The government has set out ambitious plans to reform the welfare system, including measures which could significantly change the way it approaches housing benefits.

Richard Capie, Director of Policy and Practice at the Chartered Institute of Housing (CIH), said: "CIH has long called for reform of support for housing costs and the need to tackle the barriers that prevent people moving back in to employment. The proposals put forward by Iain Duncan Smith have the potential to make significant advances in both of these areas.

"The reform options could also have major implications for both tenants and landlords. We could for example see housing benefits merged in to streamlined universal or in-work benefits. This would most likely mean the end of direct payments to landlords. With housing benefit accounting for a significant proportion of revenue in the social housing sector, and underpinning business plans and supporting new supply, it is critical that the impact of this fundamental change is fully considered."

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He continued: "We also know that housing costs vary significantly from place to place and it will be important to maintain a local housing costs element.

"While ideas presented in this Green Paper are welcomed by CIH, we remain disappointed that that cuts to housing benefits in the emergency budget are so out of keeping with the ambitions of this wider reform programme. The starting point in any changes should be improving the ability of individuals to meet their housing needs and build a platform for the future – after all a stable home is a prerequisite for a stable job."

(CD/GK)