The families affected are those who live in areas where district councils are responsible for housing and county councils provide social services. One such couple, Tom and Nicola Gates, were told their two children could be put in a foster home because there was no accommodation for the family together. The Gateses, who were evicted from their rented home in Tandridge, Surrey, earlier this year after they fell into arrears, were initially put into bed-and-breakfast accommodation by Tandridge district council, but were told in April that their debts meant they were 'intentionally homeless' and they would be evicted in May, even though Mrs Gates was heavily pregnant.
Shelter advised the couple to approach Surrey social services, believing that, under the Children Act, social services had a right to help with housing the children. However, Surrey suggested that the family returned to Scotland, where Mrs Gates's mother lives, and offered to pay the train fare.
The council later wrote: 'If you are unable to provide a home for your children, we could, at your request, accommodate them in a foster home.'
Russell Campbell, head of Shelter's National Housing Law Service, describes the reference to the parents' wishes as 'a nonsense': 'Under the Children Act, children deemed to be in need, because of homelessness or anything else, would be taken into care anyway, regardless of parents' requests.'
Less than a week before Mrs Gates's third child was born in July, the family found lodgings for six months where, exceptionally, the landlord did not require a deposit.
A spokeswoman for Surrey social services said: 'We have no obligation to offer housing to families at all. It's nothing to do with us.'
Shelter's housing magazine, Roof, to be published next week, has discovered similar cases across the country.
Jenny Powell, a single mother, who was evicted by Dacorum council in Hertfordshire in January, after getting into difficulties paying off rent arrears of pounds 2.50 a week. Ms Powell says she approached Hertfordshire social services for help but they threatened to take her child into care.
Richard Lewis, Hertfordshire county solicitor, wrote that 'the county council has an obligation to accommodate children who require accommodation . . . as a result of the person who has been caring for them being prevented (for whatever reason) from providing them with suitable accommodation or care. Section 20 (of the Children Act) does not require a social services authority to find accommodation for the entire family.'
According to Dharini Chandarana, a housing advice worker: 'It is clear that the county council was confirming that the child would be taken into care if no accommodation was provided by the parent, although they carefully avoid using the explosive word fostering.'
A spokeswoman for Hertfordshire, run jointly by the three main political parties, said they would 'not threaten to foster while all other avenues are being explored'. Margaret Nash, a Labour county councillor, said: 'We will do whatever we can, but at the end of the day we're not a housing authority.' Ms Powell is sleeping on the floor of a friend's house.
In Harrogate, Donna Wilson turned to North Yorkshire county council social services after her husband became unemployed and the family, which had run up pounds 1,000 in rent arrears, was about to be evicted. She was told that all the county council could do was to take her children into care 'at her request'. 'Once again,' said Mr Campbell, 'a council was being economic with its language, because it realised the suggestion it was making. The Children Act has a gaping loophole in it if its reference to housing care results in these threats.'
Faced with a judicial review of its decision, North Yorkshire last month agreed to guarantee the family's rent in the private sector temporarily.
John Battle, Leeds West MP and Labour's housing spokesman, said: 'These threats are the inevitable result of a desperate shortage of housing. Councils are forced to do almost anything to avoid accommodating people in need. We will soon be in a worse position than that pictured in Cathy Come Home, unless more new homes are built.'
Department of the Environment figures show that local authorities built just 900 new homes last year, down from 47,500 in 1979, while 132,000 families were registered as homeless in 1993.
Julia Haworth, of the National Children's Home, said threatening homeless families with fostering 'creates appalling distress, not just for parents but for children. The cost of fostering, at about pounds 60 a week for each child, is completely uneconomic when compared with the cost of helping with rent for a family home.'
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