Benefits Cap to Make 40,000 Families Homeless

...And Cost More than it Saves

According to a story in the Observer and picked up by the BBC, Eric Pickles' department warned No.10 in a letter from Eric Pickles' Private Secretary to David Cameron's Private Secretary (the standard method for a minister to draw something to the PM's attention) that the £500/week benefits cap would result in 40,000 families being made homeless and cost more than it saves.

Of the families made homeless, 20,000 will result directly from the cap, while 20,000 will result from related changes to the rates of housing benefit.

The letter claimed the supposed savings of £270m would be more than wiped out by the increased cost of caring for newly homeless families and generate a net loss, while 23,000 of the 56,000 affordable homes the government wants built by 2015 will not be built at all because it will be impossible for the builders to recoup their costs, and that this will primarily affect family homes.

The letter was apparently sent in January, casting doubt on Chris Grayling's claim before parliament last month, in respect to families being made homeless by the benefits cap, that "It is not yet clear to what extent they would be affected by the overall benefit cap."

In confirmation of the effects of the changes, Westminster Council announced on Friday that 81% of the families on housing benefit in the Borough, more than 5,000 households, were at risk of being made homeless, because rental rates in the borough require housing benefit payments in excess of the revised housing benefit cap, with most seeing a cut of £84 to £130/week, and nearly 1 in 8 seeing a cut of more than £300/week . The Tories are naively hoping that landlords will accept lower rents -- yeah, right.

80% of landlords surveyed by Westminster Council said they would rather end the tenancy than lower rents. The council's own figures show that 4,000 children would have to leave the borough and change schools (so school closures to come, I suspect), half the children on the council's At Risk register would be forced out of the borough. 300+ pensioners, 95 of them with serious health concerns, and 61 disabled people will be similarly affected.

The council warns it could be forced to find £18m in order to temporarily house 1,500+ families from next January, but in 2013 the benefits cap is extended to temporary housing and the only alternative would be to move the families affected entirely out of the borough. The report cheerily predicts that within 3 years, homelessness won't be a problem in Westminster, because it will all have been packed off to become the problem of the outer London boroughs.

Boris Johnson was widely reported to have warned that this policy would amount to the 'Kosovo-style ethnic cleansing' of London social housing, but, reassuringly for those of us whose worlds would be shaken by a Boris with a social conscience and a line in incisive social commentary, he was misquoted, is in agreement with government policy and insists that it will not result in social-cleansing and that 'no such exodus will take place on my watch'. Westminster Council would appear to be putting one of his assertions to the sword and the other to the test.

Westminster will be one of the worst affected boroughs, but other inner-city boroughs are likely to see similar effects, and all boroughs will be affected to some degree. Now take Westminster's 5,000+ and extrapolate those effects across the entire country....