HUNDREDS of Oxford residents could be driven out of the city when housing benefit is slashed this summer, councillors fear.

The payments – which help cover the rent of about 3,000 people in private housing in Oxford – will drop by up to 13 per cent, prompting the spectre of evictions, homelessness and a city exodus, according to senior council officers.

And despite its mounting financial pressures, Oxford City Council has earmarked an extra £2m over the next four years to deal with an anticipated deluge of hardship cases.

Changes to the way the benefit is calculated, announced as part of the Government’s spending review, will affect new claims from April and will leave some Oxford families facing a rent shortfall of about £100 per month.

Existing claimants will notice the differences from January 2012.

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 to cities such as Coventry or Birmingham in the search for affordable housing.

For the first time, the city council is also set to search for emergency accommodation, provided to the most vulnerable homeless families, in outlying towns if housing benefit fails to cover city rents.

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

Government figures released in December revealed that 44 households were accepted as homeless by the council between July and September, double the number in the previous quarter.

Council deputy leader Ed Turner said: “Suffering and misery will be caused by these changes.”

He said families who had lived in the city for generations could be forced to move to find properties they could afford.

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

Mr Turner said as rents in Oxford were higher than those in county towns, it would leave city properties unaffordable.

Figures produced by the Government’s Valuation Office Agency following June’s Budget announcement, show that housing benefit in Oxford could drop by £10 per week for renting a single room and by £23 per week for a four-bedroom house.

Mr Turner said: “Oxford people will move out because they can’t afford it and that will have an unwelcome effect on the social fabric of the city.”

He said those who chose to remain would be forced into increasingly smaller pockets of low-rent housing, adding: “You will get high concentrations of poverty.”

Affordability issues in the private rented sector could also increase Oxford’s social housing waiting list – which currently stands at more than 5,000.

However, the council has said it will have little or no ability to help.

Mr Turner said: “We can warn people and encourage landlords to reduce rents. The Government believes they will do that, but I don’t hold much hope.”

A spokesman for the Department of Work and Pensions said: “There is an urgent need to reform housing benefit and return fairness to a system that has been allowed to spiral out of control.

“We are determined to drive down private sector rents for housing benefit recipients, whilst delivering value for money for Oxford taxpayers.

“A third of all properties will still be affordable to people on local housing allowance in Oxford and alongside we have outlined a number of measures including a further £130m in discretionary housing payments that will support the most vulnerable.”

People in housing association properties may not be affected by the cut, but the Government does want rents to increase to 80 per cent of market value for all new tenants.

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.