Housing benefit may have been wrongly docked in thousands of cases

Thousands of housing benefit claimants may have had their payments wrongly docked, the Department for Work and Pensions has revealed.

Regulations designed to end what ministers call a "spare-room subsidy" have cut housing benefit for social tenants deemed to have surplus rooms.

A department source said up to 5,000 claimants could have been exempt, although this figure could be lower.

Labour said the policy was once again mired in "chaos and confusion".

Housing benefit has been cut by 14% for social housing tenants, except pensioners, who are deemed to have one spare bedroom and 25% for those with two or more spare bedrooms.

But a bulletin sent by the department to councils says a "small number" of claimants may still be entitled to have housing benefit calculated according to longstanding rules, despite the new regulations.

People who have been claiming housing benefit for the same property since before 1996 are thought to fall into this bracket due to the drafting of the regulations.

It is understood that they should not have had their benefits reduced if there has been no break in their entitlement of more than four weeks, or of more than a year if they or their partner is taking part in a welfare-to-work programme.

The bulletin asks councils to consider identifying claimants who may have been affected.

It says those affected should have their housing benefit restored until legislation is amended, and arrears paid back to April 2013.

The government is expected to close the loophole by April.

A Department for Work and Pensions spokesperson said: "We are looking at this issue carefully and working with local authorities, and we will take any necessary action. We expect very few people to be affected."

But Labour's shadow welfare reform minister Chris Bryant said: "This is the latest example of the chaos and confusion within the Department of Work and Pensions under Iain Duncan Smith.

"Rather than closing loopholes in the policy, the government should scrap their hated bedroom tax.

"If they don't, the next Labour government will."