Add LHA relinking to 30th percentile as reform option

[MaxGhenis]

Summary

The Resolution Foundation identifies LHA (Local Housing Allowance) relinking to the 30th percentile of market rents as a key anti-poverty measure that should be modeled alongside two-child limit removal.

Policy Context

LHA rates were frozen for many years before being temporarily relinked to the 30th percentile. The RF analysis shows that combining:

1. Two-child limit removal
2. Benefit cap removal
3. LHA relinking to 30th percentile

Could lift ~1 million people (600,000 children) out of relative poverty immediately.

Current State

Check if PolicyEngine-UK has:

• LHA rate parameters by area
• Ability to model relinking to 30th percentile dynamically
• Integration with UC housing element calculations

Implementation

If not already supported:

1. Add LHA percentile parameter (currently at which percentile?)
2. Add housing cost data by broad rental market area (BRMA)
3. Model the UC/HB housing element with adjustable LHA rates

Fiscal Impact

The RF recommends this as part of a £10 billion poverty reduction package. Individual cost estimates for LHA relinking should be validated against HMRC/DWP estimates.

Source

• Resolution Foundation "No half measures" (30 Oct 2025)
• Resolution Foundation "Black holes and consolidations" (4 Nov 2025)

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