Housing Benefit caps 'will increase burden on councils'

22 Dec 10
The government should be prepared to step in and give councils extra funding to support changes to the Housing Benefit system, MPs warned today.
By Lucy Phillips


22 December 2010

The government should be prepared to step in and give councils extra funding to support changes to the Housing Benefit system, MPs warned today.


A
report by the Commons’ work and pensions select committee on changes to the Housing Benefit system announced in the June Budget said Whitehall should consider giving more funding to local authorities that were hit by influxes of new tenants because of the new regime.


Witnesses had suggested to the group of cross-party MPs that some councils might experience increased pressure on their services as cuts to housing benefit left people unable to pay their rents and forced to move to cheaper areas.

Government must therefore ‘monitor the costs of the policy to local government and be prepared

to consider additional funding if necessary in order to ensure that appropriate support and services can be provided to the new areas’, the report says.

 Changes to Housing Benefit announced by Chancellor George Osborne in his ‘emergency’ June Budget include capping maximum weekly rates at £400 and linking payments to the rents of the cheapest 30% of properties in a neighbourhood, rather than the average.

The government hopes to slash the £17 billion annual cost of housing benefit but, according to the MPs’ inquiry, some of the savings could be offset by the need to provide local authorities with extra resources to cope with the changes.

A number of witnesses said evictions and increased levels of homelessness in some areas would be

‘inevitable’ because of shortfalls between benefits and rents.

Large families, young people, older people and disabled people would be particularly affected. 

 Committee chair and Labour MP Anne Begg said there was still great uncertainty as to the impact of the changes.

She said: ‘It is difficult to judge at the moment to what extent Housing Benefit claimants will change their behaviour as a result of these proposals. The government hopes that people will be able to find cheaper accommodation in cheaper areas and that private landlords will be willing to reduce their rents to Local Housing Allowance claimants, so that the new levels will not result in an increase in homelessness.

‘However, it is too early to determine if this will happen in reality which is why it is hard say exactly what the impact of these changes will be.’

The report also raises concern about the plan to cut housing benefit by 10% for those who have been out of work for a year. It calls for a ‘more nuanced approach’.

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