Councillors are already describing a "doughnut effect" in which tenants who previously relied on benefit can no longer do so as market rents in central areas continue to rise and the benefits payable are capped.
The result will be to drive as many as 200,000 Londoners into the ring of cheaper and more remote suburbs and beyond, with inevitably serious consequences in social segregation, greater commuting distances for those who have jobs and threats to community services that depend on low-paid workers.
As landlords cash in and affluent areas are "cleansed", it is hard not to recall earlier episodes of social engineering forcing tenants out of central city apartments.
To make matters worse, a 60 per cent cut to the affordable housing budget is even more swingeing than predicted two days ahead of the chancellor's statement. Any hope that the private sector will offset decline in new social housing has been dashed by reports of crisis in construction industries and the withdrawal of plans for thousands of homes originally adopted through the now abandoned regional spatial strategies.
In an apparent rediscovery of the value of targets, the coalition declares that it can use increased rents from council and housing association tenants to fund 150,000 new affordable homes in the next four years. It is an aspiration greeted with scepticism in the housing world, where the combination of rent increases and benefit caps is expected to increase homelessness.
A special commission to examine the changes is to be formed by a partnership of the Chartered Institute of Housing, the National Housing Federation and Shelter.
The government has to listen and learn or its pledge to build more homes than the last regime will have no chance of being fulfilled. Housing minister Grant Shapps called this aim "the gold standard on which we shall be judged".
Already there is a hint of government desperation in the announcement buried in a letter from communities secretary Eric Pickles that although the new homes bonus to local authorities is payable only from April next year, planning permissions granted now "will count against the bonus". Depleted councils will need to work hard to persuade their reluctant electorates that thousands of new homes are needed partly to keep them in business.
- Anthony Fyson is a freelance writer on planning issues.