The payments for housing benefit are to be restricted to £400 a week for a house and £280 a week for a flat.

The Chancellor said the new caps were required, as the cost of the payments had increased 50% to £21bn in the last 10 years. Some people were getting £104,000 a year in housing benefit that defines rewards would be abridged.

Other reforms planned comprised restricting and re-setting local housing payments and re-adjusting hold up for mortgage interest expenses.

The price of an additional room for those applicants with a disability and need a career will also be included, in future.

Chancellor, George Osborne said, “As country we now spent more on housing benefit than on the police and universities combined and that this package would cut the cost of housing benefit by £1.8bn a year”.

The Chief Executive of Shelter, Campbell Robb said that most housing benefit applicants had little choice over where or how they lived. The majority of housing benefit applicants were either pensioners, disabled people, those caring for a relative or hardworking people on fewer incomes.

Mr. Robb also said that many applicants were already contributing to the rate of housing and we are really afraid that even at the current stage, almost half of the Local Housing Allowance claimants are making up a loss of almost £100 a month, to pay the rents.