Pickles letter fuels calls for benefit rethink
The government is facing calls to rethink its approach to housing benefit reform after the private secretary to Eric Pickles warned the policy will increase homelessness and cut house building.
In a letter obtained by the Observer newspaper Nico Heslop, who works closely with the communities secretary, warned the introduction of an overall cap on benefits would cost more than it saves because of increasing homelessness.
In the letter, which was sent to the private secretary to the prime minister Matthew Styles in January, Mr Heslop said the £26,000 a year cap will increase homelessness acceptances by 40,000.
He also said the cap would limit the number of homes that can be built through the affordable rent programme. This allows social landlords to charge up to 80 per cent of market rent to fund development.
Mr Heslop warned that capping benefit will limit the ability of landlords to charge the higher rents. He said Communities and Local Government department research suggests 23,000 of the 56,000 affordable rent units the government wants built by 2015 will be lost as a result.
The emergence of the letter prompted shadow work and pensions secretary Liam Byrne to question whether ministers have been open about the impact of the government’s welfare reforms.
‘We’ve been saying for months that the method the government is proposing for introducing a benefits cap is so badly thought through that it risks putting up the benefits bill by putting up the costs of homelessness. Now we know that the government itself secretly agrees,’ he wrote on his website.
‘Department for Work and Pensions ministers now have to explain why they didn’t come clean with the House of Commons about the cost of the benefits cap.’
The legislation to introduce the benefits cap is contained in the Welfare Reform Bill, which is currently in the House of Lords. Peers have indicated the letter could increase pressure on the government to water down its plans.
A Communities and Local Government department spokesperson said: ‘We are fully supportive of all the government’s proposals on benefits, clearly action is needed to tackle the housing benefit bill which has spiralled to £21 billion a year.’
Inside Housing is campaigning for fairer housing benefit reform. For more see our What’s the benefit? page