In a ministerial statement  Lord Freud, work and pensions minister, announced the Local Housing Allowance (LHA) cap for general needs accommodation will be pushed back a year to 2019.

However, it will now apply to all tenants on Universal Credit, rather than just those who sign new or re-let tenancies, which was the previous policy. Lord Freud said this would “ensure simplicity and a streamlined process”.

In a costing document published alongside the Autumn Statement, the Treasury estimated it would save an additional £160m in 2020/21 as a result of the change, and a further £125m in 2021/22.

Housing associations have hit out against the change.

Sinéad Butters, chief executive of Aspire and chair of Placeshapers, said the policy shift was a “big surprise and not a welcome one”. “I can give examples where LHA is £52 a week and that doesn’t cover anybody’s rent. It might make sense in high-value areas but it doesn’t in many parts of the country,” she said.

Barbara Spicer, chief executive of Plus Dane Housing, said her tenants will have to find nearly £22 a week to pay their rent. “If transitional arrangements aren’t robust then the first port of call for people trying to find that money and waiting for their Universal Credit to kick in will be loan sharks – and effectively the government will see people fall into deeper poverty and despair,” she added.

Lord Freud said tenants who are moved from housing benefit onto Universal Credit after April 2019 will be protected “in cash terms” under a transitional arrangement.

 

A spokesperson for the Department for Work and Pensions said it will have provided £1bn in Discretionary Housing Payments by 2020 “to support people transitioning to our reforms”. The revelation came as a much-anticipated review in the supported housing sector published this week revealed £6.15bn is spent annually on supported housing rents, of which £4.1bn comes from housing benefit. This makes up approximately 17% of the total housing benefit bill.

A government analysis from 2010 estimated the benefit of providing supported housing came to £3.5bn a year. The review’s authors surveyed 197 councils, 173 supported housing providers and conducted 150 interviews with interested bodies. They called for a “stable and secure funding system” that allows commissioners and providers to “plan strategically and with certainty”.

Timeline: a tale of two welfare reforms

Pay to Stay

October 2011
The government pledges to clamp down on wealthy council tenants through Pay to Stay

March 2013
Powers introduced, with a threshold of £60,000, but take-up is tiny

July 2015
George Osborne announces compulsory Pay to Stay with thresholds of £30,000, or £40,000 in London

December 2015
Pay to Stay is made voluntary for housing associations

April 2016
Lords vote to make Pay to Stay voluntary for councils, but are defeated in the Commons

November 2016
Housing minister Gavin Barwell announces Pay to Stay will no longer be compulsory for councils

LHA cap

November 2015
Plans to cap housing benefit at Local Housing Allowance levels are announced

December 2015
Placeshapers research shows the cap will make supported housing unviable

March 2016
The government delays the implementation for a year and promises a review

September 2016
The government says it will give councils funding to top up the cash lost through the cut

November 2016
The government pushes implementation back to 2019, and in an unexpected twist says it will now apply to all tenants on Universal Credit