Resolution Foundation urges £6bn budget spend to close rent-benefit gap
The Resolution Foundation is calling on the government to allocate £6 billion by 2029/30 to re-link housing benefit rates to local rents and ease the rent burden on low-income renters.
The Resolution Foundation has released a study highlighting a record-high disparity between private rental prices and the Local Housing Allowance, which has been frozen since April 2024. Over 1.1 million low-income renters are now confronting a "cost of housing crunch," with the shortfall projected to hit 23.3 percent in October and potentially rise to 30 percent by early 2028. The think-tank recommends that the upcoming Budget allocate £2 billion annually to re-peg LHA to local market rents, amounting to £6 billion by the 2029/30 fiscal year.
Their analysis of the April 2024 adjustment found that each extra pound of benefit generated only a modest 10 p increase in bottom-tier rents and instantly reduced rental shortfalls for more than 150,000 Universal Credit households. Economists argue that failing to act would lock in another year of frozen benefits, worsening material deprivation for renters who already forgo essentials. Housing campaigners, including Shelter, echo the call, warning that one outlet freeze leaves families choosing between food and rent and contributes to prolonged homelessness. The government has not yet responded to requests for comment.
Why it matters
Millions of low-income renters risk deeper poverty unless housing benefits are updated to reflect rising rents.
How the sides frame it
HIGH AGREEMENTBoth camps report the Resolution Foundation’s call for a £2 billion annual increase to re-peg Local Housing Allowance, but left-leaning coverage stresses the hardship for low-income renters, while right-leaning coverage stresses the affordability benefit and frames the proposal as a response to Conservative cuts.
LEFT
Left-leaning coverage frames the story as a warning about a record-high rent-benefit gap that is forcing more than 1.1 million low-income renters into a “cost of housing crunch,” and calls for a £6 billion spend to close the gap.
RIGHT
Right-leaning coverage frames the story as a policy proposal for Prime Minister Andy Burnham to add £2 billion annually to the housing-benefit budget, arguing it would improve rental affordability rather than simply boost landlords’ profits.
The left emphasises
- over 1.1 million low-income renters facing a “cost of housing crunch”
- the gap could reach 23.3 % now and 30 % by early 2028
- calls for £2 billion a year (£6 billion by 2029/30) to re-peg LHA to market rents
The right emphasises
- asks Prime Minister Andy Burnham to increase the housing-benefit budget by £2 billion
- re-linking LHA to local rent levels would be automatically updated with rent growth
- the increase would improve rental affordability rather than simply boost landlords’ profits
How this story developed
- Sep 1 Prime Minister Andy Burnham to Address Commons on First Day Back
- Sep 3 Burnham announced a plan to extend devolution to all parts of England and to increase public control of utilities.
- Sep 3 During the opening of Reform UK's three-day conference in Birmingham, deputy leader Richard Tice warned against Chinese buses and goods, urging support for British manufacturing. Yet the nearby merchandise stall offered caps, hoodies and water bottles that were produced in China alongside items from Bangladesh, Pakistan and India. Prices ranged from £5 for pins to £45 for hoodies, with a UK-made Nigel Farage tea towel costing £20. The speech also highlighted the party’s broader business agenda and its leader Nigel Farage’s recent controversies.
- Sep 4 Bond yields surged to their fastest rise since the 2022 mini‑budget, wiping out £12 billion of fiscal headroom.
- Sep 6 Burnham pledged to transfer failing utilities into public ownership.
- Sep 6 John Healey will launch a £150 million fund aimed at supporting university spin-outs and other high-growth companies across northern England.
- Sep 6 West Midlands Police have issued a call for the protester to come forward to assist their inquiry.
- Sep 7 Healey also pledged steps to curb borrowing costs, energy bills, regulation and labour expenses on UK businesses.
- Sep 9 Prime Minister Andy Burnham said he will not trim social security programmes to meet the 3 % of GDP defence spending goal and gave no timetable for reaching it.
- Sep 9 Burnham publicly rejected the welfare‑cut funding plan.
- Sep 13 Burnham faced his first Prime Minister's Questions where opposition members pressed him on funding for his agenda.
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