Ministers are considering forcing all housing benefit recipients to contribute towards their rent as part of efforts to save £12bn from the welfare bill, government sources say.
Housing benefit currently can cover the full cost of rent.
The chancellor is also understood to be pushing for the cap on all benefits to be lowered from £26,000 to £20,000 outside London and south-east England.
It was previously announced the cap would be cut to £23,000 across the UK.
It is understood that other proposals to abolish or severely restrict the carer's allowance have been dropped after opposition from the prime minister.
A government spokesman said it would not comment on speculation about next Wednesday's Budget.
Manifesto commitment
Since winning the election, officials and ministers have struggled to find £12bn in savings - a key Conservative manifesto commitment.
Details of how all the savings will be made are likely to be spread between the Budget and the Autumn Statement.
Housing benefit is thought to be an obvious target as costs have been rising in recent years, to £25bn last year.
The average weekly housing benefit payment is £93.
If, for instance, ministers made claimants pay 10%, they would have to find about £9.30 a week to ensure their rent is paid in full.
The Institute for Fiscal Studies (IFS) has calculated that this would save £2.5bn if applied to both the social and private rental sector.
The measure to reduce the benefits cap to £20,000 outside the South East would save tens of millions - a relatively small amount of money, according to the IFS.
However, Chancellor George Osborne is said to see it as a key political message, showing that the government is tough on welfare costs.
Another measure believed to be under consideration is the scrapping of part of the Employment and Support Allowance, the UK's main sickness benefit.
A leaked government paper seen by BBC News describes the Employment and Support Allowance as a "passive" benefit which does not "incentivise" people to find a job and proposes abolishing the Work Related Activity Group (WRAG) category.
It is unclear whether any of these options will appear in next week's Budget, but ministers have already announced plans to:
- Cap benefit rates for the next two years
- Reduce the benefits cap
- Deny unemployed 18 to 21-year-olds housing benefit
The IFS has estimated these measures would save about £1.5bn.
Last month, Newsnight reported that tax credits were also likely to be cut, potentially saving up to £5bn.
Posted: Thu Jul 02, 2015 10:33 pm