Plans to cut housing benefit in yesterday’s Budget risk increasing homelessness and demand for social services, experts have warned.
Chancellor George Osborne announced plans to claw back £1,765m a year from housing benefit, known as local housing allowance (LHA), by 2014-15.
Measures include capping payments so claimants can only afford to live in the 30% cheapest properties in their local area, down from 50%, increasing LHA in line with the consumer price index measure of inflation, rather than the higher retail price index, and chopping the benefit by 10% for those who have been on jobseeker’s allowance for more than a year.
LHA will also be capped for each property size, with a maximum of £400 a week for a four-bedroom property.
The Joseph Rowntree Foundation warned that some families could find themselves forced into “poor quality, overcrowded housing” in areas where private rents were high, such as London and the south east.
Shelter chief executive Campbell Robb said: “We are really concerned that even at current levels nearly half of local housing allowance claimants are already making up a shortfall of almost £100 a month to meet their rent.
“If this support is ripped out suddenly from under their feet it will push many households over the edge, triggering a spiral of debt, eviction and homelessness.”
Robb added the Budget had failed to address the central point of “the critical shortage of affordable housing”.
Jenny Edwards, chief executive of Homeless Link, warned that the homelessness charities faced a “perfect storm”, if housing benefit cuts drove increased homelessness at a time where charitable donations were falling and councils were making cuts to Supporting People budgets.
Martin Cheesman, joint chair of the Association of Directors of Adult Social Services’ housing network, said that the caps could potentially put a significant additional cost on to temporary accommodation budgets and make it more difficult for councils to get landlords to take homeless people as tenants.
Welfare rights consultant Neil Bateman said the changes were unlikely to reduce the welfare bill because the reforms did not look at the root causes of housing benefit claims, such as lack of work skills, high housing costs and low pay.
Bateman warned: “Any increases in poverty and joblessness and housing stresses directly impacts on the demand for social care support. We have this constantly with governments that they cut housing benefit but then don’t factor on additional costs of increased homelessness.”