DEBT advisors in Oxford last night welcomed a Government U-turn on housing benefit penalties for the long term jobless.

But they claimed the major overhaul of state welfare announced yesterday would still cause anxiety.

Prime Minister and Witney MP David Cameron unveiled radical plans to roll about 50 benefit payments into a single Universal Credit.

He said the Welfare Reform Bill also included measures to ensure it was always more lucrative to take a job rather than remain on state hand- outs.

However, the Government scrapped controversial plans to dock housing benefit payments to those on jobseekers’ allowance for more than 12 months.

The reforms are expected to cut the UK welfare bill by £5.5bn over four years by limiting housing benefit, reforming tax credits and taking child benefit away from higher-rate taxpayers.

Carole Roberts, manager of the Rose Hill and Donnington Advice Centre, said the 10 per cent cut to housing benefit for the long term unemployed – which was dropped from the Bill – had been the main worry for many. She said: “It would have meant people having to find that money themselves.

“Rents are sky high in Oxford so people would have been made homeless.”

The advice centre in Ashurst Way has reported huge rises in the number of people seeking help over the last 12 months.

Mrs Roberts said it was a lack of appropriate employment rather than financial barriers created by the benefits system that caused hardship on Oxford’s estates.

She said: “Ninety-nine percent of the people we deal with on benefits really want to work but there are not the jobs.”

And she added the fact that more than 1,000 public sector workers were facing redundancy in Oxfordshire would add to the problem.

She said: “It’s no use Cameron saying people will be absorbed into the private sector – that is collapsing as well.”

Nick Turnill, a welfare rights case worker based at Barton Advice Centre, in Oxford, said the full extent of the reforms would only be revealed when the detailed regulations were published and the Welfare Reform Bill had passed into law.

But he said the Government may find a major overhaul more difficult to implement than it had anticipated as the benefits system, developed over a number of decades, was “deeply rooted in the fabric of society”.

Launching the Bill in east London, Mr Cameron said: “Never again will work be the wrong financial choice. Never again will we waste opportunity.

“We’re finally going to make work pay, especially for the poorest people in society.”