£4bn benefits cut rejected: what it would mean for housing benefit

Andy Burnham has shut the door on paying for higher defence spending by taking money out of the benefits system. Challenged at Prime Minister's Questions, he said funding national security "can't come at the expense of social security" and warned that the Conservative plan would push families out of their homes.

The plan he was rejecting is worth around £4billion, and the detail matters more than the row. According to the source account of the exchange, the Conservatives would find that money from the welfare budget in two main ways. One is bringing back the two child limit on benefit payments. The other is an overhaul of housing benefit.

The housing benefit change is the one that would land hardest on renters. It involves cutting Local Housing Allowance, the figure used to work out how much help private tenants get with rent, down to the 10th percentile of local rents. In plain terms, support would be pegged to the very cheapest tenth of properties in an area rather than tracking what people are actually being charged.

Rachael Williamson of the Chartered Institute of Housing said that approach "risks taking us back to a situation where support bears little relation to the real cost of renting". She warned it would "almost certainly increase financial hardship and homelessness" at a time when record numbers of households are already struggling, and said any savings could be wiped out by higher costs falling on councils, the NHS and other services.

Mr Burnham told MPs that taking £4billion out of housing benefit "would create levels of homelessness in this country that we wouldn't have seen before", with "hundreds of thousands of children in temporary accommodation". He added that strong national security also depends on "having resilience in our communities" and said his side would not be forced to choose between the two.

Downing Street was careful afterwards not to promise the welfare bill would be left alone. The Prime Minister's official spokesman said the country has "got to get serious" about bringing the bill down, but that this "doesn't mean crude cuts that simply push people into crisis and create bigger costs elsewhere". That leaves the door open to changes of a different kind.

The two child limit was scrapped last year. Then Chancellor Rachel Reeves announced at her Budget that the policy, which capped Universal Credit payments at the first two children in a family, would be abolished. She put the cost at roughly £3billion a year by 2029-30 and said it would mean an estimated 450,000 fewer children living in poverty.

On defence, Kemi Badenoch pressed for 3% of GDP by 2030. Mr Burnham did not commit to that date, saying the Government would honour the Nato commitment of 3.5% by 2035 and set out a target for 3% at next year's spending review. That review is the moment to watch, because it is where the actual numbers get fixed.

For households, nothing has changed on your payments this month. What has changed is the shape of the argument. Both sides now accept the welfare bill is going to be looked at, and the disagreement is about which pocket it comes from. If you rent privately and claim help with housing costs, the Local Housing Allowance rate is the figure worth keeping an eye on when the spending review lands.