The public spending watchdog has slammed housing benefit reforms saying the government has not properly considered the outcomes.
The Public Accounts Committee published a report today saying the Department for Work and Pensions should state in advance what it will do about any increase in homelessness or rent arrears that result from its plans to cut housing benefit.
It states: ‘The department is introducing these significant changes without comprehensive modelling of the likely outcome on individuals or on housing supply and with limited understanding of the costs local authorities will incur.’
The committee concludes that while the DWP wants to save £6.2 billion from the housing benefit bill by 2014/15 it has not taken into account the administrative costs of implementing the changes and the potential knock-on costs to other services.
‘These costs could be high for local authorities as they come at the same time as changes to council tax,’ committee chair Margaret Hodge said.
‘Even small reductions in housing benefit can have a severe impact on the finances of the poorest people.
‘The department must decide in advance exactly what actions it will take in response to increases in homelessness or rents.’
She criticised the DWP’s ‘wait and see’ approach to changes in homelessness, rent level and arrears and said £390 million of discretionary housing payments set aside for councils to help vulnerable people affected by the reforms over four years ‘was not based on any rational assessment of need’.
It was not clear whether the discretionary housing payments would be enough for local authorities, Ms Hodge said.
The report notes many claimants are still unaware of how the changes would affect them and urges landlords to inform their tenants. It says the DWP must provide information to claimants to help them plan and adapt.
The government has introduced a range of housing benefit reforms, including capping payments for tenants in the private rented sector. Next week further changes will come into force, when the social housing under-occupation penalty, or ‘bedroom tax’, begins, and from October housing benefit will start to be paid to tenants rather than direct to landlords.
The committee highlights concerns about direct payments. Ms Hodge said: ‘Experience from the past suggests that stopping direct payments to social landlords will simply lead to an increase in arrears and evictions.
‘At the same time some tenants will face higher rents under the affordable homes programme, which will also increase the housing benefit bill, offsetting some of the savings intended by housing benefit changes.’
National Housing Federation chief executive David Orr said: ‘That the government is bringing in these housing benefit changes without knowing the full consequence on the vulnerable people affected is worrying and irresponsible.’
Inside Housing
