Blair will pay for rent rise, say MPs

London MPs have warned Tony Blair that the decision to increase council rents across the capital by above-inflation rates for the next 10 years could lead to a huge loss of support for Labour at local elections next year.

For the first time, rents on council and housing association homes will be linked to local property values, the Government announced today in its rent restructuring plans.

The move will affect tens of thousands of tenants in London, although the increases will be capped so that no one faces more than a five per cent rise next year - probably between £4 and £10. Inner London will be the biggest loser because of spiralling property prices. Other parts of the country, particularly the North-East where many of the Cabinet ministers have parliamentary seats, will see rents fall.

Several London MPs asked Labour Party chairman Charles Clarke last week for a year's respite to look at the full impact of the plan, as there has been no calculation of the number of tenants affected.

They failed to win a reprieve and made it clear that the increases could slice off their core support in the inner cities.

There is mounting concern that the case for the capital is not being heard strongly enough in Cabinet, where there is only one London MP, Culture Secretary Tessa Jowell.

The increases are aimed at ending the widespread variation in rents, depending on who the landlord is. The Government has conceded no rent should exceed £100 a week on any council or housing association home next year.

Those already claiming housing benefit will not be affected. A target rent will be set for each property, which will be much higher than the capped rents, and the extra money will go directly into Treasury coffers.

Housing Minister Sally Keeble said: "The Government is committed to overhauling the rent system in London. Compared with the private sector, council rents are still low - an average £60 a week, against more than £125."

She said that after London MPs' concerns that it would lead to a rise for "a minority" of tenants of up to nine per cent, it was decided to reduce that level to just over four per cent.