HOUSING benefit payments in Oxford will be cut from today, leading to fears that many families could be forced out of the city.

The payments – which help cover the rent of about 3,000 people in private housing in Oxford – will drop by £150 per month for a four-bed house, down to £29.55 a month for a shared room, prompting fears of homelessness and a city exodus, according to housing chiefs.

But the Government believes the handouts, paid to the unemployed and those on low incomes, have spiralled out of control.

Whitehall says slashing payments will force landlords to reduce rents.

The changes will affect new applicants from today and existing claimants will be moved to the lower payments in nine months time.

City housing experts believe it will have a catastrophic effect on Oxford’s poorest families, forcing them to leave for lower rent areas such as Didcot and Bicester, or even move out of the county altogether.

Tim Sadler, the council’s director of city services, said: “You could be talking about relocating entire families and people on low incomes who rely on family support networks. That could be broken up.”

In January, the Oxford Mail reported how “suffering and misery” could be caused by the changes.

Meanwhile, in October, the number of people in emergency housing in Oxford rose for the first time in five years.

City council deputy leader Ed Turner said: “Oxford people will move out because they cannot afford it and that will have an unwelcome effect on the social fabric of the city.”

The council has now earmarked an extra £2m over the next four years to deal with an anticipated deluge of hardship cases.

Housing benefit limits are currently calculated by taking a list of sample rents across the county and drawing a line halfway down – the 50th percentile.

From today, that line will be drawn much lower, at the 30th percentile.

This year, the Government will pay out more than £21bn in housing benefit.

It said the current system paid families to live in expensive housing that working families could not afford.

Lord Freud, the Minister for Welfare Reform, said: “The current housing benefit system is not working.

“The cost of paying housing benefit for private sector rents has spiralled out of control for over a decade and the Government has a duty to the tax payer to bring costs down.”

He added: “We are not expecting large numbers of people to have to move.

“But we have set aside £190m to help those who may be affected by the changes and we are working with local authorities to ensure that there is plenty of help.”

The changes will not affect the 8,000 families in council-owned social housing, although they face a 6.8 per cent rent increase from April.