We all knew the Tories’ housing benefit cap was morally bankrupt, but it turns out it made no economic sense either

Another Prime Minister’s Questions, another U-turn. This time it was the announcement that the much-maligned decision to cap housing benefit for social housing tenants at the same level as those in the private rented sector is to be scrapped.

The real question, though, is not why ministers have finally ditched the policy – it’s why it took them so long to do it.

Introduced by George Osborne in the 2015 Autumn Statement, the cut was, from the very start, a direct and devastating attack on many of the most vulnerable people in society. Because the Conservatives consistently refused to exempt specialist supported homes from their housing benefit cut, thousands were placed at risk of closure.

Types of supported housing include refuges for victims of domestic violence, sheltered accommodation for the elderly, homeless shelters, and properties for people struggling with addiction. As the benefit cut forced housing providers to face the prospect of a crippling loss of income, specialist accommodation for military veterans and young people leaving care, as well as people with mental illnesses, was also placed under threat.

It was these groups that the Conservatives set their sights on, ignoring the calamitous impact that charities, local councils and almost the entire housing sector had been frantically warning about for months.

Those warnings were as stark as they were sustained. Housing providers made clear that almost 500,000 homes faced closure if the cut went ahead – leaving vulnerable people with nowhere else to turn. For more than two years, ministers downright ignored them.

For all the damage it would do, the policy did not even make economic sense. Designed to help slash a housing benefit bill that has soared amid a deepening housing crisis, in reality the loss of supported housing would have cost the state billions.

Supported homes provide a vital lifeline for those who most need it, offering an array of services ranging from counselling and training to safety wardens and help finding a job. By doing so, they alleviate pressure on public services, keeping tenants out of the health system and reducing the burden on emergency services, the courts, social workers and local councils, many of which are already stretched to breaking point.

In June, think-tank Demos estimated that supported homes for elderly people alone save the NHS almost half a billion pounds a year. An older study, by Frontier Economics, found that supported housing saves the taxpayer as much as £640m a year.

In contrast, the Government’s housing benefit cut was forecast to save just £120m next year, rising to £225m by 2020-21. It wasn’t just immoral – it was economically illiterate too.

While the policy has now been scrapped, much of the damage has already been done: since the change was announced, the number of supported homes due to be built has fallen from 8,800 to just 1,350. The Tories’ refusal to admit their mistake earlier has had major consequences. As housing providers prepared for a drastic fall in income, 19 new developments were scrapped entirely and a further 2,185 new homes postponed.

After spending months vigorously defending it, the Government has now accepted the policy is a mess, scrapping the housing benefit cut not just in relation to supported homes but for social housing entirely. It is a clear admission of how needless the cut was from the start. With the briefest of responses, the most casual of announcements, Theresa May removed a threat that should never have existed.

Capping social rents at private sector levels was a desperate bid to cut a housing benefit bill that has soared by £4bn since 2010 alone, and now stands at £24bn a year. As spending spiralled, ministers faced a choice: cut housing costs by building more genuinely affordable homes, or slash benefits for some of the poorest people. Time and time again they have chosen the latter.

Today’s reversal also marks a further unravelling of the Tory’s seven-year assault on social housing. That should be welcomed. But the Government is still forcing councils to sell off social homes by the thousands, still ordering house-builders to prioritise more expensive “affordable” homes over actually-affordable ones, still pushing ahead with an extension of the Right to Buy policy that has decimated the social housing sector.

Ministers should not be congratulated for their U-turn – they should be forced to explain why they didn’t make it months ago. And as they begin to accept their approach to housing for the poorest in society has had disastrous consequences, they should ensure that today’s backtracking marks the start of much more fundamental shift.