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Despite efforts by the government to cut payments, the housing benefit bill is set to soar, according to the Office for Budget Responsibility.
The independent body, which monitors the UK’s finances, has radically altered its modelling for changes in housing benefit demands.
In March it predicted costs would fall by £300 million in 2012/13 and then by £400 million from 2013/14 to 2016/17. But its latest forecast, released alongside the autumn statement, predicts a rise of £700 million in 2013/14, then increases of £6 million, £5 million, and £4 million.
The change in estimates is due to revised predictions of demand for housing benefit, and comes despite an announcement from chancellor George Osborne that benefits will only rise by 1% for the next three years.
Mark Henderson, chief executive of Home Group, warned removing the link between benefit uprating and inflation would hit social landlords as well as their tenants.
He said: “Removing the annual link to inflation and capping increases at 1 per cent will effectively erode rental income in real terms which will put undue strain on customers and clients living in social housing and those housing associations that are driving the development of social housing. This will limit our sector’s ability to deliver the affordable homes that are so desperately needed.”
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