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23 July, 2010 01:08 (GMT +01:00)

"Ghettoisation" of London - 'Half a million face homelessness' in benefit shakeup

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Nearly half a million Londoners face losing their homes in the Governments benefit shakeup, a study says. The National Housing Federation fears new housing benefit caps could see 750,000 people across the south-east turfed out of their accommodation as the coalition trims the bill by £1.8bn. Using council data, the study suggests a ghettoisation and segregation of the capital is on the cards as low-income families are forced to move out of more prosperous areas. In Greater London as a whole, a quarter of households rely on the benefit to meet their rent Changes outlines in the emergency budget will see a £400 a week ceiling on four-bedroom properties and £250 a week for a two-bedroom home - the allowance will also be pegged to the bottom third of rents in any borough. Unemployed people who claim jobseeker's allowance for 12 months will see their housing benefit fall by 10%. Future increases to local housing subsidies will be linked to retail price inflation, rather than rents, which will further erode the value of the benefit. Four out of 10 families in inner London are dependent on housing benefit, offical figures show. During the recession claims soared - 42 per cent of homes in Hackney and 38 per cent in Tower Hamlets are reliant on the weekly payment. The proposals come into effect by next April. "Enormous upheaval" David Orr, the National Housing Federation's chief executive, says the moves will see the poorest in society facing "enormous upheaval", and that thousands of children would be shifted out of schools as families move to try to find cheaper accommodation. Others in the housing sector have voiced concerns that the moves are too rash and discriminating. Headlines such as the former asylum seekers who recited £8,000 a month for a Kensington house and revelations that just two London families received housing benefits worth £366,000 helped prompt the get tough policy. Councils are already facing huge budget cuts and are legally required to house only the "most in need" - this, the campaign group fears could lead to a new generation of rough sleepers. Changes will "restore fairness" The minister for welfare reform, Lord Freud, said: "We are working to restore fairness and responsibility to a broken system, so that we are no longer left in the absurd situation where if you are on benefits you can receive an expensive house in a smart area that many working families could not afford." Iain Duncan Smith, the work and pensions secretary, is about to publish a report of the impact of the cuts. The Government claims the controversial changes will get claimants into smaller and more appropriate homes and reforms will help bring down rental prices. Orr added: "The housing benefit caps could see poorer people effectively forced out of wealthier areas, and ghettoised into poorer neighbourhoods. Some people affected by housing benefit caps may successfully find a home in cheaper areas, but many will end up in expensive bed and breakfast accommodation, while thousands will simply become homeless."