HAs are losing £84m per year

A new National Housing Federation survey has found that the crisis is far worse that previously thought. The average association is owed £210,000 in lost benefits - much of which will never be recovered - and is losing an average £47,000 a year in lost interest payments as well.

Federation chief executive Jim Coulter said: "The federation is seeking co-operation not confrontation on this but the ball is firmly in the government's court. Immediate steps must be taken to simplify housing benefit and make it easier to administer."

He called on the government to acknowledge the crisis and restart its stalled 1998 initiative to simplify the system. It could be simplified by making claimants eligible for benefit for fixed periods, he said.

The survey drew a response from 90 associations. They complained the problem was costing them in terms of officer time and other bad debts too.

"It is almost impossible to meet arrears when 50 per cent of the arrears are attributable to third-party inefficiency," said one respondent. "It is the tenants that suffer the hardship and anguish of being told their rent is not being paid and how much their arrears are," said another.

The federation estimates its members are suffering around a two per cent shortfall in rental income thanks to later payment or non-payment of housing benefit. The system is over-complicated, the four-weeks in arrears system automatically puts people in arrears and the verification framework to prevent fraud is slowing the whole system down.

"For young people who are working, by the time claims are assessed, they are often in major arrears," said Christian Alliance housing association. "It often leads to their abandoning tenancies or being evicted."