Poorest to get less whilst landlords get cash bonus

The Local Housing Allowance, introduced at the beginning of 2008, was a welcome, if flawed attempt to overhaul the shambolic Housing Benefit system.

Previously Housing Benefit rates were an esoteric secret known only to a handful of DWP officials. It was not possible to find out how much benefit you were entitled to until you had moved into a property and made a claim. This left many moving into accommodation only to find that the Local Authority weren’t prepared to pay the full rent, forcing many into either poverty or homelessness.

Now all Local Authorities set a rent based on current market value which is published for all to see and allows tenants to move into a property knowing in advance how much benefit they will receive.

So far, so good.

In addition prospective tenants who find a property that was cheaper than the local market rate would receive up to £15 a week of the surplus benefit. This rare magnamity towards benefit claimants was styled as a patronising way to teach claimants about ‘market forces’.

As the recession has bitten this has allowed canny tenants to pick up properties a little bit cheaper and pocket a few quid extra on top of the meagre pittance doled out to the countries most vulnerable people.

But no longer. A paper (PDF) quietly sneaked out in June reveals that it has been decided that this is “not sustainable in the current economic climate” and the extra payments are to be stopped from April 2010.

This means that up to 300,000 people could see their current income shrink.  Of these people many already live on the pitiful sixty quid a week doled out by Job Seekers Allowance.

A cynic might consider whether this was a ploy to bribe people into moving into cheaper housing and then moving the goalposts once they settled in a new home.

But it’s much worse than that.  Blood sucking landlords now have no incentive to offer a cheaper rent to attract benefit claimants.  Every landlord in the country is now bound to set rents at, or above, the Local Housing Allowance rate.

The end result of this move will not only be further poverty for the poorest, but higher rents for everyone, funded by the tax payer.  And landlords will be rubbing their filthy palms with glee.

That’s New Labour folks.