The DWP Data Deficit
Flaws in benefit calculations mean young people are being forced to live beyond their means.
The Shared Accommodation Rate (SAR) is the lowest rate of housing cost support, or Local Housing Allowance (LHA), given to young, single people in the private rented sector. Our recent report highlighted some of the problems with this scheme and argues that it’s failing to provide young people with the support they need to secure appropriate housing.
Shared housing shortages
Our recent findings highlight the chronic shortage in the provision of appropriate shared housing.
Demand outstrips supply almost everywhere, but the problem is worse in some places than others. The map below shows that large cities and university towns have relatively high provision, with Exeter and Brighton having a rate of approximately 1 house in multiple occupation (HMO) per every 20 young people. However, this may often be specifically targeted at groups like students (relatively cheap, but not available to the typical benefit claimant). Or it may proceed at a level beyond the means of people eligible for only the SAR.
Figure 1 — No. of HMOs per 16–34 year old*
Towns like Rochdale and Bromsgrove, and rural areas like North Norfolk have a provision rate of less than 1 shared house for every 1000 young people. In these areas, scarcity means it’s simply not fair to support housing costs on the expectation that sharing accommodation is possible, because it almost certainly isn’t.
Ideally, we would be able to assess HMO availability in relation to the number of young people actually receiving housing cost support at the SAR, and the places where they live. But the government does not routinely release this information.
Questionable calculations
The low level of shared housing provision across much of the country is also a problem because it’s being used to calculate the level of support people receive. The LHA calculates the level of support for different areas based on a survey of rents conducted by the Valuation Office Agency (VOA) on behalf of the Department for Work and Pensions (DWP). This records the contracted level of rents for different types of housing, and sets the level of support at a level equal to approximately the cheapest third of housing in each area.
Rent officers are required to ensure that these are an accurate reflection of the local housing market. But in much of the country, the level of shared housing provision is so low — or VOA methods are failing to capture the required data — that it’s hard to see how the required level of accuracy can be guaranteed.
We can tell this is a problem because the VOA publishes a list of all the rents that go into these calculations. This shows that the level of data used to set the SAR is much lower than the other categories. In almost half of all local rental markets across the country, the VOA uses fewer than 100 data points to set the rate. Given the nature of shared housing, many of these data points may represent different rooms in the same shared house. This means that it’s being calculated based on much less data than the other categories, with only the 4-bedroom rate even coming close. The 1 bedroom rate is set using an average of 650 data points, whilst the 2 bedroom rate uses more than 1400.
What we would expect to see, given this low level of data used to set the rate, is greater variation in how much the measure of rents in different areas change year on year. Looking at the recent increase to LHA rates that came into force on 1st April this year, figure 2 shows us that there was much greater variation in how much the SAR increased, relative to other categories. Measuring the standard deviation of the increases shows us how much the proportional change has varied across the different levels of support, and shows that this is twice as high for the SAR than for the 2-bedroom category of housing cost support.
The real-world implications
What this means in practice is that an area like Darlington saw a 0% increase, whilst Chesterfield saw a 45% increase. Rather than just being a technical point about the use of data, this demonstrates that it can have real-world consequences. This greater level of variation means that the chances that the SAR fails to reflect the actual rents is greater, and thus increases the chance that people simply aren’t being given an appropriate level of support.
Figure 2 — Standard Deviation of LHA increases across categories**
Paying people an amount that is appropriate for shared accommodation in the area won’t help if there simply isn’t enough to go round. And this is what the lack of data going into these calculations ultimately points towards: a lack of appropriate accommodation across much of the country.
This gap in the data is not simply an analytical issue; our report shows that it causes real harms to young people only eligible for the SAR.
*This map uses 2021 UK mid-year population estimates, and 2023 estimates of the number of households in HMOs, both published by the Office for National Statistics.
**Author’s calculations based on VOA data
