A long-planned shake-up of the housing benefit system aimed at combating corrupt landlords and "anti-social" tenants has been unveiled by the government.

We want to turn housing benefit from a system that simply pays peoples' rent for them into a means of empowering tenants

Andrew Smith

Under the scheme, being piloted in 10 areas, tenants will be paid a flat rate housing allowance to cover their rent costs.

If they move to cheaper accomodation, they will be allowed to keep the difference.

The rate will be vary around the country and be based on the size of the claimant's family.

'Cautious welcome'

At the moment tenants make a claim based on their rent level and income.

What tenants will be forced to do is live in the cheap rent, ghetto part of town because they won't be able to afford to live in the decent part of town

Steve Webb, Lib Dems

The change is designed to simplify the system and prevent unscrupulous landlords colluding with tenants to drive up rents.

Rent will also be withheld from tenants deemed to be "anti-social".

The proposals were given a cautious welcome by Conservative shadow work and pensions secretary David Willetts, who has campaigned for reform of the housing benefits system.

But he added: "We need to know whether the gap between the hype and the reality, which has so frequently dogged this government's commitment to welfare reform, is going to be in evidence yet again when it comes to housing benefit."

Poverty

Unveiling the proposals in the Commons, Work and Pensions Secretary Andrew Smith said: "Housing benefit is there to make sure that families with low incomes can afford a decent home which meets their needs.

"But at the moment this support contributes far less than it should to lifting people out of poverty and promoting opportunity.

"We want to turn housing benefit from a system that simply pays peoples' rent for them into a means of empowering tenants and allowing them to exercise choice about where they live."

'More choice'

Mr Smith said many people were "trapped out of work" because of the unpredictable administration of Housing Benefit, which meant they dare not risk getting a job, incase they lose benefit.

"Others find their choice of accommodation restricted because of uncertainty about what Housing Benefit they will receive."

He said the new "standard local housing allowances" would give more choice over where they lived and speed up the administration process.

'Anti-social tenants'

Liberal Democrat work and pensions spokesman, Steve Webb, said the aims of the changes were "laudable".

Mr Smith wants to give tenants 'more choice'

But he was concerned about using housing benefit sanctions for anti-social tenants.

The effect would be to "move the problem rather than deal with it", he argued.

The money should instead be spent on schemes tackling the causes of such behaviour, he said.

How scheme works

On the subject of the standard housing allowance, Mr Webb added: "What tenants will be forced to do is live in the cheap rent, ghetto part of town because they won't be able to afford to live in the decent part of town?"

Flat-rate payments would force many tenants to move because the housing benefit did not cover their rent, he warned.

Under the scheme, rent officers will calculate allowances monthly and make the results public.

A claimant will know beforehand what, given his household size, his or her allowance in a particular area will be.

If the actual rent is �80 and the relevant allowance is �90, the claimant will still be entitled to �90 and be allowed to keep the �10 excess.

Payments will be made direct to tenants, except where there are large arrears or the tenants are unable to manage their own affairs.

The scheme will be piloted in ten areas from mid to late 2003.

The pilot projects are likely to cover a mix of high and low cost areas, not only in England but also in Wales and Scotland.

Depending on the results of the pilot scheme, the new system will go nationwide from 2005.