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U.K. Housing-Benefit Safety Net May Be Insufficient, Panel Says

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U.K. Housing-Benefit Safety Net May Be Insufficient, Panel Says
A council-run housing stands in Lambeth in London. Housing benefit has almost doubled in a decade to more than 23 billion pounds a year in the U.K. Photographer: Peter Macdiarmid/Getty Images

March 26 (Bloomberg) -- The U.K. government may not have set aside enough money to help people in need as a result of cuts to housing-benefit payments, a committee of lawmakers said.

The 390 million pounds ($590 million) earmarked by the Department for Work and Pensions for discretionary payments over four years “was not based on any rational assessment of need,” Margaret Hodge, the opposition Labour Party member who heads the House of Commons Public Accounts Committee, said in an e-mailed statement. The panel published its report in London today.

Payments to 2 million of the 5 million households who receive housing benefit are expected to be reduced, saving 6.2 billion pounds over the four years to 2015 according to the department, the panel said. Those in privately rented homes will have their benefits cut and there will be deductions for claimants in accommodation with unused rooms, a measure attacked by Labour as a “bedroom tax.”

“Even small reductions in housing benefit can have a severe impact on the finances of the poorest people,” Hodge said. The DWP “has failed to take into account the administrative costs of implementing the changes and the potential knock-on costs to other services, for example if homelessness does rise. These costs could be high for local authorities.”

Housing benefit has almost doubled in a decade to more than 23 billion pounds a year, “so it’s absolutely necessary that we get that spending under control,” the DWP said in a statement. “We are closely monitoring the reforms to ensure councils are informing people about the changes, and spending the extra 390 million pounds we have provided to support their residents.”

To contact the reporter on this story: Eddie Buckle in London at ebuckle@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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