Pensioners living in council houses will see a widening gap between their income and their rent next year, figures released by the Chancellor revealed this week
Gordon Brown's prebudget report, which contains a range of measures affecting social housing, also shows the government is expected to save more money on housing benefit than it budgeted only six months ago.

It says that spending on the Housing Revenue Account subsidies will be £100m less next year, and £300m less the following year than was assumed in the March budget.

The increased saving is likely to be due to a higher than expected fall in housing benefit claimants.

The report confirms that council rents will rise by 4.5 per cent next year, more than twice the rate of housing association rents (Housing Today, 4 November).

The rent rise will far outstrip increases in pensions and other benefits, which are likely to increase at a rate only slightly higher than the headline rate of RPI which is currently at 1.1 per cent.

One source who did not wish to be named, described the council rent rise as a "stealth tax" for pensioners.

The report says the GDP deflator - the inflation index used for calculating council rents - will be 2.5 per cent. A further 2 per cent will be added to this as set out in the comprehensive spending review.

Local Government Association head of housing group Paul Lautman said: "It is a significant real terms increase for those on modest incomes to have to meet."

Other measures include:

The scrapping of a controversial scheme which offers residents of some sheltered housing a cut-price TV licence - but only for the over-75s.

A £30m programme to encourage local businesses to help turn around deprived neighbourhoods. The package is aimed at encouraging shops and small businesses to reopen on estates and aid regeneration.

Source

Housing Today