Housing alert over benefit changes

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SHORTAGES of affordable housing could affect almost half of England within five years because of Government welfare reforms.

The National Audit Office yesterday warned that increasing state help with rents by inflation rather than the actual cost of local homes could lead to “significant problems”.

It also said that 87 per cent of claimants know little or nothing about the cuts to housing benefit they face because the Department for Work and Pensions (DWP) has “struggled to raise awareness”.

And it noted the DWP had “little firm evidence” about the likely impact on claimants’ behaviour or the costs of administering reforms which are supposed to save the Treasury £2.3bn a year.

“It is not clear that communications are translating to increased awareness of reforms or whether additional funding will meet the needs of local authorities,” the report found.

Public accounts committee chair Margaret Hodge said was “astonished that the Department still does not understand the wider impacts of these changes”.

The potential for shortfalls in affordable housing across large swathes of the country was also “deeply worrying”, she said in reaction to the report.

The NAO highlighted potential issues with a number of the reforms – which include a cap on rents and overall benefits and restricting the under-35s to claiming the cost of shared accommodation.

About two million households will see payments cut, with a small number facing substantial reductions in their state help with housing.

The report paints a stark picture of the effect of raising local housing allowance – which covers private sector accommodation – by the CPI rate of inflation not average rent rises in an area.

It warned that “the speed and extent of shortfalls could be significant”, with the potential for large-scale migrations to areas with more affordable housing.

On recent trends, 48 per cent of councils would no longer be able to meet in full the rents of half of all claimants – the present proportion – by 2017, it calculated.

Even if the measure succeeded, as Ministers hope, in pushing down rents, boosting housebuilding and getting more people into work, about 30 per cent of areas would still face that shortfall.

There was a “limited awareness” among the 1.4 million people expected to be directly affected by the change – with 13 per cent saying that they knew “a fair amount” or “a great deal”, the report added.

More than half – in a survey conducted this time last year – were not aware at all.

The report also warned that the extra administrative burdens and costs placed on town halls to deal with the changes “could lead to risks for effective implementation”.

DWP was “still developing estimates of the administrative costs”, it noted.

Mrs Hodge said: “I am astonished that the Department still does not understand the wider impacts of these changes.

“Cuts in payments will add uncertainty and increased hardship to the lives of individuals who are already struggling to get by.

“There is a real risk of increased homelessness, which on top of the human cost will simply transfer costs to other public services.

“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.”