Government cutbacks on housing benefit are likely to leave many people struggling to pay their rent and forced to move to cheaper areas, a cross-party parliamentary committee has warned.
The House of Commons Work and Pensions Committee urged the Government to monitor the impact of the changes and be prepared to increase the £190 million fund it has set aside to smooth the transition to the new system and help local authorities deal with possible increases in homelessness.
The committee said it was not possible to predict how many landlords would respond to the benefit reductions by cutting rents, as ministers hope. While some would do so, their response will vary in different parts of the country depending on local market conditions.
The MPs also expressed unease at plans to cut Housing Benefit by 10% after a year out of work.
They urged ministers to come forward with “a more nuanced approach”, recognising the difference between disabled people and single parents who find it difficult to get into work and those who are simply not trying to find a job.
Changes to Housing Benefit were announced in Chancellor George Osborne’s emergency budget in June in a bid to cut the £17 billion annual cost of the payout, claimed by 4.75 million households.
Maximum weekly rates are to be capped at £400 a week and payments will be reduced by linking them to the cheapest 30% of properties in a neighbourhood, rather than the average rent.
In an inquiry into the changes, some witnesses told the committee that an increase in evictions and homelessness was “inevitable”.
In its report, the committee said it supported the Government in its goal of managing the costs of Housing Benefit and agreed that support for the housing costs of low-income families should provide value for taxpayers’ money.
Committee chair Anne Begg said: “It is difficult to judge at the moment to what extent Housing Benefit claimants will change their behaviour as a result of these proposals. 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.”