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Government plans for social housing are divisive and will create a disincentive for people to work, Oldham MP Debbie Abrahams has warned.

The Oldham East and Saddleworth MP said changes being introduced to tenancies could also lead to workless communities.

The Government is reducing payments people can claim for housing benefit as part of its plan to rebalance the economy.

Social housing tenancies will be subject to a two-yearly review for new tenants, who could be evicted if their financial situation improves enough. But Mrs Abrahams warned the move would deter people from seeking work, would be divisive and neglected the duty towards homeless people.

She said: “Not only does the Localism Bill remove the security of tenure by introducing two-yearly reviews, but it will also allow housing associations and later local authorities the ability to charge up to 80 per cent of commercial rents instead of a social rent.

“The impacts of this would be to create a powerful disincentive for tenants to work as this would mean they no longer meet tenancy requirements. It would also mean that social housing will consist of transient, deprived and workless communities — a recipe for disaster. How exactly does this empower communities?”

The Government previously said it wanted to end council houses for life for anyone new coming into the system. However, existing tenants will not be affected by the changes.

The amount people will be able to claim for a one-bedroom property in Oldham will be £80.55 (down £5.75 on current levels), £97.81 for two bedrooms (down £5.75) £113.92 for a three-bedroom home (down £8.05) and £143.84 for four bedrooms (down £11.50).

Ministers argue the new measures, amounting to £2.4 billion in savings, are necessary, not only to tackle the rising cost of benefits and the budget deficit, but also to create a fairer system for taxpayers and to provide greater incentives for people to work.