The Department of Work and Pensions (DWP) intends to use the Welfare Reform Bill to slash housing benefit for tenants living in homes deemed too large for their needs - even if they have lived there for decades.
The measure will hit 670,000 council and housing association tenants - a third of all working-age housing benefit claimants in the social rented sector across Great Britain.
Each claimant is expected to lose an average of £13 a week if the Government succeeds in introducing the measure in 2013.
The DWP has suggested that households seeing their benefit reduced - by up to 15% for those with one 'spare' room and up to 25% for two or more 'spare' rooms - should 'move to accommodation which better reflects the size and composition of their household' - or make up the shortfall from other income sources.
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But National Housing Federation research shows that while about 180,000 social tenants in England are 'under-occupying' two-bedroom homes, and will therefore come under pressure to downsize to one-beds, just 68,000 one-bed social homes became available for letting in a single year (2009/10).
The significant shortfall in available properties, which are also in high demand from people on housing waiting lists, suggests many families will struggle to move within the social sector.
The DWP's own impact assessment admits that there is a 'mismatch' between properties in the social sector and household size - suggesting many people would see a cut in their housing benefit with no prospect of being able to move to a smaller home.
The assessment said: "In many areas this mismatch could mean that there are insufficient properties to enable tenants to move to accommodation of an appropriate size even if tenants wished to move and landlords were able to facilitate this movement."
It adds that people facing benefit cuts but unable to move to a smaller property in their neighbourhood "may have to look further afield... or move to the private sector".
But every tenant moving to the private rented sector will cost the taxpayer more in additional housing benefit.
(CD/KMcA)
