Cutting benefits 'needed to stop taxpayer revolt'

Housing benefit needs to be overhauled to prevent "social unrest" by taxpayers who believe it is unfair, David Cameron said yesterday as he faced a grilling from MPs over his Government's spending cuts .

The Prime Minister defended the Government's welfare reforms to the powerful House of Commons Liaison Committee, telling members that housing benefit was "out of control".

Mr Cameron became entangled in a tetchy exchange with Labour's Margaret Hodge, who said the PM did not understand the "anger" in her Barking constituency and warned about the impact on the "extreme right".

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The Government intends to cap housing benefit at 400 a week for a four-bedroom property and cut the handout by 10 per cent for people who have been on Jobseeker's Allowance for more than a year.

It will also cut the level of benefit from the 50th to the 30th percentile – from the level of the average rent in the area to that of the 30 per cent cheapest homes.

Mrs Hodge, chair of the Public Accounts Committee, told Mr Cameron: "You said you support mixed communities but it's undoubtedly the case that the cap and the 30th percentile you're going to be introducing in the housing benefit changes will mean that poorer people cannot afford to live in rented accommodation in Notting Hill, where you live, or Islington, where I live, or in Westminster, where we all work.

"And they will be forced out to areas like the one I represent, Barking, where you know there is already pressure and social unrest caused by the very rapid changes in population and the lack of affordable housing.

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"I'd simply put to you: is social unrest a price worth paying, and the impact that can have with the extreme right?"

Mr Cameron replied: "Find me a street in your constituency and let's go down it together and let's ask people earning 20,000, 25,000, 30,000, whether they are happy to be paying towards people whose rent bills are 30,000, 40,000, 50,000 living in central London.

"I think that is more likely, frankly, to lead to social unrest when people find out how much money they're paying in taxes for people to live in houses they couldn't dream of living in themselves."

The PM said housing benefit had risen by 50 per cent in the last five years. "Everyone accepts it's out of control and you've got to take some steps to deal with it," he said.

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"We've tried to take a range of different steps – this housing benefit cap, moving to the 30th percentile. None of these things are easy but it's no good saying 'We're all in favour of getting on top of housing benefit' but then actually saying 'Well, I don't like this change or that change'."

But Mrs Hodge told him: "I don't think you understand the anger in my constituency."

Later, the Prime Minister appeared to aim an apparent dig at Defence Secretary Liam Fox, by telling the senior MPs his department had "a problem with leaks".

Mr Cameron said it was "worrying" that confidential Ministry of Defence documents had found their way into newspapers. And he said the leak of a private letter from Dr Fox in September, in which he warned of the impact of proposed cuts in the MoD's budget, had "added to the pressure" ahead of last month's Strategic Defence and Security Review.

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The review set in train a process of cuts which will see the armed forces lose warships, tanks, fast jet fighters and thousands of soldiers, sailors and airmen to slash defence spending.

During the course of negotiations ahead of the review, a national newspaper published a private letter from Dr Fox in which the Defence Secretary warned Mr Cameron of the "grave consequences" of "draconian" cuts. Dr Fox has always denied leaking the letter, and launched an official hunt to find the source.

Asked about the incident, Mr Cameron said: "Ministers stand up for their departments and make the case for their departments. Sometimes they do it orally, sometimes it appears in a letter. Regrettably, sometimes it appears in national newspapers."

He went on: "That department does seem to have had a bit of a problem with leaks, which is worrying when it is the department responsible for security."

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Later he dismissed criticism of the 2015 deadline to leave Afghanistan and denied suggestions the Taliban would simply wait for Nato to leave before taking over.

He said the deadline would help to focus minds.