David Cameron stands by 'fair' housing benefit cap

David Cameron dismissed talk of a climbdown over capping housing benefit today despite claims that the policy could drive 200,000 poor people out of major cities.

The Prime Minister said the Government was "sticking by" its proposals, insisting it was not "fair" that claimants lived in properties many workers could only "dream of".

The staunch defence came during clashes in the Commons during which Labour leader Ed Miliband repeatedly challenged Mr Cameron on the issue.

The coalition has announced plans including limiting housing benefit to around £400 a week for a four-bedroom home and cutting payouts by 10% when people have been on Jobseeker's Allowance for more than a year.

But Liberal Democrat deputy leader Simon Hughes is among those who have criticised the "draconian" proposals, saying ministers will have to "negotiate" to get parliamentary approval.

Labour has suggested the policy will lead to "cleansing" of the poor from areas with high rents, while some Conservative backbenchers with urban constituencies have also voiced concerns.

The Prime Minister admitted that the welfare reforms were "difficult", but said they were necessary to protect other areas of spending such as the schools and NHS from austerity cuts.

He stressed that the cap would still leave claimants able to receive around £20,000 a year for housing.

"We are going forward with all the proposals we put in the Spending Review and the Budget," he told MPs.

"I know you don't like the answer that we are sticking to our policies, but we are sticking to our policies.

"The point everyone in this house has got to consider, are we happy to go on paying £30,000, £40,000, £50,000?

"Are constituents working hard to give benefits so people can live in homes that they can only dream of? I don't think that is fair."

Mr Cameron said housing benefit for people of working age had gone up 50% over the past five years, and the budget was "out of control".

Rejecting criticism of the 10% cut for those who have been on JSA more than a year, he said: "Everyone on jobseeker's allowance is expected to work and everyone knows there is a problem when people claim jobseeker's allowance and maximum housing benefits for long periods of time.

"It creates a serious disincentive to work."

The move would affect 37,390 people in London, but every month there were 30,000 new job vacancies in the capital.

"That is 400,000 vacancies a year - we want to get those people back into work," Mr Cameron added.

The Government estimates 21,000 households are due to be affected by the benefit cap - 17,000 of them in London.

But Labour frontbencher Chris Bryant warned yesterday that around 200,000 people could be driven out of areas with high rents as a result of the changes.

Mr Miliband highlighted the potential for the measures to cause splits in the coalition by referring to Lib Dem leader Nick Clegg - who recently confessed to being a secret smoker - and Mr Hughes as "glum and glummer".

Pointing at the Southwark and Bermondsey MP on the benches opposite, the Labour leader said: "No wonder he looks glum.

"And then we have glummer, the Deputy Prime Minister. No wonder he is back on the fags."

Mr Miliband went on: "Isn't the truth the Prime Minister just doesn't get it?

"He is out of touch, other people will pay the price for his cuts. Isn't it time he thought again on housing benefit?"

The Department of Communities and Local Government is to grant £10 million from its homelessness budget to local councils' funds, to help smooth the change.

The money will go to councils' "discretionary funds" that can be used for special cases. They could dip into the pot if, for example, a family's rent was more than £400 but one of their children attended a local special school.

Chancellor George Osborne had already tripled the cash for discretionary funds to £60 million when he delivered his Budget in June.

Westminster Council reiterated its backing for the cap today, saying more than 1,000 households in the area were currently receiving in excess of the limit being mooted.

At present the authority's housing allowance is £1,000 a week for a four-bedroom house and £2,000 for a five-bedroom.

Tory councillor Philippa Roe, who leads for the council on housing issues, said: "The intention of the cap is not to force claimants from central London and other city centres but to support the reduction of the national housing benefit bill that was spiralling out of control and restrain a system which was driving up and distorting private sector rents.

"Of course, those people who have a genuine need to be housed in their local area, those on low incomes, pensioners who have lived in their neighbourhood all their lives and pupils sitting their exams should be prioritised."

But the Tory MP for the Cities of London and Westminster, Mark Field, warned that the April 2013 date for introducing the changes may be too soon.

"The speed at which the cap is being put into place does perhaps ignore some of the huge logistical problems for some local authorities in arranging for more accommodation, but also coping with an influx of new claimants," Mr Field said during a parliamentary debate.

He said 80% of the households currently handed the benefit in his constituency were receiving more than the cap level.

Speaking on BBC Radio 4's World at One, Communities Secretary Eric Pickles said: "People have got to understand that these new reforms do not come in until 2013, so we have quite a lot of time to offer help to people to get them into work and get them into employment.

"But fundamentally, it is a question of fairness."

He also dismissed the "urban myth" that councils were already booking bed and breakfast accommodation in a bid to deal with the fallout from the reforms.

"Are you seriously saying (councils) are using this year's money to pay for something in three years' time?" he asked.

"I have found not a single example of this happening."

Shadow Commons Leader Hilary Benn said the 50% rise in housing benefit over the past five years "reflects rent levels in certain parts of the country".

"The fact is that these are people who need to live where they are because of their jobs, they have got children in schools," he added.

"This is why there is so much concern that there should be a wholesale shipping out of people if they are affected by this and the government does not think again."