WORKING tenants in social housing will receive “little or no direct benefit” from the 1 per cent annual rent cuts promised by George Osborne, according to a report published yesterday.

The Chancellor will gain more from the rent reduction over the next four years than council or housing association (HA) renters, as lower housing benefit payments for full and partial claims would save the Treasury £1.7 billion.

In comparison, only a third of all 3.9 million households in social housing would enjoy a collective £700 million increase in disposable income — according to the Institute for Fiscal Studies (IFS) report.

But the £2.3bn a year cuts — that were announced in Mr Osborne’s Budget in July — were slammed as another death knell for social landlords’ plans to build more affordable housing.

At least 14,000 fewer properties will be built between now and 2020 because of the huge reduction in funds, according to the Office for Budget Responsibility.

“This instability could damage the ability of social landlords to plan and finance new house-building,” said IFS senior research economist Robert Joyce.

Meanwhile, households earning a combined income before tax of £30,000 and £40,000 in London would have to pay market-level rents by 2017 under Mr Osborne’s “pay to stay” attack on working-class people in employment.

More than 250,000 households would be pushed to pay extortionate rents, quit decent-paying jobs or exercise their right to buy their homes, according to IFS.

Labour’s shadow chief secretary to the Treasury Seema Malhotra said: “This report completely undermines claims that reductions in social rents will help offset cuts to tax credits.

“More than three million working families are set to lose an average of £1,300 from next April as a result of tax credit cuts. The Tories need to reverse fully their cuts to tax credits — not exaggerate the impact of the reduction in social rents to those affected.”