[KF] The Government estimates that Housing Benefit reforms announced in the June Budget will save nearly £2 billion in the financial year 2014-15.
It also claims that the measures announced will in the long term make the system simpler and fairer, and help reduce the fraud and error bill which currently stands at £5 billion across benefits and tax credits.
Local Housing Allowance (LHA) will now be restricted to a maximum of four bedrooms for new and existing claimants. Alongside this, weekly LHA rates will be capped at £250 for a one bedroom property, £290 for two, £340 for three and £400 for a four bedroom property.
In its response, the National Housing Federation (NHF) warned that in setting the cap the Government would need to ensure that local authorities could cover the costs of rent for homeless families placed in temporary private rented accommodation, pending re-housing. The NHF points out that this type of housing is meant to offer a much better alternative to bed and breakfast.
LHA rates will now also be based on the thirtieth percentile of rents of the local area. From April 2013, LHA will be uprated by CPI.
There will be staged increases in the rates of non-dependant deductions in the income-related benefits from April 2011. By April 2014, these increases will bring the rates to the level they would have been had they been fully uprated since 2001 to reflect growth in rents and Council Tax. This measure are phased over three years.
From April 2013, people who have been on Jobseeker's Allowance for 12 months or more will have a 10% reduction in their Housing Benefit.
The Government also signalled its intention to ensure that the housing stock is more sensibly utilised and that entitlement to social housing reflects a family size. Working age HB claimants who are living in a property that is too large for their household size will have their benefit capped. To help the most vulnerable people who could be affected by this change, the Additional Discretionary Housing Payments budget will be tripled to £60 million a year from 2013-14.
June Budget Update