Hundreds of thousands more people to be pushed into poverty by Labour’s freeze on housing benefit

Hundreds of thousands more people to be pushed into poverty by Labour’s freeze on housing benefit Exclusive: Leading charities warn that the decision will ‘undermine’ Andy Burnham’s pledge to end rough sleeping - Bookmark - CommentsGo to comments Become an Independent member to bookmark this article Already a member? Log in Nearly 200,000 families will be pushed into poverty or deeper poverty due to Labour’s decision not to end the freeze on housing benefits at the Budget, leading charities have warned. In an open letter to prime minister Andy Burnham, seen by The Independent, groups including the Trussell Trust, Generation Rent and the Joseph Rowntree Foundation say that maintaining the measure will “critically undermine” his commitment to end rough sleeping. The formula used to calculate housing benefit levels – the Local Housing Allowance (LHA) – has been frozen since April 2024. The mechanism is designed to ensure benefit levels are in line with at least the lowest 30 per cent of rents in any local area. But as market rents have continued to surge, the shortfall between LHA rates and affordable rent hit a record 23.3 per cent in October. This means a shortfall of around £200 a month for renters in London, and £100 a month for the rest of the UK. Joanne, 59, from Bury, faces a monthly housing benefit shortfall of around £125 on her £700 rental, but says moving to somewhere cheaper is impossible. She told The Independent: “Basically, you don’t have a life, you’re just existing because all your money is just going to live.” “It just takes every penny, and especially now with the energy... It gets you down very much because you don't know what's going to happen from one month to the next.” Private renters will be around £700 worse off per year by 2029 without action, figures from the Joseph Rowntree Foundation showed, pulling 50,000 into poverty for the first time. Around 60,000 will also be forced into deep poverty, and 80,000 into very deep poverty, the research indicates. In the UK, households are in poverty if their income after costs is below 60 per cent of the national average, falling to below 50 per cent for ‘deep poverty’ and below 40 per cent for ‘very deep poverty’. The 19 signatories, also including Shelter and The Salvation Army, have urged Mr Burnham to reconsider the continued freeze, and spend the £1.7bn needed to end it, alongside the introduction of an inflation-linked rent cap to limit rising costs. The letter says: “You have been clear that tackling homelessness is a top priority. These two steps would bring your vision within reach by tackling the cost of rent and ensuring that housing support for those who need it actually covers the cost of a home.” Holly Williamson, chief executive of Generation Rent, said that it is “hugely disappointing” that the government maintained the LHA freeze. She added: “When housing benefit doesn’t cover the rent it forces families into impossible decisions, traps them in poverty and leaves them vulnerable to homelessness, with councils picking up the pieces. “This decision also brings into question the government’s goal of ending rough sleeping, as it will mean there are very few affordable long-term homes for people currently sleeping rough.” Joanne, who lives with her 22-year-old daughter and works 10 hours a week at a local supermarket, suffers from fibromyalgia, spondylitis, and is recovering from breast cancer. She says she can’t afford to move to a bungalow because it would cost her even more. “It doesn't take a genius to work out, you know, the landlords are allowed to put their rent up every year, but the price cap doesn't go up. It’s so unfair,” Joanne said. “I just wish whoever makes that decision just lived a couple of months in our shoes, and they'd realise it's not working, it doesn't work.” She has been supported by Citizens Advice, whose research team recently found that more than half (58 per cent) of all privately renting households across Great Britain receiving housing benefit now are not getting enough support to cover their rent. Ahead of the Budget, the prime minister announced a further £432m towards his pledge to end rough sleeping at a summit with several leading campaigners and frontline charities. This brings the total funding commitment to £874 million, coming alongside an extra £1.5bn for the government’s affordable housing programme. While both announcements were welcomed by experts, many continue to warn that the continued LHA freeze is exacerbating the UK’s housing crisis by pushing more people towards homelessness. There were a record 135,580 families living in temporary accommodation as of March 2026, the most recent official figures show, housing 177,530 children. Councils in England spent a record £2.9bn on temporary accommodation in the year to April, equating to just over £8m a day and marking another record high. Signatories of the open letter tell the PM that around 8 in 10 (78 per cent) of low-income private renters receiving housing support are now going without essentials, adding that “this reality becomes untenable and they can no longer afford to stay living in their homes, and councils are left to pick up the pieces.” The government was approached for comment. Join our commenting forum Join thought-provoking conversations, follow other Independent readers and see their replies Comments