Matthew Sinclair: Home truths we must face in the costly heart of the city

Beneath the now highly polarised debate over the Government's planned changes, there are some basic decisions about the standards we can afford to provide, and it is fair to ask ordinary taxpayers to provide.

We should look after families who need somewhere to live but can't afford it. That will be easier if we reform planning regulations so more homes are built, but some people who aren't able to work or face sudden changes in their circumstances are likely to need support.

Housing benefit gives them money to pay the rent. There have been some notorious cases where claimants have received ridiculously generous treatment, living in huge houses in posh places, though. And the cost is spiralling out of control.

The Government has proposed two key changes. The first says that you can't live on housing benefit in a property that the ordinary taxpayers who finance all these benefit cheques couldn't possibly afford. New limits will be put in place ranging from 250 a week for a one-bedroom property to 400 a week for a four-bedroom property.

The second says that someone who is unemployed for a prolonged period will have the amount they are paid reduced a bit. If you are going to depend entirely on these benefits for a long time you will need to adjust your expectations about what you can afford. There are also some changes to the way rates are calculated designed to make the benefit more affordable that will somewhat reduce the number of properties in a given area that housing benefit claimants can afford.

None of that is so unreasonable but the housing issue is a sensitive one so it has provoked a furious political debate. There may be some circumstances where it is worth making an exception, and special funds are in place to help when that happens. But fundamentally families on benefits are just facing some of the same pressures working taxpayers face all the time.

There are a range of things that working families – on moderate incomes and not receiving any benefits – have to do day in, day out, which opponents of the Government's reforms seem to think benefit claimants should be above.

Most people do have to accept that some areas are too expensive for them to live in. Inner London is expensive. It is madness to spend billions trying to use housing benefit for social engineering to keep a mix of incomes in each area. This is trying to deny the basic reality that it will tend to be richer people living in more expensive areas – we can't all live in Knightsbridge.

After all, apart from young people living in tiny places, lower middle-class families have been priced out of Inner London. Commentator Ed West pointed out the problem last week: "The real story is that Inner London now has almost no lower middle-class people left. To live inside Zones 1-3, one has to be either a virtual millionaire or on housing benefits.

"The housing crisis is a genuine disaster, but I wonder why Inner London should be reserved for the very poor rather than the struggling lower-middle class."

It is also being written up as some horrible tragedy if the reforms might, at some point, force some people to move. If someone is unemployed they might not be able to permanently afford to live in Islington, for example, particularly if they have a large family. Families not on housing benefit often have to move though, either because they need somewhere they can afford more space or they get a job in a different town.

Some people are suggesting this will trap people in unemployment, as they won't be able to live where jobs are available. But few of us live on the doorstep of our job and it is absolutely normal for people working in the centre of

London, in particular, to travel in from the rest of London or the suburbs. In 2003, the average commute to work took 45 minutes.

Unfortunately, it seems like some of the defenders of the status quo expect taxpayers to support benefit claimants to live in places they couldn't afford themselves.

Some of the frightening figures they come out with ignore people's ability to adapt to these changes by prioritising space or location and the likelihood that some of the pain will be borne by landlords who make significant profits out of housing benefit.

They are well intentioned but need to be more realistic. The changes being made to housing benefit are fair and necessary.

Matthew Sinclair is research director of the Taxpayers' Alliance.