The government has pledged to replace housing benefit with a new flat rate allowance aimed at encouraging tenants to shop around for cheaper housing. The new local housing allowance is paid direct to the tenants rather than to their landlords. It is currently being tested in the private rented sector in 18 local authority areas. In the Queen’s speech the government said it would publish legislation to introduce the system nationwide in the private sector. It has promised to fully test the allowance in the social rented sector before extending it. The allowance will be based on average local rents rather than actual rents charged. If tenants can find accommodation that is cheaper than the local rate they will be allowed to keep the difference. If it is higher they will have to make up the difference from other resources. Some are worried this will create ghettos of poor households in the worst housing