David Cameron has said he would reduce the benefits cap to £23,000 within days of a re-election. Photograph: Paul Ellis/AFP

Reduced benefit cap would 'force large families out of the south-east'

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Tory plans to reduce benefit cap to £23,000 a year would leave large families on benefits unable to afford rent and facing relocation elsewhere in UK

Social housing across the south-east of England would become unaffordable for large families on benefits within days of a Conservative victory in the general election, according to one of the region’s leading social housing providers.

The prime minister vowed on Tuesday to reduce the annual benefits cap from £26,000 to £23,000 “within the first few days” of a Conservative victory, but analysis conducted by a housing association has highlighted the devastating consequences it would have on tenants in the south-east.

In its analysis, Moat housing association, which provides social housing across the south-east of England, found that every three-bedroom social home across all 35 areas it operates would become instantly unaffordable for residents receiving full housing benefit if the cap were reduced to £23,000 and that all two-bedroom homes would be unaffordable within six years.

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For social housing residents in homes that are rented at “affordable rent” levels (which, confusingly, are more expensive than normal social rents but still cheaper than market levels), the outlook is even bleaker. The analysis found that two-bedroom homes in London, Brighton & Hove, Epping and Mid-Sussex would all become instantly unaffordable, while all other two-bedrooms homes in the rest of the south-east would be out of reach within four years. The majority of one-bedroom homes in the south-east would be unaffordable within 10 years.

“Three-bedroom properties will be completely wiped out and even two-beds, in most areas we operate, become unaffordable within two years,” said Angelo Sommariva, policy manager at Moat. “In deprived areas you might find that it takes an extra couple of years to become unaffordable, but all you’re really doing is buying time.

“Once the cap affects benefits that are meant to go towards basic living costs, that’s when people go into unsustainable debt with payday lenders or credit cards, or they have to make choices about forgoing things such as heating and food.”

The housing association said a reduced benefit cap would lead to huge numbers of residents in the south-east being unable to pay rent, falling into debt, being evicted, moved into insecure private rented accommodation or forced to leave the region. If its tenants were unable to pay rent, or it reduced its rent prices, it said, the number of affordable homes it could build would be drastically reduced, worsening the area’s affordability in the long run.

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“While the reduced cap will have a huge impact on current tenants, there will be an equal impact on future tenants who won’t be able to be housed because housing associations won’t be able to build enough homes for them,” Sommariva said.

The majority of people affected by the benefit cap are in London and the south-east because the far higher cost of housing has seen the amounts paid out in housing benefit soar. Some families from inner-London have already been relocated miles away to towns such as Stoke as reduced housing benefit have left people unable to afford their rent, but a further lowering of the benefit cap to £23,000 would see this replicated with families across the wider south-east.

A Conservative spokesperson said: “We now know the benefit cap is clearly working and helping people move into work. We introduced it at £26,000 as a conservative first step. This is about fairness. When resources are tight it is right to move resources from those getting the largest benefit payments in the country in order to help get more young people into work.”

The benefit cap has been one of the government’s most popular policies, with public support for the principle of the policy at 73%, according to pollsters Ipsos Mori. It was designed to prevent unemployed people claiming more in benefits than the average working household’s weekly wage.

David Cameron said lowering the cap would save £135m which would help to fund 3m apprenticeships and claimed the introduction of the £26,000 benefit cap in June 2013 had created “a rush to the job centre”. A similar claim in 2013 by the work and pensions secretary, Iain Duncan Smith, was refuted by the UK Statistics Authority.

On Saturday 31 January, thousands are expected to March through London to protest the lack of affordable housing in the capital. In recent months, dissent about London’s housing crisis has increased with demonstrations over an investment bank’s plan to increase rents in the New Era estate in Hoxton, Newham council’s planned demolition of a housing estate and rip-off letting agent charges.

In January, the Guardian revealed that 80% of riverside apartments in a series of new developments had been sold to overseas investors rather than London homebuyers, while a separate luxury development in south-east London caused uproar when it boasted in an advert aimed investors in Hong Kong that it contained no social housing.

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