Housing benefit cost claim denied Mandarins reject Aitken rent claim: Civil servants say landlords not inflating rents

TWO SENIOR government officials yesterday contradicted claims by Jonathan Aitken, Chief Secretary to the Treasury, who suggested the housing benefit bill was too high partly because landlords were pushing up rents to exploit the benefits system.

Donald Dewar, Labour's social security spokesman, also stepped into the housing benefit dispute last night, attacking Mr Aitken as the new boy in the Cabinet who had blundered into an area of policy he appeared not to understand.

Addressing separate conferences on housing, the civil servants from the Department of the Environment cast doubt on claims made by Mr Aitken on Monday that landlords seemed to be pushing up rents. He said the Treasury was examining every element of the housing benefit bill, which had more than doubled to pounds 8.5bn over the last four years.

John Roberts, head of the department's housing and private rented sector division, told a housing conference that the level of rents was not exorbitant.

Mr Roberts said: 'Over one- third of tenants have their rent paid in whole or in part by housing benefit. I know that in some quarters that in itself is controversial. With the sector having expanded, and with rents now at market levels rather than held down artificially, the housing benefit bill has grown steadily.

'Some have described private sector rents as 'exorbitant'. But the rents are set by the market. And in general, the return being made by private landlords is not out of line with the return available in other parts of the economy.'

At another conference, Helen Ghosh, the department's head of housing policy and private finance, said rents reflected modest and fair returns on the landlords' investment in property.

She also revealed the Government's policy of shifting subsidies from grants to housing associations for social housing to personal subsidies in the form of housing benefit, had achieved public expenditure savings overall.

Mr Dewar said: 'Mr Aitken is worried about the cost of housing benefit. He must know the cause is government policy. The reason is the Government has deliberately forced up rents in both public and private sectors. If Mr Aitken wants to quarrel about this he must pick a fight with the Cabinet colleagues responsible and not the unfortunate tenants.'

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