Secretary of State confirms that increase to local housing allowance rates will be frozen in cash terms from 2021/2022

Office for Budget Responsibility highlights that the cost of the measure will fall to £0.3 billion by 2025/2026, and that LHA rates will fall back below the 30th percentile of local rents over time

The Secretary of State for Work and Pensions Dr Thérèse Coffey has confirmed that the increase in local housing allowance rates - introduced at the start of the coronavirus pandemic - will be frozen in cash terms from next year.

Announcing in a written statement to the House of Commons today that she has concluded her annual review of benefit and state pension rates, Dr Coffey said that, while separate to the uprating review -

'I can confirm that the increase to local housing allowance rates in April this year will be maintained in cash terms in 2021/22. The assumption in the forecast is that rates will remain at these levels in future years, subject to the Secretary of State reviewing annually in the usual way.'

NB - in its latest economic and fiscal outlook, the Office for Budget Responsibility says -

'... [the government] has now decided that rates will be frozen in cash terms from 2021-22 onwards. This means the £1 billion cost of the measure in 2020-21 declines to £0.3 billion by 2025-26 (and that LHA rates will fall back below the 30th percentile of local rents over time).'

Dr Coffey also clarified today that her statutory annual review is also separate from the £20 per week increase in universal credit and working tax credit rates that was announced by the Chancellor as a temporary measure in March 2020 in response to the COVID-19 pandemic, and that -

'As the Government has done throughout this crisis, it will continue to assess how best to support low-income families, which is why we will look at the economic and health context in the new year.'

Dr Coffey's written statement is available from parliament.uk