The minister for welfare reform Lord David Freud has admitted that a reduced cap on housing benefit could force families in high-value areas to move.

In a speech to the National Landlords Association yesterday, Lord Freud defended the government’s controverial welfare reform programme and reiterated that welfare reform was designed to take control of ‘spiralling welfare costs’.

The Welfare Reform Act has set a weekly cap of £400 per household on housing benefit.

‘We accept that in some cases people may have to move out of the more expensive properties but they will not have to move far and most areas of London are still affordable within the LHA (local housing allowance) cap levels,’ he said.

‘Of course we want people to continue to have access to decent housing but the support provided has to be founded on principles of fairness, affordability and making work pay.

‘We are making huge strides in tackling these issues and bringing fairness back to the system.’

On the subject of direct payment of housing benefit to tenants, due to be phased in from next April, Lord Freud admitted that there was work to be done to make sure vulnerable groups were supported.

He quoted data from six pilot projects that showed just over half of the tenants involved believed they would be able to manage direct payment of housing benefit. Just under a quarter of those surveyed said they would need support under direct payment.

‘These learnings from the demonstration projects are invaluable for both social and private sector landlords,’ continued Lord Freud. ‘They will help us to understand what safeguards are needed to help landlords protect their income and how best to support tenants and landlords experiencing financial difficulties.

‘The findings also tell us that social landlords are discovering for the first time how little they know about their tenants and they are learning how to build more productive, rounded relationships.’