control over their lives; the reality will be that tenants who need help with their housing costs will be forced to live in the areas with lowest rents. The problem with that is that the more able will move on, leaving the very poor and the vulnerable clustered together. Far from the happy scenario of increasing choice for tenants as envisaged by the DWP, it is likely to do the opposite, ensuring certain areas become ghettoes of the disadvantaged. The DWP and the rent registration service should think again”.

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