Housing Benefit Cuts: Ministers 'Worryingly Unaware' Of Impact Of Reforms

The Department of Work and Pensions has little idea how plans to cut housing benefit will affect claimants and if the reforms will even save money, MPs have warned.

The Commons Public Accounts Committee said the DWP had made no attempt to assess what impact the changes would have on homelessness, rent levels and arrears.

It said the projected savings of £6.2 billion by 2014-15 had failed to take into account the administrative costs of implementing the changes or the knock-on costs for other services if homelessness does rise.

It was unclear whether the £390 million set aside by the DWP would be sufficient to enable local authorities to manage the impact of changes while paying the benefit direct to claimants rather than to landlords was liable to lead to more arrears and evictions.

Despite the scale of the planned changes, the committee said the DWP had opted for a "wait-and-see" approach to assessing their effect.

"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," it said.

Committee chairman Margaret Hodge said: "Even small reductions in housing benefit can have a severe impact on the finances of the poorest people.

"At the time of our hearing, far too many of those who stand to be directly affected were worryingly unaware of the reforms and what they will mean for their finances.

"Experience from the past suggests that stopping direct payments to social landlords will simply lead to an increase in arrears and evictions."

Protests took place nationwide last week against a new "bedroom tax" that will cut benefits to people with a spare room.

Under the government's welfare reforms, those deemed to have a spare bedroom in their council or housing association home will have their housing benefit claims reduced by £40 to £80.

Labour has dubbed the move the "bedroom tax". However David Cameron prefers the term "spare room subsidy", arguing it is a change in benefit payments not the imposition of a new tax.

The protest's national organiser, Dr Èoin Clarke, said: "This is a cruel policy that primarily hits single parents, and the adult disabled."