Ministers take on Church in row over benefits

Housing Minister Grant Shapps said alarmist claims over the impact of cuts to housing benefit were "completely untrue" after Archbishop Rowan Williams warned the changes would lead to "social zoning" with poorer families forced out of affluent areas.

Welfare Minister Lord Freud also condemned the "hysteria and exaggeration" in criticism of the benefit changes – which include capping housing benefit claims at 21,000 – and warned it was "deeply unhelpful".

Mr Shapps and Lord Freud were the first Ministers to publicly criticise Dr Williams following this weekend's comments when he also attacked plans to force long-term benefit claimants to carry out voluntary work.

The Housing Minister also angered Hull City Council leader Carl Minns by branding him a "motor mouth" for accusing the Government of dictating local council housing policy.

In order to slash 2bn from the housing benefit bill, Ministers want to introduce the 21,000 cap and cut maximum weekly payments for claimants in private rented homes, changes they say are "modest" and fair to stop benefit claimants living in areas average families cannot afford.

Ministers – who will today defend the measures against Labour criticism in the House of Commons – admit some people will have to move home to cheaper properties as a result, but say in many cases the changes will force private landlords to cut rents.

Last night, the Government released figures showing it takes 13 workers on an average wage in Hull to cover a single 25,000 housing benefit bill, and the Tories say that by 2015 every working household would be paying 1,515 a year without reform.

But this weekend Dr Williams said; "I'm a bit worried about the way in which this could lead to a kind of social zoning, where middle class areas get more solidly middle class and other people are pushed out to the edge."

Asked about those views at a briefing for regional journalists in Westminster, Mr Shapps said: "It is completely untrue and I am afraid it is borne out of kind of just not recognising the facts and jumping on a sort of bandwagon that says 'no, no this must be terrible because it is going to mean change'.

"For one thing there are four million plus social and affordable houses in this country – housing associations and council houses – which are completely unaffected by these changes."

He added that somebody "who perhaps hasn't really understood the subject" would not realise that in many areas there are few housing benefit claimants in private rented homes.

Lord Freud said: "I do think it is fair to say that there has been in some of the commentary elements of hysteria and exaggeration and I think that is deeply unhelpful, largely because it frightens people who have absolutely no reason to be frightened.

"I think people should look at these what are essentially rather reasonable measures and not stir up some particularly nonsensical claims about the consequences."

Mr Shapps also criticised Coun Minns, who accused Ministers of "micro-managing" local housing issues at the same time as promising "localism".

He said: "If your Hull leader with the motor mouth wants to believe in localism surely it makes much more sense for me to say look here's the deal you build more homes and you can charge any rent you like up to 80 per cent (of market rate] and you can make it based around the kind of tenants you think that you need to attract.

"So this is absolutely providing the powers to Hull and everywhere else in the country to do the right thing by their list and their people. If the leader wants to come and understand that rather than insult the Secretary of State then he is welcome to engage in that conversation."

But Councillor Minns said: "I'm saddened that a Minister of the Crown has resorted to using very personal insults over what is a very serious issue."