THOUSANDS of people will be able to cheat housing benefit cuts and rake in up to £1,000 a month while still claiming benefits thanks to a loophole in welfare reform.
By: Kirsty BuchananPublished: Sun, March 3, 2013
Ian Duncan Smith's welfare reforms have loopholes
Labour says 660,000 tenants will be hard hit by what it calls the “bedroom tax”, which from next month cuts the amount people can claim in housing benefit if they are deemed to be living in homes too big for their needs.
However, the Department for Work and Pensions has not capped how much they can earn from a lodger or boarder before it affects their benefits claim. So while they would be an average £11 a week worse off because of benefit cuts on spare bedrooms they could net up to an average £100 a week in rent by becoming landlords and still claim welfare.
The loophole emerged as the Commons Public Accounts Committee investigated the impact of housing benefit reform. Under current rules a housing benefit claimant can charge rent on a spare room only up to a certain limit before it affects their benefits. Under the new Universal Credit system, however, all income from lodgers will be ignored.
East London MP Meg Hillier believes the Government has "lost all common sense."
In its rush to simplify benefits the Government has lost all common sense.
East London MP Meg Hillier
According to DWP Permanent Secretary Robert Devereux, this system is “better still”.
This raises questions about the coalition’s policy, partly designed to free up under-occupied social housing for families in over-crowded accommodation.
East London MP Meg Hillier, who sits on the PAC, said: “In its rush to simplify benefits the Government has lost all common sense. A lodger in a high-rent area could provide a good income for a tenant who is still receiving full benefit.
“The incentive will be to whack up the rent for a spare room which will do little to help house people on low incomes. In parts of central London rents can exceed £150 a week for a room.”
There are 540,000 social housing tenants with one spare bedroom and a further 120,000 in homes with two or more spare bedrooms.
A spokesman for the DWP defended the change in policy insisting it would be simpler to administer.
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