Select committee to probe "£700m shortfall" in DWP housing refunds to councils

MPs on the Work and Pensions Committee will hold a one-off session later this month to consider a reported shortfall of £737.3 million across five years in Department for Work and Pensions (DWP) refunds to local authorities.

The shortfall was highlighted by Local Government Association research published last December.

Announcing the review, the committee noted that councils are required to provide temporary accommodation as part of their duty to reduce homelessness, the costs for which should then be reimbursed by the DWP at a rate linked to local rental costs.

“But while the DWP pays individuals a rate linked to 30% of 2024 private rental levels (Local Housing Allowance), the cash handed to struggling local authorities is pegged to 2011 rates,” it added. This amounts to 90% of the LHA rates as they were 14 years ago.

According to ONS data, between 2015 and 2024 rents in the private sector jumped by almost a quarter. 

Witnesses, who will include representatives from the Local Government Association, the National Residential Landlord Association and charities, will also be asked about the impact of insufficient support to individuals to cover housing costs and on the supply of social housing.

The committee’s session will take place on Wednesday 18 June 2025 at 09.30am and can be watched via the parliamentlive.tv website here.

Harry Rodd