Housing benefit changes: Who will be affected?

A boy on a housing estate Housing benefit changes will be phased in over three years

Thousands of families across the UK will be affected by changes to housing benefit due to come into force this week - part of the biggest shake-up of the welfare system for decades.

Ministers argue the new measures, amounting to £2.4bn in savings, are necessary, not only to tackle the rising cost of benefits and the budget deficit, but also to create a fairer system for taxpayers and to provide greater incentives for people to work.

They say expenditure on housing benefit in cash terms has increased significantly from £11.2bn in 1997/1998 to £20bn in 2009/10, and without reform they predict it will reach £24.7bn by 2014/15.

Graph showing housing benefit costs

However, housing bodies and charities have warned that the changes will force thousands of poorer people out of expensive areas, such as central London, and increase homelessness.

So what are the changes to housing benefit, when will they be introduced and who will be affected?

What is housing benefit?

Housing benefit is a government payment made to those who cannot afford to pay their rent. Its current form was introduced in the early 1980s but it has been modified several times by subsequent governments.

Who gets housing benefit?

It is available, subject to a means test, to tenants of both private and social (public and not-for-profit) landlords.

Claimants include low-paid workers, unemployed job-seekers, low-income pensioners and economically inactive adults such as the long-term sick, the disabled and full-time unpaid carers.

As of November 2010, there were 4.8 million claimants of housing benefit, with 1.5 million of those renting in the private sector.

How much private rent can people claim?

In 2008, the previous Labour government changed the way housing benefit was calculated for private tenants, introducing a system called the local housing allowance (LHA), which is administered by local authorities.

LHA rates - the maximum amount of benefit that is paid in different local rental markets - are currently set at the median average (middle value) of a sample of rents in a local area. But this is set to change.

What changes are being made to housing benefit?

Ministers have announced a host of new rules determining how housing benefit is allocated, with some of the most significant changes applying specifically to local housing allowance.

Some of the changes were announced in the emergency Budget last year and some in the autumn Spending Review.

Some of the measures will come into effect on 1 April 2011, others will not be introduced until later this year, 2012 or 2013.

However, ministers have dropped one planned measure - to penalise job seekers by cutting their housing benefit by 10% after 12 months.

To find out more about the changes, explore our guide explaining each of the measures in turn, how many people they are estimated to affect and by how much.

The figures come directly from the Department for Work and Pensions, including from its Budget 2011 report and its previous impact assessments. Comprehensive figures were only available in cash terms and were not adjusted for inflation.

Do the changes mean people will have to move?

Housing charities argue the changes in the way LHA is calculated will force many claimants to move out of expensive areas - such as central London. Others have warned of "social cleansing".

A BBC survey in December found that 13 councils in the capital were already re-housing people outside the city, and a study by Cambridge University has predicted that by 2016, just over a third (36%) of London neighbourhoods will remain affordable, while the other two-thirds will be largely unaffordable to low-income tenants supported by LHA.

The Chartered Institute of Housing (CIH) says the new measures are going to have "far-reaching effects on families and communities across the whole of the UK".

"Where tenants face significant shortfalls the choice is going to be stark, find money from somewhere else or move. Given these are people on low incomes their ability to save by cutting back on other items is severely limited," says Richard Capie, the CIH's deputy chief executive.

But the minister for welfare reform, Lord Freud, has told the BBC he does not expect large numbers of people to have to move and says the government has set aside £190m to help those affected by the changes.

He added: "Under the current system, there are many families living in expensive housing - paid for with housing benefit, which ordinary hard working families cannot afford. This has got to change, which is why we are bringing in these new measures on 1 April."

Where can people go to get more help and advice?

More information can be found on the Directgov website, where there are lists of the new LHA rates in England, Scotland and Wales.

In addition, Citizens Advice Bureaux offer advice. Visit their website or look under "C" in your local phone book for your nearest branch.

Shelter can also help. Phone the charity's free helpline on 0808 800 4444, open Monday to Friday 8am-8pm and Saturday or Sunday 8am-5pm. You can visit the charity's website to find details of its local advice centres.

There is also an information leaflet to download on the National Homelessness Advice Service website.

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