Large swaths of London will become "largely unaffordable" to housing benefit recipients from next year, says an authoritative new study from Cambridge University.
Stung by widespread criticism of proposed caps to housing benefit, the work and pensions secretary, Iain Duncan Smith, accused opponents of "hysteria and scaremongering" over the changes.
But the Cambridge study, commissioned by the housing charity Shelter, found that rents on most two-bedroom properties in London would be more expensive than the new caps. It also claimed that people would be forced to move out of their homes, not only in parts of central London but in many of the capital's suburbs.
The analysis follows revelations in last week's Observer that inner London councils were block-booking bed and breakfasts outside the capital to house the tens of thousands of poor families that would be forced to move.
Councils on the edge of the capital and beyond have reacted with alarm to the news. Now many are planning to write to the government demanding more money to deal with what some have called the "benefit influx".
Liam Smith, the council leader in Barking and Dagenham, said: "We will need money that we currently don't have to deal with that situation. We simply haven't budgeted for this additional pressure on our finances".
Barnet, Brent and Newham councils have already sent letters, while a group of councils to the west of the city, including Hounslow, are preparing a joint demand.
Inner-city areas are also worried about the impact. In a letter to the government, seen by the Observer, Westminster council is asking ministers to reduce its duty to support families who are made homeless as a result of the cap. Tory councillor Philippa Roe, the cabinet member for housing, wants the duty to be removed for families who have lived in the area for less than two years in order to give long-term residents priority. She said that demand for housing outstripped supply in the borough more acutely than elsewhere.
Karen Buck, the local Labour MP, described the move as "truly shocking". She added: "Westminster council's pitch to the government is that housing benefit cuts can only work by removing homelessness protection built up over decades".
Campbell Robb, chief executive of Shelter, said the latest study showed how the reforms would "change the makeup of London" with no-go areas for those on local housing allowance. "We are concerned this could mean tens of thousands of households forced from the centre, creating concentrations of poverty and inequality and adding to the already significant levels of homelessness and overcrowding in the city".
The concerns come as the National Housing Federation, the body that represents housing associations in England, claims that around 200,000 people will be forced to live below a minimum income standard that has been endorsed by the prime minister, David Cameron.
The federation added that the £26,000 maximum limit on the amount of housing benefit and other entitlements a family can claim could leave thousands of larger households without enough money to cover food, transport costs and energy bills.
While the problems are most acute in London, figures published on the blog Left Foot Forward reveal how the cap, as well as a series of other housing benefit reforms, will also hit families across the country.
Areas worst hit include Leeds, with 15,610 losers; Bradford, with 10,470; Liverpool, with 12,620; Manchester, with 10,210; and Brighton and Hove, with 12,550.
Many outside the capital will be hit by the decision to reduce the rate at which the local housing allowance is set from the median of local rents to the 30th percentile.
The Observer
