Brown faces backlash over plan to cut housing benefit

Treasury plans to pare back a housing allowance by up to £15 a week will mean some claimants could lose a fifth of their income, Labour MPs warned.

Under the current scheme, claimants are allowed to keep the difference if they find rents lower than their housing benefit. Up to half of them are gaining up to £780 a year as a result.

But thanks to a little-noticed move in the Budget, from 1 April the housing allowance will be tightened to ­prevent any spare money being retained.

The plan has angered Labour backbenchers, including Frank Field, the MP who led the revolt against the abolition of the 10p income tax rate.

The MPs are concerned that scrapping the original policy would destroy competition among landlords, enabling them to raise their rents to the allowance maximum.

Mr Field, who is tabling an amendment to oppose the change, told The Times: "At one stroke, they get rid of a reform aimed at getting flexibility into a fairly inflexible market.

"The timing for this could have been decided in Conservative headquarters."

Homelessness charity Crisis called the plan "ill considered" and said people on £65-a-week jobseeker's allowance could lose 20 per cent of their income under the plans.

A spokeswoman for the Department for Work and Pensions said: "This small change will not affect our customers' ability to pay their rent."