Housing associations have urged the chancellor not to announce further welfare cuts when he delivers his autumn statement next month.

In a submission issued ahead of the 5 December announcement, umbrella body the National Housing Federation calls on George Osborne to reject further welfare cuts and ensure a ‘common-sense approach’ is taken with existing reforms due to come in next year.

It argues benefits must keep pace with rising living costs once the universal credit is introduced, and mechanisms should be put in place to ensure landlords do not see an increase in arrears as a result of direct payment.

Under universal credit, which will be phased in from April 2013, current benefits will be combined into a single payment. The housing element of the credit will be paid to tenants, rather than going straight to their landlord, raising fears that more tenants will fail to pay their rent.

The NHF warns arrears could double to around £1 billion. ‘This will severely impact on [housing associations’] ability to service debt, which could lead to a re-pricing on existing loans and reduce their ability to attract competitively priced finance in future,’ it states.

‘This will undermine housing associations’ ability to access the same level of funding, resulting in fewer homes being built.’

The federation calls for a ‘speedy and effective process for switching payments from claimant to landlord after a specified period of non-payment of rent by any tenant’.

Mr Osborne told the Conservative Party conference in October that he wants to reduce welfare spending by £10 billion by the first year of the next parliament, on top of existing cuts.

In the five-point submission the NHF also urges the chancellor to clarify long-term plans for social rents so housing associations can plan to build homes after 2015.

‘Housing associations are ready to build now but are finding that the uncertainty regarding government’s plans post-2015 are acting as a barrier to their long-term planning,’ it states.

The NHF wants Mr Osborne to announce the current formula for rent setting, of retail price index inflation plus 0.5 per cent, will be retained until at least 2020.

‘This would help attract investors and ensure housing associations can ramp up development, creating jobs and driving the growth we need,’ it states.

The NHF’s other demands are that the public land release programme should be accelerated, with small sites made available to housing associations through an open competition.

It calls for VAT on services provided to housing associations to renovate stock to be cut to 5 per cent, arguing this would save the 25 biggest housing associations £135 million a year, allowing them to finance the building of an extra 7,000 homes a year.

And it calls for the cap on local authority borrowing to be raised to ‘realise the full potential of council housing finance reforms’.