Housing Secretary writes to UK Government

To: The Rt Hon Steve Reed OBE MP Secretary of State for Housing, Communities and Local Government 

From: Housing Secretary Màiri McAllan

30 January 2026

Dear Mr Reed, I am writing to you further to my correspondence in October, shortly after your appointment as Secretary of State for Housing, Communities and Local Government, in which I raised concerns about the continued freeze to Local Housing Allowance (LHA) rates and the detrimental impact this is having on homelessness and child poverty.

I was deeply disappointed by the decision, announced in the recent UK Budget, to extend the LHA freeze into 2026-27. This marks the second consecutive year of frozen rates, and the third year since LHA was last uprated. At a time of continued high rents, this decision makes it harder for low-income households to access and sustain tenancies in the private rented sector.

In Scotland, freezing rates of support in 2026-27 will mean that 87 of the 90 LHA rates will fall below the 30th percentile of local market rents. We estimate that up to around 45,000 households in Scotland, including approximately 31,000 children, will be adversely impacted by the end of 2026-27. UK-wide analysis by the Joseph Rowntree Foundation shows that around half of those receiving housing support are already living below the poverty line. This is deeply worrying for private rented sector tenants who rely on housing support to keep a roof over their heads.

The Scottish Government continues to mitigate these impacts, including through increased funding for Discretionary Housing Payments. However, decisions taken at UK level on LHA limit our ability to prevent homelessness and tackle child poverty. I urge you to reconsider this position and to commit to uprating LHA so that rates permanently meet, at a minimum, the 30th percentile of local rents. Doing so would provide greater certainty for tenants, reduce pressure on homelessness services and support wider efforts to prevent poverty.

I am also concerned about the Housing Benefit subsidy arrangements for the provision of temporary accommodation. Local authorities currently receive subsidy equivalent to 90 per cent of the 2011 LHA rate to cover temporary accommodation costs. This arrangement has been frozen for almost 15 years, despite substantial increases in the cost of providing temporary accommodation over that period.

The subsidy system is placing an unfair burden on local authorities. This issue has been raised by councils across Scotland, who say it undermines their capacity to meet their statutory duties. I urge you to agree to a review of these funding arrangements, to ensure that subsidy levels reflect the true costs to councils.

It was encouraging to see the UK Government’s Autumn Budget commitment to introduce new earned-income disregards in Housing Benefit for people in supported housing and temporary accommodation.

I would welcome further detail on how these disregards work, who will be eligible and when they will be introduced. I would appreciate the opportunity to discuss these matters further with you, recognising that they impact on our shared ambition to prevent homelessness and protect children and families from poverty.

Yours sincerely,

MÀIRI MCALLAN