Saturday, 10 October 2015

Benefit cut for underoccupiers 'will not save money'

The government will spend more money than it saves by cutting housing benefit for social tenants who underoccupy their homes, Labour’s housing benefit spokesperson has warned.

Karen Buck told a committee of MPs working on the Welfare Reform Bill that the cut, which is intended to encourage social tenants to leave houses that are too large for their needs, could lead to a rise in homelessness.

She also said that as there are not enough smaller housing association and council properties to move the tenants into, demand would rise for housing benefit to cover more expensive private sector rents.

From April 2013, housing benefit will only be paid for the number of bedrooms that a tenant actually uses. The cut, which will affect 670,000 social tenants, will save £490 million.

Speaking on Thursday as the committee considered support for housing costs within the bill, Ms Buck said: ‘I suspect that the government’s proposed savings in the universal credit will be reduced the more under-occupation is tackled. It will cost more money when tenants downsize into newer, smaller housing association properties, because the rents are higher.

‘The impact assessment explicitly states that moving into the private rented sector is an option for people to downsize. In my understanding of social and market rents across the country, invariably market rents are higher, so such moves will end up costing more.’

She added that if households became homeless, local authorities would be obliged to house them, which would not save money either.

Housing associations and councils have already told the committee that there are not enough smaller properties to accommodate claimants who will need to move.

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