Britain faces the prospect of the ghettoisation of towns and cities between rich and poor as a result of changes to housing benefit, Shelter has warned.

Old-style housing benefit, received by 4m people, is being gradually replaced from last April with a new system called local housing allowance.

Instead of payments being made directly to landlords, the benefit is now received by the tenants themselves. But problems are emerging over the way in which the applicable rent is set at the median level in different regions.

While half of tenants will get more money – and are allowed to pocket any difference between the grant and their actual rent – others are set to end up with a significant shortfall.

Financial Times