New analysis from the Institute for
Public Policy Research (IPPR) finds that a combination of welfare
reforms, rising numbers of children in the private rented sector
and a lack of investment in building social housing has led, and
will continue to lead, to increasing child poverty, unless the
government acts.
A new report by the think tank reveals
that the 2011 decision to reduce LHA rates from the
50th
percentile to the
30th
percentile, alongside periodic
freezes, has made at least two-fifths of private rental
properties less affordable and led to an increase in child
poverty.
There are now an estimated 440,000
households with children whose housing support no longer covers
the costs of their rent. As the government has not committed to
raising LHA rates in April 2025, the number of households
affected is expected to rise by an additional 90,000 families by
March 2026. This would leave an estimated 925,000 children
affected by housing support shortfalls.
As rents rise whilst support is
frozen, households will need to find the money to pay their rent
from other sources – leaving families worse off overall despite
benefit uprating come April in many
cases.
This is a growing concern as the
number of children in the private rental sector has grown from
one in twelve to one in five over the last 20
years.
The report also identified a
concerning postcode lottery with LHA rates. Over half (62 per
cent) of families renting privately in Wales face a shortfall,
while only a third (31 per cent) of those in Scotland do. The
variation between local authorities is even more stark, with 74
per cent of claimants facing a shortfall in Neath Port Talbot,
compared to just 9 per cent in East
Lothian.
A key challenge is the lack of social
housing since right-to-buy was introduced in 1979. Waiting lists
for social housing have now reached a 10-year high of 1.33
million.
Social housing has the twin benefit of
ensuring that a family's housing benefit, or housing support
element of Universal Credit, will meet their entire housing
costs, as well as guaranteeing a home for
life.
The state currently spends £32bn a
year on housing support through the benefits system, much of
which goes into the pockets of private landlords. IPPR modelling
suggests that if the government built and moved all families with
children on means-tested benefits into social housing this would
save £3bn per year in housing benefit expenditure and reduce
relative poverty by 200,000. Whilst government would need to
consider the cost of building social housing, this would also
help to contain the ballooning cost of temporary accommodation,
where local authorities are forced to shell out for
inappropriate, and expensive, housing solutions in the private
sector.
Among the policy solutions outlined in
the new report, IPPR is recommending:
-
Raising LHA rates to the
30th percentile of rents and removing the household benefit
cap from April 2025,
followed by a long-term ambition to raise them to the
50th
percentile. This should go
hand-in-hand with other reforms to social security such as
‘locking-in' annual LHA increases.
-
Establishing a new English
housing tribunal to
enforce new rights given to private renters by the Renters'
Rights Bill, as well as conducting a review into the evidence
for formal rent caps.
-
Building 100,000 social
homes every year over a 20-year period to reverse the losses to social
housing stock.
Henry Parkes, principal
economist at IPPR and author of the report,
said:
“A safe, secure, and affordable
home should be the foundation for every child's future. Instead,
too many families are trapped in a cycle of poverty and
instability caused by unaffordable rents and insecure tenancies.
Housing reform isn't just a moral imperative—it's an economic
necessity.”
