Housing associations in England have delayed or cancelled plans to build new sheltered accommodation units due to proposed cuts to housing benefit.

The UK government announced plans last November to introduce a Local Housing Allowance (LHA) cap as part of efforts to reduce the welfare bill. The changes will bring housing benefit rates for social housing in line with the sums paid to landlords in the private sector.

The cap, which includes sheltered housing, is not scheduled to be introduced until April 2018 but will affect people signing new tenancies from this April.

For this reason, housing associations have said that it is no longer financially viable to build flats for the elderly or people with learning disabilities as sheltered housing providers face losing an average of £68 a week per tenant.

Figures from the National Housing Federation revealed that nearly 2,500 units have so far been scrapped or delayed.

Now BBC News reports that four housing associations have confirmed their plans had needed to change:

David Orr, National Housing Federation chief executive, said: “As these examples show, the impacts of the LHA cap are real and immediate. The threat alone has caused the building of thousands of specialist homes for the nation’s most vulnerable to grind to a halt. And if the cap comes into force, our research suggests that 156,000 specialist homes could be lost.

“The PM has said that this would be a government that supports the vulnerable. But if this cap applies, society’s most vulnerable - dementia patients, women fleeing domestic violence, army veterans suffering mental health problems, older and disabled people - will be asked to find an extra £68 a week.

“We have repeatedly tried to engage the government on the urgency and severe impacts of this cap on supported housing – we need clarity that this won’t apply to those in specialist homes today.”

Ministers say they are reviewing the sheltered housing sector “to ensure it works in the best way possible”.

A spokesman for the Department for Work and Pensions said: “We’ve always been clear that we value the work the supported accommodation sector does to protect the most vulnerable members of society.

“That’s why we are carrying out a thorough review, working with the sector, to ensure that it works in the best way possible - which is what the NHF has asked for.

“We are also providing councils with £870m of Discretionary Housing Payments which can be paid to people in supported accommodation.”

Mark Henderson, chief executive of Home Group, warned that the lack of clarity over funding for supported housing will lead to an uncertain future for vulnerable people.

Mr Henderson added that funding from Discretionary Housing Payments (DHP) will not be a sufficient alternative should the LHA cap be applied to supported housing.

He said: “Supported housing providers when looking at a service are looking at a three year period. That’s the standard term Commissioners are looking for and few providers are able to commit to new contracts with the current uncertainty.

“As we approach a new financial year services are more rapidly closing down because of this lack of clarity over the government’s position. We understand there is a review going on but as things stand Supported Housing will still be capped. I’m not convinced by suggestions that DHP will be able to cover any short fall.

“We’ve seen massive variations from differing local authorities on their willingness to grant DHP to those affected by welfare reform. Nationally only 46 per cent of the DHP funding pot made available to local authorities by central government has been spent. DHP can’t be the answer when it clearly is not getting to those in need of it.

“Services are closing every week and vulnerable people are being left without the support they need. Government has suggested it has no intention to apply LHA to supported accommodation but housing providers can’t operate on suggestion. We need long term certainty and the people we support deserve reassurance.”

Mr Henderson warns that the taxpayer and cash strapped NHS could bear the brunt of mass closures of social care funded supported housing services as vulnerable people seek alternative support in more expensive clinical settings such as A&E.