Jasper Chaplin, West London Socialist Party
Starmer’s Labour has made it a mission to drive down the benefits bill by blaming, particularly young, unemployed and sick people. But where does the money spent on Universal Credit (UC) go? UC rolled into one system a number of benefits including Housing Benefit, Jobseeker’s Allowance and Child Tax Credit. On the surface, Universal Credit might appear to be a functional benefits system, but anyone who has to jump through the bureaucratic hoops knows otherwise. For anyone with variable income or fluctuating childcare costs, for example, it is a nightmare. More than half of all people on UC can’t afford to eat properly, and 40% skipped meals.
Part of a UC claimant’s entitlement is for housing. The maximum amount of money that can be used for housing through Universal Credit is called the Local Housing Allowance (LHA) rate. LHA is based on private rent levels in large areas and varies by postcode and local authority. It’s based on the lower 30th percentile of rents – lower than the average – meaning tenants in towns with higher rents will receive a payment that is not reflective of actual house prices in their area.
Labour’s October Budget froze the LHA rates for next year, something the Tories have done for 7 of the last 12. However much landlords raise rents next year (8.4% on average this year), claimants’ benefits won’t rise to cover the increase.
The glaring issue here is that rents used for the LHA calculation are set by private landlords and estate agents, who are more interested in maximising income than providing affordable housing to tenants. This means the government, via Universal Credit recipients, is paying landlords’ sky-high rents. In 2021-22, 88% of the money spent by the government on housing was on housing benefits, that’s nearly £27 billion! Additionally, bills for services such as water, electricity and gas are not covered by the housing allowance, meaning people receiving LHA still have to pay high rates for these, also set by privately owned companies.
A better system would provide safe, genuinely affordable council housing for all and set strict rent controls to avoid government payments going straight into landlords’ pockets.
