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Warning on affordable housing trap
A scheme to create more affordable housing could suck low-income tenants into a "benefit trap", a cross-party committee of MPs has warned.
Properties built under the Affordable Homes Programme will cost more to rent after the Government negotiated a much lower grant with providers, said the Commons Public Accounts Committee.
The higher rents could mean some poorer people are unable to access the new homes, and those that have their housing costs covered by benefits would find it even harder to find a job that paid enough to be worthwhile, it said.
The PAC said it was also "not yet clear" whether the reduced grants - on average £20,000 per home, a third of those from a predecessor scheme - would save money in the long term as the housing benefit bill was expected to rise by £1.4 billion over 30 years to cover the higher rents.
"The programme therefore shifts cost from one department to another," the committee said in a report.
Social housing providers have been offered up to £1.8 billion in Government grants under the Affordable Home Programme.
The Department for Communities and Local Government (DCLG) expects it to create about 80,000 new homes by March 2015.
But the committee said the higher rents would "affect tenants' ability to afford the new housing and may exclude some of the poorest from accessing this new housing".
"Where higher rents are paid through increased housing benefit, tenants may find themselves caught in an even stronger benefit trap where it has become even harder to find sufficiently well paid employment to make working worthwhile, countering the Government's objective of ensuring that the benefit system makes work pay," it added.
PAC chairwoman and Labour MP Margaret Hodge said the committee had "serious concerns" about the financing of the programme and the affordability of its homes for tenants. "The Department must do more to understand the full impact of higher rent levels on tenants and ensure that resources are targeted where need is most acute," she said.