Peers have raised concerns about the impact of the bedroom tax on disabled people – and said discretionary housing payments will do little to help the problem.

Peers debated the housing benefit regulations in the House of Lords on Tuesday. The regulations introduce the bedroom tax, which will see an estimated 660,000 social housing tenants with spare rooms docked an average of £14 per week in housing benefit. The government estimates the policy will save £500 million a year.

The Department for Work and Pensions estimates 420,000 of the 660,000 affected will be disabled people.

The government has made an additional £25 million a year available for people who have had their homes significantly adapted and a further £5 million for foster carers, but peers believe this will not be sufficient.

Labour peer Lord William McKenzie said: ‘It is accepted that 420,000 of the 660,000 households affected… contain a family member with a disability. On what basis did the government consider the addition of a £30 million a year DHP pot to be sufficient to address the needs of a disabled tenant?’

Another Labour peer, Patricia Hollis sarcastically described the £30 million of DHPs as ‘brilliant’. She said: ‘I calculate that my local authority might get £200,000 in DHPs. It has something like 20,000 families in social rented accommodation, half of whom may be pensioners and half of whom may be other tenants, and two-thirds of whom will be on housing benefit, so we are talking about 6,000 tenants, of whom perhaps half will be regarded as underoccupying.

‘That money will stretch to one year’s worth of help for 250 people at £750 a year.’

Liberal Democrat Lord Archy Kirkwood, said: ‘I was taken aback by the extent to which the client group [disabled people] will be affected by this policy change. I wish that I had known it during the passage of the bill.’

Welfare reform minister Lord David Freud said it does not necessarily follow that the daily lives of the 420,000 people are affected by their disabilities. He said: ‘Lords will accept that, as unpalatable as these measures are, we have found the best balanced way of reducing the housing bill, which is simply enormous now.

‘It requires a response from local authorities, housing associations and tenants but one that, in the majority of cases, these groups will be able to make. There will be hard cases.

‘Let us hope we have put enough resource into looking after various hard cases.’