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Housing benefit cuts put 200,000 at risk of homelessness, campaign group warns

Monday 5 July 2010

Brutal cuts in housing benefit, announced last week in the Budget, will put more than 200,000 people across Britain at risk of homelessness, according to a campaign group.

The National Housing Federation warned that plans to cut Housing Benefit by 10% for people claiming Jobseeker's Allowance for 12 months or more would lead to real terms cuts of up to 50% in disposable income for a significant proportion of the nation’s 4.7 million Housing Benefit claimants.

The cut would hit single, childless claimants hardest because they would not be entitled to any other income support from the state – other than their Jobseeker’s Allowance cash.

They would be forced to make up the shortfall in their Housing Benefit with a substantial proportion of their dole money, which is worth just £65.45 a week.

An unemployed, single and childless person in London, with a weekly rent bill of £350, would see their Housing Benefit cut by £35.

This would mean that if they topped up their housing benefit with part of their Jobseeker's Allowance they would be left with £30.45 for food, clothing and energy.

With not enough cash to cover their basic household bills, the Federation warned that thousands of unemployed people on housing benefit will fall into arrears on their rent and be evicted.

The Federation believes 202,000 people are at risk of being made homeless as a result of the benefit cut, which will come into force in April 2013. There are around 140,000 people who are currently homeless in Britain.

Even if tenants do manage to pay their rent, the extra expense could plunge people into poverty and severe debt. The change in rules would also mean that low income groups would effectively be priced out of prosperous areas like London and the South East – and away from jobs – because reduced Housing Benefit payments would make these areas unaffordable.

The 10% cut in Housing Benefit was announced last week in the Budget. The reduction in Housing Benefit would equate to a 53% drop in disposable income for people claiming the maximum £350 a week allowance.

Up to 34,000 single, unemployed people living in London, where rents are the highest in the country, would be affected by the cut and be at risk of being made homeless.

Although the crackdown on payments will be hardest felt in London and the South East, unemployed people in other parts of the country will also see a sharp fall in their disposable income.

In Scotland, 20,000 Housing Benefit claimants would be at risk of homlessness, and around 10,000 in Wales.

The Federation, which represents England’s housing associations, fears people will struggle to pay their rent and fall into arrears, with most of them being evicted and ending up homeless.

As they would be deemed to be ‘at fault’ for their eviction, they would generally be classed as intentionally homeless and would not be entitled to emergency accommodation from the local authority.

The new rules could also make vulnerable people easy prey for loan sharks as they struggle to make ends meet – further fuelling a cycle of poverty, fear and debt.

The benefit cuts would apply to tenants in both the private and social rented sector.

Federation chief executive David Orr said: 'Cutting Housing Benefit could have a catastrophic impact on the lives of thousands of people who – despite their best efforts – have failed to find work after 12 months.

'These changes mean that up to 200,000 people could end up homeless. Quite frankly, the proposals are disturbing and unfair.

'Forcing people already on the breadline to take a huge cut in their disposal income will push low income groups out of prosperous areas like London and the South East – and further away from jobs, therefore increasing unemployment and the concentration of social problems into deprived, marginalised areas.'

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