Housing Benefit

HC Deb 26 July 1990 vol 177 c482W

Mr. Chris Smith

To ask the Secretary of State for Social Security if he will state(a) how many people would gain, (b) what would be the average gain and (c) what would be the cost as a result of raising the level of savings under which housing benefit is payable to £10,000 on the assumption that (i) the rules for other benefits are unaltered, (ii) the interest actually received on savings and not an arbitrarily assumed return is used in assessing benefit and (iii) no change is made to the rule that those with savings under £3,000 receive benefit in full.

Mrs. Gillian Shephard

The level of savings under which housing benefit remains payable was increased in April to £16,000. On the assumption, therefore, that this £16,000 upper limit is used rather than £10,000 and the income counted in the calculation of housing benefit is the actual interest received rather than the assumed tariff income, it is estimated that 170,000 existing recipients of housing benefit would gain an average of £4.50 per week and 30,000 people would start receiving an average of £7.20 per week. These gains would go to those with higher levels of capital. However, for those with savings not far above the £3,000 lower level there would be an average loss of £1.40 a week: this adverse effect would reduce housing benefit for 110,000 present beneficiaries, and remove entitlement entirely from a further 10,000. The total cost would be around £40 million.

It is not necessarily the case in the current housing benefit scheme that people with savings under £3,000 receive benefit in full. Savings of £3,000 or less do not affect the amount of income counted in the calculation of housing benefit. Where savings are £3,000 or less and total calculated income is equal to or less than the relevant applicable amount, maximum housing benefit is payable. However, many people with no savings or with savings of or below £3,000 have incomes in excess of the applicable amount, and this excess income reduces their maximum housing benefit by the amount of the taper. (Source: Modelled using data drawn from the 1985–86–87 family expenditure surveys).