Housing benefit set to get two-tier reform

Housing benefit for pensioners looks set to be replaced as part of a new pension credit in a two-tier reform of the payment, the government revealed today.

The new minister with responsibility for housing benefit, Malcolm Wicks, gave a heavy hint that long-term reform could include one scheme for pensioners and another for those of working age.

Speaking at the Chartered Institute of Housing annual conference, Mr Wicks said: "We are seeking views on how housing support should be paid to pensioners. One option would be to pay housing benefit as part of the new pension credit."

Regarding long-term options for those of working age, Mr Wicks revealed he favours encouraging tenants to shop around for cheaper housing by making claimants pay some portion of the rent themselves.

Before becoming a minister Mr Wicks was a member of the social security select committee when it claimed that housing benefit was standing in the way of the governments' welfare to work objectives.

He said: "Citizens should have purchasing power so that they can shop around in the market."

Mr Wicks said he was against the current system because it meant benefit "passing from one agency to another with no influence by the tenants".

His remarks alarmed Richard Clark, chief executive of Prime Focus, who in the same session delivered a scathing attack on the current standard of housing benefit administration.

Mr Clark said: "The theory (of shopping incentives) sounds great but the practice could make the system radically worse. I could not possible welcome that step."

He pointed out that housing associations were owed ?84m in housing benefit payment because of delays caused by the complexity of the system and a bureaucratic anti-fraud scheme known as the verification framework.

He said delays had made the "delivery of anti-poverty strategies on the ground virtually impossible".

Mr Clark said the problems had caused a breakdown in the relations between housing associations and their tenants and between housing associations and councils who administer housing benefit. He also warmed that the morale of frontline staff had been damaged as a result.

Mr Wicks admitted the administration of housing benefit was "often dire", but he pointed out that some councils were delivering a good service.

He also promised to look at ways of simplifying the system.