The amount of public money in the UK lost to fraud and overpayments through Housing Benefit rose by 18%, or £253m, in a year, according to figures released by the Department for Work and Pensions (DWP). As of July 2015, the most recent data available, the total amount lost was £1.7bn.
In the first six months of the 2015-16 fiscal year, the DWP said it had identified £562m in Housing Benefit overpayments, a rise of 37% compared with the same period a year before. Officials recovered £315m, a 13% rise, and wrote off a further £40m, an increase of 12%, leaving a large shortfall.
A big part of the Conservative government's plan to close the deficit in public finances is to cut welfare spending, off which it has shaved billions of pounds since coming into office in 2010. Housing benefit has been a target. The government introduced the controversial spare room-subsidy — dubbed the 'bedroom tax' by critics — which cut the Housing Benefit of recipients with spare bedrooms. It also capped benefit increases at 1%, and the total amount people can receive outside of London at £20,000. Inside London, where living costs are higher than the rest of the country, the cap is £23,000.
In his 2015 autumn statement, Chancellor George Osborne linked the Housing Benefit cap for social tenants to the Local Housing Allowance. The Local Housing Allowance is effectively a Housing Benefit cap for private renters who need government help to pay for their homes. Set by the government's Valuation Office Agency, the allowance is a benefit limit for each type of property that takes into account local market prices.
The government hopes the move would keep its housing benefit costs down and prevent some social landlords from inflating their rents. It also regards the old housing benefit rates as a subsidy to social tenants to live in housing many working families would not be able to afford, though DWP statistics show just 12% of recipients are also on Job Seeker's Allowance because the vast majority are in work too but cannot afford market rents.