Cameron’s housing benefit confusion

In response to Liberal Democrat MP Bob Russell at the end of Prime Minister's Questions today, David Cameron confirmed that the "key change" in housing benefit was "a cap of £20,000", a measure which, according to the June budget, will save only £65 million by 2014/15 - the least effective revenue raising measure the government has announced.

While standing firm today on the Government’s housing benefit reforms, David Cameron outlined his own failure to fully understand the issue. His hardline approach will cause further unease among many backbench MPs, especially those in London.

Responding to Liberal Democrat MP Bob Russell at the end of Prime Minister’s Questions today, David Cameron said:

“We have a housing benefit bill that is out of control, 50% up over the last five years for working age adults, and what we are suggesting the key change is a cap of £20,000, let me repeat that, £20,000 that a family can get for its rent.”

But the so-called “key change” is actually the least effective revenue raising part of the Government’s welfare cuts delivering just £65 million by 2014-15 according to the June budget. The real problems lie with the dynamic impact of the reforms including proposals to reduce housing benefit awards by 10 per cent for people who have been out of work for more than 12 months.

Housing charities have warned that, if implemented, this reform will “drive poor families into ghettos“, with the National Housing Federation warning the cap will put 200,000 people across Britain at risk of homelessness. Douglas Alexander has said the reform would penalise the long term unemployed who were genuinely seeking work.

The cap will hit properties in central London particularly hard. In July, research by London Councils showed that up to 15,000 families in the capital could lose their homes under the plans. Boris Johnson has called for “transitional arrangements” to ease the impact of the cut.

London Tory MPs and the Lib Dems’ Simon Hughes – who earlier this week described the cap as “harsh and draconian” – failed to hide their disappointment at the prime minister’s refusal to compromise, following reports last night of concessions on the cap. Channel 4 News’s Cathy Newman tweeted:

“London tory mps aren’t cheering cameron too loudly…”

While the BBC’s Laura Kuenssberg observed:

“Simon Hughes looking most displeased during this exchange on housing benefit changes”

In Southwark, where Mr Hughes’s constituency lies, 37,570 people claimed housing benefit – only neighbouring Lambeth (39,920) and Hackney (40,570) have higher numbers of housing benefit recipients in the capital. Nationally, Birmingham (110,840), Glasgow (90,900) and Leeds (65,750) are the local authorities with the highest levels of housing benefit recipients.

The government is also planning a 10 per cent cut to the housing benefit of people who have been on jobseekers allowance for more than 12 months, a change shadow work and pensions secretary

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