A scheme which could see a major overhaul of the housing benefit system is being piloted in south Devon.

Teignbridge is one of only 10 local authorities in the UK invited to trial the Pathfinder scheme.

It involves the introduction of a new flat-rate housing allowance which will be paid directly to private sector tenants, rather than landlords.

The changes will also make the system more effective by removing the need for people to go through the reclaim process every year.

The trial areas

Brighton and Hove, Sussex Conwy, Wales Coventry, West Midlands Edinburgh, Scotland Leeds, West Yorkshire Lewisham, London Middlesbrough, Cleveland North-east Lincolnshire Teignbridge, Devon Tendring, Essex

Parliamentary undersecretary of state for works and pensions, Malcolm Wicks, said: "This scheme will help us get away from the nanny state.

"It will empower the individual.

"At the moment, the local council has to visit properties to make sure they are the right size for the claimant and that the landlord is charging a reasonable rent.

"But under this scheme the claimant will get a flat rate housing allowance based on an average rent in the area.

Introduced nationwide

"People will be able to make a choice of where they want to live, based on the income they have got."

Mr Wicks said, if successful, he would like to see the scheme introduced nationwide by 2005.

Teignbridge District Council and housing charities have welcomed the reforms.

But some landlords are worried that paying benefit directly to tenants could cause problems.

Clearing debts

Arthur Christian, from the St Marychurch and District Letting Agency, said: "Some tenants don't have bank accounts and those that do are often not in credit.

"Some of the housing benefit money could be swallowed up paying off debt."

Mr Wicks said there were certain risks with the system.

But he said: "If people build up rent arrears, we will have to revert to paying money direct to the landlord."