Autumn Statement: benefits raised and LHA freeze to be lifted next year, but councils warn over ‘precarious position’

Rachel Earwaker, senior economist at the Joseph Rowntree Foundation who had earlier responded to the news of LHA unfreezing by expressing a “sigh of relief” on social media platform X (formerly Twitter), later commented that this was made “much smaller” in view of the time-limited nature of the measure. She said: “Not having LHA increase in line with private rents erodes the value of the benefit – it means low-income renters cannot afford their rents and increases hardship.”  

 

She added: “Incredibly frustrating and has big impacts on household budgets from 2025-26 if LHA falls behind again.

 

“It means that any rent increase from October 2023 onwards won’t be reflected in the amount of housing benefit until it is unfrozen again.”

 

The announcements follow calls from sector organisations to address the impact of the cost of living increases on tenants and to tackle the growing homelessness crisis.

 

On Monday, the G15 group of London’s largest social landlords called on the government to adopt the 6.7 per cent rise to benefits, after analysis from the Resolution Foundation showed that, without this, 4.7 million households would lose at least £500 a year.

 

Earlier in the month, London Councils published its own analysis suggesting that at least 16,500 additional households would become homeless by 2030 without an increase to LHA, while the District Councils’ Network, a cross-party network of 168 district and unitary councils, urged the government to raise it to at least the 30th percentile.

 

While these policy changes will now be introduced next year, other announcements within, and omissions from, the chancellor’s speech were a cause for concern among sector bodies.

 

Announcements included proposed changes to the planning system which would see councils able to recover the full costs of “major business planning applications”, if they are able to meet “guaranteed faster timelines”, the chancellor said. However, should they fail to meet these, fees would be refunded “automatically, with the application being processed free of charge”, Mr Hunt added.

 

In addition, the government will launch a consultation on a new permitted development right to allow “any house to be converted into two flats, provided the exterior remains unaffected”. 

 

Some sector commentators drew attention to the lack of new funding for decarbonisation and energy-efficiency efforts.  

 

Planning changes

 

Commenting on the planning fee changes, Michael Dempsey, legal director in Addleshaw Goddard’s planning and infrastructure consenting team, said: “The proposal that councils should be able to recover the full costs of major planning applications is eye-catching, not least because it appears that it will not be without jeopardy for the councils themselves. If they do not meet the associated deadlines for the faster determination of the applications, the fees will be fully refunded.   

 

“However, I can’t see how this will to do anything to incentivise planning authorities to process applications more quickly. Many are chronically under-resourced and can’t process applications at the required speed. A more direct and, I think, much more effective solution would be additional funding for councils in this regard. I wouldn’t be surprised if some councils end up worse off under these proposed fee arrangements.”

 

On the suggestion of a new permitted development right to convert houses into flats, Peter Hardy, a partner at Addleshaw Goddard and co-head of living, said: “The chancellor’s [buy-one-get-one-free] offer is unlikely to attract quality landlords and will probably just become a new way to deliver poor [houses in multiple occupation]. We desperately need new housing, but this can’t be at the expense of decent living conditions.”

Responses from sector organisations

 

Chartered Institute of Housing (CIH)

 

The CIH welcomed the rise in the LHA rate. “This measure alone won’t solve the housing and homelessness crisis. But in the face of rising rents, ever-increasing numbers of families living in temporary accommodation and the lack of social housing, restoring the link to the 30th percentile and the commitment to uprate benefits by the September inflation figure will make a big difference to those struggling the most.”

 

Local Government Association

 

Shaun Davies, chair of the Local Government Association, labelled the end of the LHA freeze a “positive step”, but criticised the lack of additional funding to support “chronically underfunded” public services.

 

“Adult social care remains in a precarious position, record numbers of households are in temporary accommodation and there are now more than 80,000 looked-after children in England. The lack of additional funding in today’s announcement risks councils’ ability to meet this spiralling demand, provide critical care and support a healthy population with access to housing, training and jobs.

 

“Councils have worked hard to find efficiencies and reduce costs, but the easy savings have long since gone. It is wrong that our residents now face further cuts to services as well as the prospect of council tax rises next year, with councils having the difficult choice about raising bills to bring in desperately needed funding.”

 

London Councils

 

While it also welcomed the decision to end the freeze on LHA rates, London Councils warned that the Autumn Statement would still leave boroughs facing massive financial pressures and that, overall, the changes would not “significantly alter” the cross-party group’s forecast of a £600m shortfall in boroughs’ budgets this year. It added that the homelessness crisis and pressures on social care would remain “critical risks” to council finances across London.

 

Claire Holland, acting chair of London Councils, said: “Boroughs will continue to face massive budget pressures. Many are struggling to balance their budgets and the Autumn Statement leaves them teetering on the edge.

 

“London’s homelessness emergency is a key concern. After years of campaigning for an increase in LHA, we welcome the decision to end the freeze. Boosting LHA is essential for helping low-income Londoners pay their rent and avoid homelessness. This is good news for London renters and for boroughs’ hard-pressed homelessness services.

 

“But with one in 50 Londoners currently homeless and living in temporary accommodation arranged by their local borough, the housing crisis remains a critical risk to town-hall budgets. Enormous and growing pressures can also be seen across other vital services, especially adult and children’s social care.”

 

G15

 

Also in London, the chair of the G15 group of the capital’s largest housing associations welcomed the rise in benefit levels. Fiona Fletcher-Smith, chief executive of L&Q, said: “The chancellor’s confirmation that benefits will be uprated in line with September’s inflation figure is very welcome. This will ensure more households are protected from the very worst of the financial pressures they are currently having to bear.

 

“We are also pleased that LHA will be restored to the 30th percentile, as the G15 called for. Uplifting LHA rates to current levels will reduce the affordability gap and prevent immediate and avoidable hardship for private renters.”

 

But she added: “Notable in its absence from the Autumn Statement was any mention of additional measures to support the decarbonisation of Britain’s housing stock.

 

“We know that retrofit solves more than just the climate challenge, with a multitude of benefits stretching from lower bills for residents to economic opportunity for the country.

 

“Housing associations are, on average, more energy efficient than any other homes, but we need long-term policy certainty if we are to reach net zero by 2050.”

 

Scottish Federation of Housing Associations

 

The Scottish Federation of Housing Associations (SFHA) said the chancellor’s measures needed to go further to tackle “unacceptable levels of poverty” and to support Scotland’s social tenants.

 

Sally Thomas, chief executive of the SFHA, said: “It’s positive to hear the chancellor confirm that social security will be uprated in line with inflation, as well as unfreezing LHA rates, as we know that the cost of living crisis is still hitting people hard.

 

“But we also hear directly from our members about the scale of need that social tenants are facing, and we need to go further to address it. That’s why we’ll continue to call for more substantial reforms to Universal Credit, to ensure that no one should be facing a winter where they struggle to eat or heat their homes.”