Impact assessment

Equality Analysis for uprating Local Housing Allowance rates to the 30th percentile of local rents

Published 6 October 2020

This was published under the 2019 to 2022 Johnson Conservative government

Introduction

This document records the analysis undertaken by the Department to enable Ministers to fulfil the requirements placed on them by the Public Sector Equality Duty (PSED) as set out in section 149 of the Equality Act 2010.

The PSED requires the Minister to pay due regard to the need to:

• eliminate unlawful discrimination, harassment and victimisation and other conduct prohibited by the Act

• advance equality of opportunity between people who share a protected characteristic and those who do not; and

• foster good relations between people who share a protected characteristic and those who do not

When making a policy decision, as such, the evidence and analysis must inform the decision on the policy outlined above.

In undertaking the analysis that underpins this document, where applicable, the Department has also taken into account:

• the United Nations Convention on the Rights of the Child (UNCRC) and, in particular: Article 2 (the duty not to discriminate); Article 3 (the duty to treat the best interests of the child as a primary consideration); Article 6 (the right to life and to develop to the maximum extent possible); Article 9 (the right for children not to be separated from their parents against their will); Article 16 (prohibition against arbitrary or unlawful interference with private life, home and family); article 26 (social security); and article 27 (standard of living)

• the Convention on the Elimination of all forms of Discrimination Against Women in particular articles 2 (policy measures), 3 (Guarantee of Basic Human Rights and Fundamental Freedoms) and 13 (economic and social benefits)

• and the UN Convention on the Rights of Persons with Disabilities

Local Housing Allowance

Local Housing Allowance (LHA) rates were introduced into the private rented sector in 2008. Each of the 192 Broad Rental Market Areas (BRMAs) in Great Britain has 5 LHA rates - for 4+, 3, 2, 1 bedroom(s) and shared accommodation respectively. These rates are set each year with reference to market rents in each area and determine the amount of housing support (either through Housing Benefit (HB) or Universal Credit (UC)) provided to each household. The LHA rates policy therefore ensures that taxpayers do not subsidise benefit claimants to live in expensive rental accommodation that those not on benefits could not afford, and similarly helps balance the overall HB/UC housing support bill.

LHA rates for each BRMA were originally set at the 50th percentile (median) of market rents in 2008. This was subsequently reduced to the 30th percentile in 2011, meaning benefit claimants could access the bottom 30% of the private rental market without supplementing rental costs themselves from other income.

Increases to LHA rates have been restrained for a number of years; in April 2013 increases were limited to the level of the Consumer Price Index (CPI) and in 2014/15 and 2015/16, increases were limited to 1 per cent in line with other working age benefits. Alongside the 1 per cent uprating measure, there was £140 million in Targeted Affordability Funding available over the two-year period. This was used to increase specific LHA rates by 4 per cent in the areas most affected by affordability, subject to the maximum LHA limits. In the Summer Budget 2015, the Government announced that from April 2016 there would be a freeze in LHA rates for four years. The policy objectives for freezing LHA rates were to restrain growth in LHA rates and consequently housing support expenditure, contributing to the fiscal deficit reduction strategy and the £12 billion savings measures announced by the Chancellor in the Summer Budget 2015.

To tackle affordability pressures in the worst affected areas of the country, the government has provided additional funds for the last three years of the LHA freeze, which were first set at 30% of the savings from the freeze and were later increased to 50% of the savings following the Autumn Budget 2017. In 2019/20 this Targeted Affordability Funding (TAF) was used to increase 361 of the 960 LHA rates by 3%.

Originally LHA rates were due to be increased by CPI (1.7%) from April 2020, however the current COVID-19 pandemic has resulted in a policy change to provide immediate additional support for housing support claimants.

From April 2020 LHA rates will be increased to the 30th percentile of local rents for one year including an increase to the national caps which will be based on the highest outer London LHA rates plus an extra 20%.

Evidence and Analysis

Impact on Protected Groups

1. This policy change applies to all LHA rates from April 2020 and, as a result, affects all LHA claimants with a shortfall, regardless of whether they have protected characteristics or not. However, it may indirectly impact certain groups more than others.

2. The change being considered here is lifting LHA rates to the 30th percentile.

3. All rates are capped based on the highest outer London LHA rates plus an extra 20% (i.e. none can be set at a higher level). These caps apply mainly in inner London, where rents are highest.

4. This is a positive change and will benefit all those claimants in the PRS who are subject to LHA rules who have a shortfall between their rent and their LHA rate (claimants whose tenancies started before 2008 do not have their rents restricted by LHA unless a change of circumstance has bought them within scope).

5. This analysis covers all claimants in the PRS with a shortfall between their rent and LHA rate. In practice a small minority will not be impacted as the LHA rates in their area are already at the 30th percentile.

6. Unless otherwise noted the data are taken from the 2017/18 Family Resources Survey (FRS). They relate specifically to housing benefit only, and do not include UC. We assume that this is a reasonable approximation of housing support as a whole.

7. The administrative data on housing benefit, known as SHBE, does have some information on protected characteristics. However, this only consistently collected for age and gender. Where this information is available it is broadly consistent with the FRS results. FRS is preferred here for consistency with the other characteristics and because, unlike SHBE, it enables comparisons with the whole population of households.

Protected characteristic – gender

8. As this policy measure could potentially affect everyone on HB or UC in the PRS, it does not directly affect one gender group differently from another. Table 1 below, shows housing support claimants with a shortfall disaggregated by gender.

9. As there is a higher proportion of single females (52%) claiming housing support in the PRS with a shortfall than single males (18%) or couples (30%), increasing LHA rates to the 30th percentile is more likely to benefit single females than single males. However, there is no evidence that men are being disadvantaged by this policy, and most of the single women affected are lone parents as explained below.

Table 1: Breakdown of the housing support caseload by gender

	All PRS housing support claimants with a shortfall	Whole population
Single Male	18%	25%
Single Female	52%	28%
Couples	30%	47%

10. Table 2 gives the breakdown of the PRS housing support caseload with a shortfall by gender and the presence of dependent children. Of the single females affected, 66% have at least one dependent child.

Table 2: Breakdown of the housing support caseload by gender and number of dependent children

All PRS housing support claimants with a shortfall

	No dependent children	At least one dependent child
Single Male	89%	11%
Single Female	34%	66%
Couple	24%	76%

Whole population

	No dependent children	At least one dependent child
Single Male	98%	2%
Single Female	83%	17%
Couple	63%	37%

Protected characteristic – disability

11. Increasing LHA rates to the 30th percentile may potentially affect everyone in the PRS claiming HB or UC under the LHA rules who has a shortfall between their rent and their LHA rate, regardless of disability. However, this measure may have a greater positive impact on claimants who are disabled or have disabled children because of the potentially limited opportunity to overcome the difficulties of trying to secure suitable, alternative accommodation if facing a shortfall. This could be due to specific needs for adapted properties, for example ground floor accommodation with wheelchair access.

12. Table 3 below shows the proportion of the housing support caseload who have a shortfall who describe any member of the benefit unit as disabled or not disabled. The proportion of households with a disabled member claiming housing support in the PRS with a shortfall is higher (44%) than the proportion of households with a disabled member across the population (33%).

Table 3: Breakdown of the housing support caseload by disability

	All PRS housing support claimants with a shortfall	Whole population
At least one person in the household with Equality Act 2010 disability (core definition)	53%	33%
No people in household with Equality Act 2010 disability (core definition)	47%	67%

Protected characteristic – age

13. There are no age restrictions for adults claiming housing support in the PRS under the LHA scheme, although different rules and amounts apply for those who are single without dependents and are under 35 years of age. Whilst this policy can potentially affect all those claiming HB or UC under the LHA rule, there is nothing in this policy change which directly treats one age group differently to another. The impact of the change may however indirectly affect some individuals more than others because of their age.

14. Table 4 below shows that the highest proportion of housing support claimants in the PRS with a shortfall are in the 35 to 64 age group (57%) this is a greater proportion than they represent in the whole population (45%). However, there is no evidence that the other age groups are being disadvantaged by this policy.

Table 4: Breakdown of the housing support caseload by age

	All PRS housing support claimants with a shortfall	Whole population
Under 35	28%	30%
35 to 64	57%	45%
65 plus	15%	25%

Protected characteristic – ethnicity

15. As this policy change potentially affects everyone claiming HB or UC under the LHA rules who has a shortfall between their rent and their LHA, it does not directly affect any ethnic group differently from another.

16. Table 5 below shows the ethnicity of the housing support claimants in the PRS with a shortfall and the whole population. The proportion of ethnic minority groups in receipt of PRS housing support with a shortfall is slightly higher than in the whole population of households. This indicates that a slightly higher proportion of ethnic minorities will benefit from the proposed LHA uprating. However, there is no evidence that any ethnicities are being disadvantaged by this policy.

Table 5: Breakdown of the housing support caseload by ethnicity

	All PRS housing support claimants with a shortfall	Whole population
White	82%	88%
Mixed/ Multiple ethnic groups	2%	1%
Asian/ Asian British	10%	7%
Black/ African/ Caribbean/ Black British	4%	3%
Other ethnic group	3%	1%

Protected characteristic – gender reassignment

17. The Department does not collect information on transgender following Cabinet Office consultation with the Government Equalities Office, as it is not deemed best practice to do so. We do not envisage an adverse impact on these grounds.

Protected characteristic – sexual orientation

18. As this policy change potentially affects everyone claiming HB or UC under the LHA rules who has a shortfall between their rent and their LHA rate, it does not directly affect any sexual orientation differently from another. Table 6 below shows the sexual orientation of the housing support claimants in the PRS with a shortfall and the whole population.

19. The percentage of each sexual orientation group identified in receipt of housing support in the PRS with a shortfall is the same as that of the whole population. Therefore, there is no evidence that any sexual orientation will be indirectly disadvantaged by this policy.

Table 6: Breakdown of the housing support caseload by sexual orientation^{[footnote 1]}

	All PRS housing support claimants with a shortfall	Whole population
Heterosexual/Straight	97%	97%
Gay/Lesbian	2%	2%
Bisexual	1%	1%
Other	0%	0%

Protected characteristic – religion or belief

20. As this policy measure potentially affects everyone claiming HB or UC under the LHA rules has a shortfall between their rent and their LHA rate, it does not directly affect any religion or belief differently from another. Table 7 below shows the religion or belief of the housing benefit claimants in the PRS with a shortfall and the whole population.

21. Proportions of religious or belief groups identified are slightly higher for those in the PRS with a shortfall than for the whole population of households for Muslims and people with no religion declared. This indicates that a higher proportion of some religious groups will benefit from the proposed LHA uprating. There are a higher proportion of Christians than any other group who will benefit as they make up the largest group at 43%, although the proportion of Christians benefitting is lower than that in the whole population. However, there is no evidence that any religious groups are being disadvantaged by this policy

Table 7: Breakdown of the housing support caseload by religion or belief

	All PRS housing support claimants with a shortfall	Whole population
Christian	43%	55%
No Religion	40%	36%
Muslim	11%	5%
Hindu	1%	1%
Buddhist	1%	0%
Sikh	0%	1%
Jewish	0%	1%

Protected characteristic – pregnancy and maternity

22. The Department only holds information on pregnancy and maternity in very specific circumstances, for example where it is the primary reason for incapacity on Employment and Support Allowance. It cannot be used therefore, to accurately assess the equality impacts, however, we do not envisage an adverse impact on these grounds.

Mitigation

23. This policy change is for an overall increase to LHA rates but the Government recognises that for some vulnerable customers, the increase may mean they still struggle with affordability and may still need additional support. As a mitigation measure the Government provides Discretionary Housing Payments.

Discretionary Housing Payments

24. The Government recognises that housing support claimants paid according to the LHA rules may still face a shortfall between their housing support and rent despite uprating all LHA rates to the 30th percentile. The Discretionary Housing Payment (DHP) scheme is administered by Local Authorities and is designed to help support vulnerable claimants most affected by welfare reforms including affordability pressures in the private rented sector.

25. Since 2011 the Government has provided over £1 billion in DHP funding to local authorities to protect the most vulnerable claimants and support households affected by different welfare reforms including the recent freeze to LHA rates. In addition, a further £40m in funding has been provided for 2020/21 for the purposes of addressing affordability.

26. In particular, DHPs can be used by Local Authorities to help those households remain in their home where the type and level of disability places restrictions on the amount of suitable alternative accommodation available. It can also be used to help people with removal costs and deposits so they are able to move to more affordable accommodation.

27. Payments are entirely at the discretion of the Local Authority and it is up to each authority to decide the amount and duration of each award and when an award should be made. These payments are subject to an overall annual cash limit, but in addition to the Government contribution, Local Authorities in England and Wales can use their own funds to add up to 150% of the Government contribution (there is no cap in Scotland).

Other options for mitigating the impacts

28. For claimants who are facing a shortfall between their LHA award and contractual rent as a result of the previous LHA Freeze, despite the increase to the 30th percentile, there are other options they can consider if they haven’t been able to claim a DHP award.

29. Some tenants may be able to re-negotiate with their landlord if the rent increases beyond their means to pay it. Some landlords may prefer to continue letting to a reliable tenant rather than risk letting to someone new or having the property empty if they can’t find someone else.

30. Some claimants may consider looking for cheaper accommodation either in the same area or further afield, either of the same size or smaller depending on their household size.

31. Single claimants could consider sharing accommodation, such as entering into a house-share arrangement to cut down on rental costs.

32. For those of working age who are able to, entering employment or working more hours of work will increase their income and help pay any shortfall in rent.

33. For lone parents who may find it more difficult to move into work or increase their hours of work when they have a child under school-age because of the cost of childcare, 30 hours a week free childcare is available for working parents of 3 and 4 year olds. UC claimants can continue to get help with UC childcare costs additional to receiving free childcare hours.

Monitoring and evaluation

34.DWP is committed to monitoring the impact of its policies and we will use evidence from a number of sources on the experiences and outcomes of protected groups.

• we will monitor the 30th percentile of market rents sampled by Rent Officers by Broad Rental Market Areas and property sizes

• we will monitor the proportion of LHA claimants with shortfalls and the amounts of those shortfalls

• we will use administrative datasets to monitor trends in the benefit caseloads for some of the protected groups and in the level and distribution of benefit entitlements. The administrative data will provide robust material for age and gender although not, as a rule, for the other protected groups. We will also monitor changes in the distribution of caseload by area

• we will continue to monitor the impacts of other reforms to housing support, including the removal of the spare room subsidy and the benefit cap to assess any potential impact on claimants in the PRS

• we will use feedback from stakeholder groups to assess whether there are unintended consequences for the protected groups and whether the policy itself results in adverse consequences for particular groups

When will the potential impacts be reviewed?

The policy will be monitored on an on-going basis. Updated administrative data is available to DWP on a quarterly basis.

SCS Legal sign off: John Ward
SCS Policy sign off: Natalie Keogh

1. Figures are based on those who provided response to question on sexual orientation, and large numbers of missing values increases potential sample error that may account for higher proportion of heterosexual/straight than population estimates from other sources. ↩