Business

Housing benefit plans cause financial fears

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Image caption Homes in more expensive areas of the country could be more difficult to come by

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.

Changes

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.

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.

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