Benefit cap will cost public purse dear

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Housing body responds to budget announcement that welfare spending could be capped. 

20th March 2014 by Robert Armour 0 Comments

A move to cap welfare benefits will actually cost the public purse more, according to a leading housing body.

The Scottish Federation of Housing Associations (SFHA) made the call in response to George Osborne’s budget announcement in which he said welfare spending is to be capped.  

The environment for tenants and housing providers is becoming increasingly challenging and costly - Maureen Watson

Maureen Watson, SFHA head of policy, said the cap meant measures such as the bedroom tax will actually end up costing the public purse more as it would force social tenants into the private sector where rents are higher.

Tenants getting housing benefit who can't afford to pay the bedroom tax may move to private rented accommodation that is actually dearer and where they will in fact receive more housing benefit.

The body is now calling on the UK government to exclude housing benefit from the welfare benefits being capped.

“In the face of the evolving welfare reforms and the continuing cap on welfare spending, housing associations and co-operatives remain determined to ensure that every possible help is given to tenants to maintain their tenancies and to keep rents affordable,” added Watson. 

“However, the environment for tenants and housing providers is becoming increasingly challenging and costly.”

Recently published research on the cost of the bedroom tax for Scottish housing associations and co-operatives estimates the total over the first three years of the policy will be £79 million.

Watson also said the SFHA was disappointed that neither the Scottish Office or the Westminster government had responded to the Scottish Government's request for consent to increase the amount it allocates to discretionary housing payments. This move would mean the Scottish Government could create a fund to meet all bedroom tax rent shortfalls.

She said: “Scotland's housing associations and their tenants are keen to see the additional monies identified by the Scottish Government for bedroom tax mitigation, but we need the uncertainty removed. We should have had arrangements in place by now.

“We are only days away from the start of the new financial year.”

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