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Fears of rift in coalition as Hughes attacks homes plan

The prospect that council tenants in Britain could be evicted because the state decides they are too well off has threatened to open a rift in the coalition Government.

Simon Hughes, the deputy leader of the Liberal Democrats, bluntly warned that the idea, which was floated by the Prime Minister this week, is not government policy and that it would take "a lot of persuading" for the Liberal Democrats to accept it.

"The Prime Minister is entitled to float any idea he likes but we have to be clear it is not a Liberal Democrat policy, it is not a coalition policy, it is not in the election manifesto of either party, it was not in the coalition agreement," Mr Hughes said.

"The message just has to get out; this is now being floated by the Prime Minister – if he wants to pursue it then there are the proper channels to do so. We're very happy to have the discussion... [but] our party would need a lot of persuading that it has merit or could work."

During a visit to the West Midlands this week, David Cameron suggested that new council or housing association tenants should be given fixed-term tenancies, so that families who have come into money or whose children have grown up could be evicted to make room for more needy cases.

He suggested this was the way to ease a housing crisis which has 1.7 million families on council waiting lists when the number of new homes built next year is expected to fall to the lowest level since 1923.

But his remarks appeared to run completely counter to what the Conservatives claimed during the general election, when the Labour Party alleged that it might attack tenants' security of tenure.

An election leaflet, reproduced in yesterday's edition of the Labour newspaper Tribune claimed that "the Tories want everyone to be on an 'assured shorthold tenancy'" so they could be evicted under the rules that already apply to tenants of private landlords.

That leaflet provoked an angry denial from Grant Shapps, the Housing minister, who claimed: "These are unfounded and baseless scare tactics by an increasingly desperate Labour Party trying to frighten social tenants... Conservatives recognise the importance of social housing and the security it provides."

Mr Cameron's proposal, if it becomes law, will apply only to new tenants, not to those who already have lifelong tenancies. Instead, Mr Shapps trailed a new national scheme to persuade tenants with lifelong agreements to agree to swap homes.

The Government has calculated that 400,000 council properties are underoccupied – usually because children have grown up and moved out – while 250,000 tenants are living in crowded conditions. A number of councils already run successful exchange schemes locally, but under the new proposals all eight million council and housing association tenants across England will be able to put their names forward for the National Home Swap Scheme.

Mr Shapps's plan is uncontroversial because it does not involve forcing anybody to move house – though critics suggested that it missed the real point, which is that there are too few new homes being built.

"Making it easier for tenants to exchange with one another for more suitable accommodation is of course a good thing but it is no substitute for building new housing," said the former Labour housing minister John Healey.

"I also fear these measures could be taken as a green light by some to pressure people out of their homes. Not least, as the announcement follows David Cameron letting the cat out of the bag on the Tories' secret agenda to remove security of tenure."

The British Property Federation suggested that another way to address the housing crisis was to put money into grants for renovating the estimated one million properties standing empty in the UK, including 762,000 in England.

Liz Peace, chief executive of the British Property Federation, said: "Renovating empty homes is an opportunity for the Government to get people off housing waiting lists and into 'good as new' homes; it will also save them money in the process.

"Awarding renovation grants will remove eyesores from the local community and rectify lost incomes for the owner and surrounding landlords. It is a win-win situation."

Mr Cameron himself was not in the country to hear the reaction to his remarks, because yesterday he flew to Italy for a "working dinner" with Italy's scandal-hit President, Silvio Berlusconi. The two leaders were due to discuss trade and the Afghan war, while avoiding the topics that are filling the columns of Italian newspapers, such as a recent split in Italy's ruling political party, the PDL, or the escort girls allegedly invited to the 73-year-old President's official residence.