Background

In 2008, when the Local Housing Allowance (LHA) was introduced, it was set at the 50th percentile of local rents. Since 2010, the formula for calculated the LHA has been changed almost every year and, going forward, the government continues to have choices about how they set and uprate LHAs.

Whilst these changes are likely to have had substantial impact on lower-income families, they have not been adequately scrutinised because of difficulties in modelling their effects. Outside of government, tax-benefit modelling in the UK depends on Family Resources Survey (FRS) data, which does not include geographic markers below the 12 UK regions/nations. This prevents precise modelling of tax and benefit policies that are directly influenced by more granular geography such as the Local Housing Allowance.

Outcomes

We propose to use special licence Family Resources Survey data along with an adapted version of the Institute for Public Policy Research Tax-Benefit Model to carry out accurate modelling for the first time of the impact of real and potential LHAs on incomes and poverty.

This will provide the first definitive view of the impact that the changes to the Local Housing Allowance over the past decade have had on poverty. It will also provide a definitive view of the likely impact on incomes and poverty over the next few years of LHA policy options currently being considered by the government.

Relevant Links

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