TENANTS who receive housing allowance are at risk of becoming homeless if they do not take into account cuts to the amount they receive in January, housing officials have warned.

The prospect was discussed by councillors yesterday following a national report into the impact of housing benefit reforms.

Speaking at the neighbourhood services scrutiny committee, Anthony Sandys, head of revenue and benefits at Darlington Borough Council, said there may be an increase in the number of people who rent privately ending up "sleeping rough" if they failed to make arrangements to cover the shortfall.

The council will see a reduction from the Government in its Local Housing Allowance and Housing Benefit of about £875,000 a year.

The overall reduction will affect about 2,500 households in the borough, who will lose an average of £6.55 a week.

The changes are being introduced by the Government to reduce costs and provide more incentive for people to find work.

From January next year, tenants of private homes with one bedroom will get £75 a week instead of £80.77. At the same time, the two-bedroom rate will fall from £98.08 to £91.15, and the three-bedroom rate will drop from £115.38 to £109.62. The four bedroom rate changes from £160.38 to £145.96.

Councillor Paul Harman asked what the council could do to curb the effects of the benefit reduction, but was advised that no more social housing could be provided because there were no resources.

The pivotal role of organisations such as the Citizens Advice Bureau, and homeless charities 700 Club and First Stop, was discussed and councillors agreed to raise awareness of the benefits changes in their own wards.

Other housing benefit changes include the extension of the shared accommodation rate to people under 35, when previously it was only for those under 25, and a benefit cut to those who have more bedrooms than they need.

Furthermore, from April 2013 housing benefit will be based on the consumer price index, rather than actual rents, meaning people will be able to afford fewer properties.

Since 1997, rents have increased in the private sector by 63 per cent, while the Consumer Price Index has increased by only 17 per cent.

Mr Sandys said the only "positive" change was an allowance for disabled people to have a room for an overnight carer (as opposed to a residential carer).

However only five people in Darlington will be affected by this change.