Housing Benefit cuts ‘will create affordable homes crisis’
By Vivienne Russell | 1 November 2012
Almost half of local authority areas in England could be short of affordable housing by 2017, auditors have warned.
In a report published today, the National Audit Office assesses how the Department for Work and Pension is managing changes in Housing Benefit that take effect next year. From April 2013, the amount of support paid to tenants in both the private sector and in under-occupied homes in the social rented sector will be cut. The changes are expected to save more than £2bn.
The Local Housing Allowance paid for private sector accommodation is being capped. In addition, it is proposed to uprate the allowance using the Consumer Prices Index rather than often much-higher local rent inflation. These changes could put pressure on the supply of affordable housing, the watchdog concludes.
Downward pressure on rent charges or increased employment could mitigate the impact of this change, the NAO says. But on current trends, 48% of local authorities could have a shortfall in five years time.
More also needs to be done to assess how the changes will increase the administrative burden on local authorities.
It is estimated that the changes will reduce the benefits of around 2 million households. Claimants living in expensive areas such as London and those with large numbers of children are expected to be most affected.
The NAO highlights the uncertainty of how tenants and landlords will respond to the changes. It points out that many people are still largely unaware of the changes to their housing support. Surveys have indicated that 87% of private sector claimants know little or nothing of how the changes will affect them.
NAO head Amyas Morse said: ‘The Department for Work & Pensions is working to manage the introduction of the Housing Benefit reforms, but their full impact is currently uncertain and depends on how households and their housing market react, locally as well as nationally. The department has a crucial role to play in anticipating and addressing adverse consequences for claimants and the administration.
‘Some challenges cannot perhaps be planned for: where the interaction of local authority funding constraints, the social housing stock, rental market conditions and the local economy produces extreme impacts.’
Morse added that the DWP needed to respond flexibly as issues emerged.
Public Accounts Committee chair Margaret Hodge said she was ‘astonished’ that the department still did not understand the wider impact of the changes.
She added: ‘Significant administrative responsibilities have been lumped on local authorities, who are already suffering from cuts to their own budgets. There is the potential for sudden and unmanageable population movements, for example, families moving from inner to outer London where rents are cheaper but there is already a shortage of affordable housing. This would impact not only on demand for accommodation but also put huge pressure on local health and education services.’