LONDON – British prime minister David Cameron has received a warning from within his own administration that the government’s plans to cut welfare payments risk making 40,000 families homeless.
The warning came in a letter from the private office of communities secretary Eric Pickles and appears to reflect concern in his department for communities and local government over the plan to cap total household benefits at £500 (€553) a week.
Written by Mr Pickles' private secretary Nico Heslop to his opposite number in 10 Downing Street and obtained by the Observer, the letter warns that the estimated £270 million annual savings from the plan could be wiped out by the cost to local authorities of rehousing families who can no longer afford to pay for their accommodation. Far from contributing towards the government's deficit reduction programme, the scheme could end up generating a "net cost" to the exchequer.
Moreover, it warns that the welfare cuts will put at risk at least half of the 56,000 affordable homes to rent which the government hopes will be built by 2015, as contractors doubt whether they will be able to recoup their costs from tenants.
A spokesman for Mr Pickles said: “Clearly action is needed to tackle the housing benefit bill which has spiralled to £21 billion a year under Labour.” It is understood that the letter was written in January and has not been discussed at cabinet level.
But sources within the department declined to discuss whether it was seen or approved by Mr Pickles before being sent to the prime minister’s office.
In the letter, Mr Heslop warned: “Our modelling indicates that we could see an additional 20,000 homelessness acceptances as a result of the total benefit cap. This on top of the 20,000 additional acceptances already anticipated as a result of other changes to the housing benefit. We are already seeing increased pressures on the homelessness services.”
“We are concerned that the savings from this measure . . . does not take account of the additional costs to local authorities (through homelessness and temporary accommodation). In fact we think . . . the policy as it stands will generate a net cost.” – (PA)