Tories 'would cut £25 a week from housing benefit'

Plans by the Tories to cut housing benefit will deny claimants an average of £25 a week, a government study releasedyesterday said.

Plans by the Tories to cut housing benefit will deny claimants an average of £25 a week, a government study releasedyesterday said.

Although the Conservatives angrily denied the claim, their proposals to reform the benefit, which costs £12bn a year, are likely to become an important issue in the run-up to the general election.

Labour admits the creaking system needs radical change but has backed away from a "big bang" approach, partly because it would create millions of losers. The Tories accuse Labour of ducking the challenge to reform the last unchanged bastion of the £100bn-a-year welfare budget.

Alistair Darling, the Social Security Secretary, said the Conservatives were "in a panic" to reform the benefit to find £16bn of cuts in Labour's spending. He claimed the Tories would slash housing benefit by £6bn, which would either exclude four million people completely or cut payments by an average of £25 a week.

"This would be money taken away from vulnerable pensioners and families with children who would have less to spend on food and heat and could find themselves getting into arrears and risk being made homeless." Mr Darling said there were "no easy pickings" with housing benefit.

But Michael Portillo, the shadow Chancellor, said: "I want to state categorically that the Conservative Party is not drawing up plans to scrap housing benefit. No such plan will feature in our next manifesto."

A spokesman for Mr Portillo accused Mr Darling of "negative politics", saying Labour was "smearing the Conservative Party rather than getting on with its job of running the government".

Ministers are expected to unveil plans for gradual reform of housing benefit around the turn of the year, but any big shake-up would be delayed until after the election and would be phased in over several years to cushion the impact.

Labour is attracted by the idea of a flat-rate allowance, which would be part of its effort to integrate the tax and benefits systems. But there would have to be a different method for the 1.7 million pensioner households on the benefit, as most do not pay income tax.

Government figures show that the number of people claiming housing benefit has fallen by 13 per cent from 4.6 million households when Labour came to power to 4 million. That partly reflects the reduction in unemployment.

Mr Darling said that when the Tories took office in 1979, spending on housing benefit was £700m. When they left office in 1997 it was £11.4bn, a rise of more than 400 per cent on top of inflation. He said: "We've recognised that there are many problems with housing benefit. We've started to solve them by setting up a framework for improving the way local authorities administer the benefit and for spreading best practice. And we are consulting on further reforms."