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The Local Housing Allowance (LHA) model should be extended to the social rented sector, as part of a major welfare overhaul in Britain, a leading think-tank has claimed. A report urging wide-ranging welfare reform, published by the centre-left think-tank, Demos, on 21 April, calls on the incoming government to extend Labour's experiment with LHA in the private rented sector to social housing tenants. Under the LHA, introduced in 2008, a flat rate housing benefit is paid to all claimants living in a rental market area. This contrasted with other forms of housing support, which were generally paid according to the cost of a particular property. The idea behind LHA is to provide an incentive for benefit recipients to ‘shop around' for cheaper accommodation. Claimants are even allowed to keep cash saved when they rent somewhere cheaper than the flat fee LHA payment. Report co-authors, Rob Harvey and Rob Murdoch claim that extending the LHA system to the social rented sector – incorporating council housing and housing associations, for example – ‘discourages claimants from under-occupying accommodation, reduces distortions in the housing market, and engages claimants in the same [housing] choices and trade-offs as non-claimants'. The study, endorsed by Demos chair and former work and pensions secretary, James Purnell, suggests the Government should ‘aggressively focus the welfare state on its core purpose of getting people back to work, rather than treating the benefits system as a catch-all for every social problem'.

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Call to extend LHA to social rented sector

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