Nov 1 2012
Affordable housing shortages could affect almost half of England within five years because of Government welfare reforms, the Whitehall spending watchdog has warned.
The National Audit Office said uprating state help with rents by inflation rather than the actual cost of local homes could lead to "significant problems". It also said that 87% of claimants know little or nothing about the cuts to housing benefit they face because the Department for Work and Pensions (DWP) has "struggled to raise awareness".
And it noted the DWP had "little firm evidence" about the likely impact on claimants' behaviour or the costs of administering reforms which are supposed to save the Treasury £2.3 billion a year. "It is not clear that communications are translating to increased awareness of reforms or whether additional funding will meet the needs of local authorities," the report found.
Public Accounts Xommittee chair Margaret Hodge said she was "astonished that the department still does not understand the wider impacts of these changes". The potential for shortfalls in affordable housing across large swathes of the country was also "deeply worrying", she said in reaction to the report.
The report paints a stark picture of the effect of raising local housing allowance - which covers private sector accommodation - by the CPI rate of inflation, not average rent rises, in an area. It warned that "the speed and extent of shortfalls could be significant", with the potential for large-scale migrations to areas with more affordable housing.
On recent trends, 48% of councils would no longer be able to meet in full the rents of half of all claimants - the present proportion - by 2017, it calculated. Even if the measure succeeded, as ministers hope, in pushing down rents, boosting housebuilding and getting more people into work, around 30% of areas would still face that shortfall.
There was a "limited awareness" among the 1.4 million people expected to be directly affected by the change - with 13% saying that they knew "a fair amount" or "a great deal", the report added. More than half - in a survey conducted this time last year - were not aware at all.
Mrs Hodge said: "I am astonished that the department still does not understand the wider impacts of these changes. Cuts in payments will add uncertainty and increased hardship to the lives of individuals who are already struggling to get by."
A DWP spokeswoman said: "Our reforms will ensure that people on benefits can no longer live in homes that most working families couldn't afford.
"Even with our reforms, housing benefit will meet rents of up to £21,000 a year and apart from the most expensive areas in London around a third of properties will still be available to rent. We are providing an additional discretionary fund of £190 million to help families in difficult situations. Our reforms restore fairness to a system that was left to spiral out of control."