Briefing: housing benefit in Scotland
If the proposed 2011 changes to housing benefit are implemented, in Scotland the highest average
loss for a two-bedroom home by local authority is £69 per month. Across Scotland, 22 out of 28
local authorities face an average loss of £30 or more.
A full list of local authorities in Scotland is included at the end of this briefing, showing the impact of
these changes on your constituents. A full timetable of all the housing benefit changes being
proposed is also included.
Map showing the impact of the proposed changes by local authority
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What’s happening in Parliament in November?
 A debate and vote on the proposed changes to housing benefit (Tuesday 9 November)
 Regulations scheduled to be laid to implement the two 2011 changes (see below)
What regulations are being laid in November?
Two changes due to be implemented through secondary legislation this month:
 The percentile of market rents used to calculate Local Housing Allowance (LHA) rates will be
reduced from the median to the 30th percentile of local rents from October 2011
 The maximum LHA payable for each property size will be capped from April 2011
How many people are affected by the proposed changes?
As at July 2010, there were 1,091,410 people in receipt of LHA in the private rented sector (out of
4.7m housing benefit recipients overall). The combined changes to housing benefit will affect
99.8% of all those receiving LHA.
Who claims housing benefit?
Only 1 in 8 of all housing benefit claimants is unemployed. Taking just those in receipt of LHA,
across the country 26% are in employment and only 19% claim Jobseeker’s Allowance (JSA). The
rest include pensioners, carers and disabled people unable to work. In Scotland, 21% of people in
receipt of LHA are in employment. Figures showing the number in employment for each local
authority area are included in the table at the end of this briefing.
What is the most significant change happening now?
There has been a lot of media interest in the caps being introduced, but the proposal to use the
30th percentile of local rents to calculate LHA (rather than the median) will have a far wider impact,
affecting people in every constituency. The caps affect 21,000 households, 17,000 of which are in
London. The change to the 30th percentile affects 775,000 people across the UK.
What is the most significant change proposed for the future?
The most brutal of all the housing benefit changes is the proposal to up-rate LHA according to the
Consumer Price Index (CPI) rather than local rents, as currently happens. If this change goes
ahead, more and more areas of the country will become no-go zones for low-income claimants as
LHA falls further and further below the reality of local rents. For example, between 1997/98 and
2007/08, average rents increased by 70% but over the same period CPI increased by only 20%.
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Does this affect every constituency, including mine?
Yes. The cap that has been the main focus of the media coverage only affects London, but all the
other changes – including the move to the 30th percentile – impact LHA claimants across the UK.
Even before the changes, many households struggle to find accommodation within their budget
and nearly half of LHA claimants already faced shortfalls between the LHA they receive and the
rent they have to pay, on average almost £100 a month. These shortfalls will be more common and
larger if all the proposals are implemented.
Will more people end up in poverty if these changes go ahead?
Independent research by the University of Cambridge shows that the cuts to LHA are likely to have
the effect of shifting many claimant households into severe poverty. The cuts will push an
additional 84,000 households below £100 per week per couple to live on for all expenses after
housing costs. These households include 54,000 children.
Will more people end up homeless if these changes go ahead?
The independent research also shows that 134,000 households will either be evicted or forced to
move when the cuts come in next year as they will be unable to negotiate cheaper rents. Of these,
an estimated 35,000 households will approach their local authorities for housing assistance, and
where councils have a legal duty to help they will face costs of up to £120 million a year for
providing temporary accommodation such as hostels or bed and breakfasts. There will also be
additional administrative costs to councils in processing the homelessness applications they will
receive.
Will the proposed changes encourage people into work?
The proposals in the Universal Credit idea to unify benefit tapers and make the system simpler are
welcome and should incentivise people seeking employment. However, the changes being
proposed to housing benefit in advance of bringing forward the Universal Credit will severely
undermine that goal. Some will be forced to give up employment because they can no longer live
within a commutable distance, some will be faced with moving away from friends or family they use
to provide child care to support them working.
Will rents just drop when LHA rates are reduced?
The government has produced no robust evidence to suggest rents will drop sufficiently and across
the board to offset the scale of these cuts. Almost half of claimants pay a shortfall already
suggesting that in at least half of cases rents won’t drop. The only areas where we would expect to
see downward pressure on rents is those areas with a high number of claimants. But this will only
ensure that claimants are forced to move to and concentrate further in the poorest areas.
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What are all the different proposed changes and when are they due to
take effect?
April 2011
 The separate local housing allowance (LHA) rate for five bedroom homes will be abolished so
that the maximum rate that can be claimed will be for four bedroom homes1.
 Claimants will no longer be able to claim a £15 weekly excess if their rent is lower than the
amount of LHA they receive1.
 The maximum LHA payable for each property size will be capped2.
 Non-dependent deductions will be increased over three years.
October 2011
 The percentile of market rents used to calculate LHA rates will be reduced from the median to
the 30th percentile of local rents from October 20112.
April 2012
 The age threshold for claiming the Single Room Rate (SRR) will be increased from 25 to 35.
 Increase in Discretionary Housing Payments (DHP) fund from £10 million in 2011-12 to £40
million a year from 2012-13.
April 2013
 LHA rates will be up-rated by the Consumer Price Index (CPI) from 2013/14.
 Receipt of full housing benefit for claimants who can be expected to look for work will be timelimited to 12 months and then reduced by 10%.
 Housing benefit will be restricted for working age claimants in the social rented sector who are
occupying a larger property than their household size.
 The maximum amount of benefits an out of work household can claim will be capped at £500
per week (£26k per annum) for couples and lone parents and £350 per week for singles.
More questions?
Constituents, MPs or caseworkers can get help with individual cases by calling our free3 national
helpline on 0808 800 4444 or visiting http://scotland.shelter.org.uk/getadvice to find online advice
or details of their nearest face-to-face advice.
For further information about these changes or any housing related policy issues, parliamentarians
and their staff can contact Shelter’s public affairs team by email on public [email protected] or
by telephone on 0344 515 1182.
1
This change was introduced by the previous government
Expected to be included in regulations currently scheduled to be laid in November 2010
3
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The impact of the LHA changes in Scotland
Average loss
per month - 2
bedroom
homes
Average loss
per month all bedroom
sizes
Average % of
LHA claim lost all bedroom
sizes
% LHA
claimants in
employment
Aberdeen City
£69
£52
12%
30%
Aberdeenshire
£69
£64
14%
23%
Angus
£56
£50
13%
23%
Argyll and Bute
£52
£53
14%
16%
Clackmannanshire
£48
£42
10%
17%
Dumfries and Galloway
£39
£40
12%
25%
Dundee City
£52
£48
13%
22%
East Dunbartonshire
£39
£34
7%
22%
East Lothian
£52
£53
10%
33%
East Renfrewshire
£48
£50
11%
26%
Edinburgh, City of
£48
£51
10%
30%
Eilean Siar
£48
£49
14%
21%
Fife
£35
£41
11%
20%
Glasgow City
£56
£47
11%
17%
Highland
£39
£44
12%
26%
Inverclyde
£30
£35
9%
14%
Midlothian
£48
£49
9%
25%
North Ayrshire
£30
£36
9%
12%
North Lanarkshire
£30
£35
9%
16%
Orkney Islands
£43
£49
13%
29%
Perth and Kinross
£56
£47
13%
26%
Renfrewshire
£30
£38
10%
19%
Scottish Borders
£43
£41
12%
23%
Shetland Islands
£39
£39
10%
20%
South Ayrshire
£30
£36
10%
22%
South Lanarkshire
£26
£34
9%
22%
Stirling
£39
£38
10%
24%
West Dunbartonshire
£52
£44
11%
16%
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