He told the House of Commons today that housing benefits had got “completely out of control”.
His plans include re-setting and restricting Local Housing Allowances; up-rating deductions; reducing certain awards; re-adjusting Support for Mortgage Interest payments; limiting social tenants' entitlement to appropriately sized homes; and introducing maximum limits on housing benefit - from £280 a week for a one-bedroom property to £400 a week for a four-bedroom or larger.
The reductions will reduce the cost of housing benefit by £1.8 billion a year by the end of the parliament, equal to 7% of the total budget.
Osborne said: “Spending on housing benefit has risen from £14 billion ten years ago to £21 billion today. That is close to a 50% increase over and above inflation. Costs are completely out of control. We now spend more on housing benefit than we do on the police and on universities combined.”
Among these enormous numbers for total spending there are some equally enormous individual awards, he said, citing an example of a family receiving £104,000 a year in housing benefit.
He said: “The cost of that single award is equivalent to the total income tax and national insurance paid by 16 working people on median incomes. It is clear that the system of housing benefit is in dire need for reform.”
He added that the measures would improve incentives to work.
The government has also said it will increase the budget for Discretionary Housing Payments to deal with hardship cases by £40m. From now on, Osborne said: “We will cover the cost of an additional room for those claimants with a disability who need a carer.”
