Housing benefit should be measured against rent - former Labour minister

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A former work and pensions minister has urged the government to carry out an annual review of the relationship between housing benefits and market rents in each local authority area.

Labour's Baroness Hollis of Heigham accused the government of attempting to reduce the housing benefit bill by "fixing" it to below-average market rents.

"Tenants are now getting punished for the fallacies and failures and folly of government policy," Lady Hollis said, during committee-stage debate on the Welfare Benefits Up-rating Bill on 25 February 2013.

The bill limits rises in most working-age benefits to 1% in 2014-15 and 2015-16 instead of linking them to inflation.

Another Labour peer, Lord Best, argued that capping benefit rises at 1% would have "huge repercussions for tenants", meaning that "a gap opens up between the actual rent that must be paid and the Local Housing Allowance received to cover the rent".

Conservative peer Lord Bates asked whether housing benefit was in fact having "an inflationary effect" on rents. He suggested that "one of the solutions to it is actually to ensure there is a greater supply of housing".

The Labour front bench lent its support to Lady Hollis' amendment.

Shadow work and pensions minister Lord McKenzie of Luton spoke of a "ratcheting down" of welfare support and "a growing gap between rent levels and support that has to be met from income that is coming under increasing pressure".

Government spokesperson Baroness Stowell of Beeston pointed out that the housing benefit bill "has doubled in cash terms over the last decade" and that capping its increase would provide a "crucial" contribution to the deficit reduction plan.

"Where rents are increasing rapidly there should be no presumption that the taxpayer should pick up the bill," Lady Stowell said.

She added that paying benefits directly to tenants rather than to landlords would "give people the opportunity to have control of their own budgets".

Lady Hollis withdrew her amendment, promising to return to the issue at a later stage.

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