Name:

Email:

Position:

Phone:

Mobile:

Skype Address:

IM Address:

Description:

 

Housing benefit cuts cause financial fears 23 December 2010
James Falla (about the author)

Cuts to housing benefit could leave people struggling to pay their rents, according to a committee of MPs.

A report on changes in the system by the Work and Pensions Committee found some might find it difficult to pay the shortfall between the benefit they received and the rent they must pay.

It said the government should be prepared to consider more funding to councils if people had to move.

Some groups told the committee that a rise in homelessness was inevitable.

James Falla of beatmydebt.com said that the cuts would force people to redirect more of their remaining income to pay for their homes meaning that they will have to make savings elsewhere.

"People will have no choice than to spend more of their income on keeping a roof over their heads. This will mean that there is less money to pay for other household essentials. One way to manage this problem is to reduce monthly payments on unsecured debts by using a debt management plan or individual voluntary arrangement" Falla advised.

Changes to housing benefit were announced by Chancellor George Osborne in June. Business Minister Ed Davey expressed concerns over the move, according to secret recordings by the Daily Telegraph.

Weekly rates capped

The policy would see maximum weekly rates capped at £400 a week and payments reduced by linking them to the cheapest 30% of properties in a neighbourhood, rather than the average rent.

The report found that it was difficult to tell how this would affect local areas, but there were concerns about the availability of private rented accommodation.

"The government hopes that people will be able to find cheaper accommodation in cheaper areas and that private landlords will be willing to reduce their rents to Local Housing Allowance claimants, so that the new levels will not result in an increase in homelessness," said Anne Begg, who chairs the committee.

"However, it is too early to determine if this will happen in reality which is why it is hard say exactly what the impact of these changes will be."

The committee also called for a "more nuanced approach" to the plan to cut housing benefit by 10% for those who have been out of work for a year.

Source: BBC News