Labour calls for halt on housing benefit cap over fears it will hit supported accommodation

The cap will apply from 2018 to all tenancies in England signed after April. Credit: Dominic Lipinski / PA Wire/Press Association Images

Labour has called for a halt to a new housing benefit cap over fears it could force the closure of supported accommodation for the elderly, disabled and homeless.

Chancellor George Osborne announced in the Autumn Statement that social housing tenants would not in future receive more than claimants living in private rented homes.

The cap will apply from 2018 to all tenancies in England signed after April.

The Treasury said it would prevent landlords in the social sector setting "inflated" rents.

But John Healey, the shadow housing minister, said it could have a "catastrophic" impact on accommodation for vulnerable people because those homes are costlier to run.

"It could bankrupt some organisations entirely, and thousands of vulnerable tenants could lose their homes," he told Mr Osborne in a letter published by the party.

George Osborne has said the cap will prevent social sector landlords setting 'inflated' rents

He quoted figures from Homeless Link suggesting the average rent in hostels is around £180 - far higher than the local housing allowance rate to which it is pegged.

That was £98.87 per week in Birmingham for a one-bedroom property or £57.34 for a shared room, for example, he said.

"You must put a stop to these plans, publish a full impact assessment and consult fully with supported accommodation providers to safeguard this essential housing from cuts that could be devastating to those who can least afford it."