Budget: Housing benefit system will be scrapped

THE current housing benefit system, in which some families claim up to £104,000 a year and which costs the country £21bn annually, will be scrapped.

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Instead a number of reforms will be introduced, including a maximum limit of 400 a week for a house with four or more bedrooms on the amount that can be claimed.

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Chancellor George Osborne said spending on housing benefit had risen from 14bn ten years ago to 21bn.

"That is close to a 50 per cent increase over and above inflation. Costs are completely out of control. We now spend more on housing benefit than we do on the police and on universities combined," he said.

"And among these enormous numbers for total spending there are some equally enormous individual awards. Today there are some families receiving 104,000 a year in housing benefit.

"The cost of that single award is equivalent to the total income tax and national insurance paid by 16 working people on median incomes. It is clear that the system of housing benefit is in dire need for reform."

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He went on: "Our package reduces the costs of Housing Benefit by 1.8bn a year by the end of the Parliament, or seven per cent of the total budget. It will also improve incentives to work. But at the same time we will target more resources to those who need it most, by increasing the budget for Discretionary Housing Payments, to deal with hardship cases, by 40m.

And from now we will cover the cost of an additional room for those claimants with a disability who need a carer."

But the chief executive of housing charity Shelter, Campbell Robb, hit out at the plans.

"The vast majority of housing benefit claimants are either pensioners, those with disabilities, people caring for a relative or hardworking people on low incomes, and only one in eight people who receive housing benefit is unemployed," he said.