Thousands of hard-working families living in council properties in Sheffield face being hit by big rent rises.
A new council report has warned almost 3,000 households in the city could be affected by new national legislation coming into force next April that will see households with a joint income of over £31,000 forced to 'Pay To Stay' in the council properties.
The move will hit those in work - with people on benefits worth the same amount automatically excluded from any rise.
Councillor Jayne Dunn, cabinet member for housing, said the Government policy is 'social engineering in its worst form' that would bring a 'stigma' to council housing as those in jobs leave.
Louise Cassin, Housing Business Plan officer at Sheffield Council, said the authority estimates the new policy could affect up to six per cent of the 47,000 people who are council tenants in the city.
She said the council is working with the Association of Retained Council Housing to estimate the policy's potential impact in Sheffield as part of efforts to persuade the Department of Communities and Local Government to delay its introduction.
Under the current plans, it is expected that affected households will be charged an extra 15p in rent per week for ever £1 they receive in taxable income over £31,000.
The policy will be mandatory for councils, who will have to give any extra income to the Treasury to help with national deficit reduction plans rather than keep it to spend themselves.
But housing associations can opt not to introduce the policy and if they do so, will be able to keep the additional income for development purposes.
Households that do not disclose their household income are to be charged a full market rent for their property.
The report said those on benefits will not be affected.
"Tenants receiving Housing Benefit or Universal Credit will be automatically excluded. Income will be defined as taxable income so will not include tax credits, child benefit, disability living allowance or personal independent payments," it said.
"The policy is due to be implemented from April 2017, however there has been no regulation issued by Government - making the timescales for councils to prepare for implementation of such a policy very short.
"The regulations will also be subject to the affirmative procedure and therefore subject to scrutiny in the House of Commons and House of Lords. This could result in further delays to the agreement and publication of the regulations."
The mandatory policy was announced by Chancellor George Osborne last year on the grounds that those on 'higher incomes should not be subsidised through social rents'.
He said: "This will ensure they pay a fair level of rent, or make way for those whose need is greater."
But earlier this year, a House of Commons briefing paper said the Government themselves had warned introducing the threshold could be a 'disincentive to work' - and actually lead to higher benefit costs for the country.
The briefing added: "Concern was raised by some respondents that a pay to stay scheme could damage the social mix of some communities, potentially removing positive role models in the form of those in well-paid employment."
Councillor Jayne Dunn, cabinet member for housing at Sheffield Council, said she believed the 'Pay to Stay' scheme is 'absolutely disgusting' and could result in people in employment moving from their council homes to different communities.
"It is social engineering in its worst form. It is to bring a stigma to social housing," she said.
"Another thing with Pay to Stay is we have a lot of people on zero-hours contracts and part-time workers who are going to constantly be in arrears and we are going to be constantly reassessing their income.
"I haven't met anybody who thinks it is a good idea.
"It is a way of getting rid of council housing."
She said that with recent changes to Government ministers, it is hoped that the policy could be scrapped if the council can prove it will be more costly to implement than it will bring back in income.
The council report said introducing 'Pay to Stay' may prove costly to the authority.
It said: "The number of tenants affected by this policy isn’t known as we do not routinely collect household income information from our tenants.
"In order to implement this policy, there would be extra administration costs associated with income information collection, communications with tenants, processing changes in circumstances and appeal processes.
"The additional administration will result in additional costs to the council in terms of staff time and systems and processes. Although Government have said that councils would be able to recover any reasonable administrative costs, without any regulation, it is difficult to assess how much the administrative costs for this policy will be.
"Recent analysis from the Local Government Association suggests around four per cent of households in the Yorkshire and Humber region will be affected by the policy.
"Early analysis suggests this could be between three to six per cent of households in Sheffield, however as we do not routinely collect income data from our tenants, it is difficult to make an accurate assessment.
"Pay to Stay could also lead to increased tenant arrears due to the additional rent affected households will have to pay. The time it takes to process changes in circumstances such as changes in income levels to a household may result in tenants not paying the additional rent (especially if the change is a household income that has reduced under the £31,000 threshold).
"An increase in Right to Buy applications is anticipated as for many tenants who are eligible, if paying a rental amount for their council house is similar to a mortgage payment, this option may seem more worthwhile."