The neo-liberal revolution in Ukraine

Anyone remember TINA - 'there is no alternative'?

In Kiev, Crushing IMF Austerity Defended as 'Price of Independence'

Interim Prime Minister Arseny Yatseniuk continues to tell Ukrainians and the world that gutting pensions

- Jon Queally, staff writer

Common Dreams,

4 April, 2014

The new Ukraine government in Kiev, currently led by interim Prime Minister Arseny Yatseniuk, continues to tell its people that the only path forward for the country is to submit to the demands of the international financial powers—specifically the International Monetary Fund—by meeting their demands to implement draconian cuts to social funding, pensions, and otherwise "liberalizing" the economy in exchange for billions of dollars in bailout loans.

Noting full-well the unpopularity of and crushing impact that ending fuel subsidies and cutting both wages and pensions will have on regular Ukrainians, Yatseniuk told Reuters in an interview published Friday that these measures—which are set conditions for a $14-$18 billion loan package from the IMF—are simply the "price of independence."

He called the plan being structured in Kiev at the behest of the western economic powers as "tremendous step forward" even as economists and researchers have repeatedly and consistently shown that austerity measures like the ones now under consideration have a destructive, long-term impact on national economies, especially those suffering from a debt crisis.

"We will regain trust and credibility from foreign investors," said Yatseniuk, defending the plan. "This is the roadmap for Ukraine."

That may be so. But as Jack Rasmus, a professor of economics at St. Mary's College, pointed out following the announcement of IMF conditions now being pushed in Kiev, this roadmap might lift the street credibility of Yatseniuk among the world's powerful financial elite (the Reuters report says western leaders are impressed by what they term his "clear-sightedness" on economic matters), but it's the nation's regular citizens and workers who will ultimately pay the price for these short-sighted policies.

"Those who will pay will not be the bankers and multinational businessmen, but the Ukrainian people," argued Rasmus. "That is the essential and repeated history and legacy of IMF deals globally for the last three decades."

CrossTalk: Ukrainian Ricochet

The Ukraine crisis has revealed diametrically opposing views on the subject of European and global security. The West continues to push NATO at Russia's expense. Is more conflict inevitable? And can Ukraine be a bridge between the West and the East? CrossTalking with Richard Weitz and Vladislav Krasnov.

Ukrainian austerities

Also NOT included in mainstream western media coverage. "Who cares a f..k" about the Ukrainian people

Ukraine Shocks Population With Staggered 100% Heating Price Increase While Restricting Cash Use

Zero Hedge,

28 March, 2014

In a TV address to his divided nation, Ukraine's PM Yatsenyuk stunned the people by first suggesting heating prices would rise gradually, then confirming a plan that will see prices rise 100% in the next 2 years (and almost 200% by 2017) as the cost of imported Russian gas is expected to be around $500 (up from the current $84). This standard of living crushing move was then followed by tougher capital controls, restricting cash purchases to around $1300 per person per day after the Central bank basically admitted"amid a tense situation in money markets" it was broke. And all of this comes on the heels of what can only be described as a vague pro-forma comment by US and EU governments over the riots by the "Right Sector" ultranationalists that clearly did not want to upset the state-sponsored thugs too much.

Yatsenyuk addressed the nation in a TV appearance:

• *UKRAINE TO RAISE GAS, HEATING PRICES GRADUALLY, PREMIER SAYS
• *UKRAINE TO RAISE HEATING PRICES 40% THIS YEAR, 40% NEXT YEAR
• *UKRAINE TO RAISE HEATING PRICES 20% IN 2016 AND 20% IN 2017

So a 182% increase by 2017

• *YATSENYUK SAYS PRICE INCREASE WILL BRING IT TO MARKET LEVELS
• *UKRAINE HOUSEHOLDS PAY $84 PER 1,000 CUBIC METERS GAS:YATSENYUK
• *IMPORTED RUSSIAN GAS WILL BE ABOUT $500: YATSENYUK
• *HOUSEHOLD RATE INCREASE IS `ONLY RIGHT DECISION:' YATSENYUK

And then, via The Ukraine Central Bank, they implement tougher capital controls:

• *UKRAINE CENTRAL BANK SETS LIMITS ON FOREIGN CURRENCY PURCHASES
• *UKRAINE CENTRAL BANK LIMIT PURCHASES 15,000 HRYVNIA PER PERSON PER DAY ($1300)
• *UKRAINE CENTRAL BANK LIMIT PURCHASES 150,000 HRYVNIA PER PERSON PER MONTH ($13,000)
• *UKRAINE CENTRAL BANK SAYS ON WEBSITE LIMITS TAKE EFFECT TODAY
• *UKRAINE CENTRAL BANK SAYS FX RESTRICTIONS TO REMAIN UNTIL MAY 1

After admitting they are broke...

Taking into account the preservation of the tense situation in the money market, the Decree ? 172 introduced some additional stabilization measures, such as:

Given the increased demand for foreign currencies set the maximum amount of sales of the same individual, which is equivalent to not exceed 15 000 for other operating (working) day in the same banking institution; imposed certain restrictions on transfers of foreign currency by individuals outside of Ukraine for current non-commercial operations.

Such operations are allowed to an amount not exceeding the equivalent of 150 000 per month. However, these restrictions do not apply to a number of important social and transfers, namely to cover the costs of medical treatment abroad, transporting patients, transfers carried out in case of change of the state of residence relating to the payment of non- residents of Ukraine and some others. Residents allowed to repay loans

And then, following last night's riots where the alledgely US sponsored ultranationalists who ousted Yanukoych turned on their new masters,

• *NEED TO BALANCE POWERS PRESIDENT, GOVT, PARLIAMENT: YATSENYUK

And this rather vague response from a joint EU/US statement:

The U.S. Embassy in Kyiv and the Delegation of the European Union to Ukraine condemn the incident that took place at the Verkhovna Rada on the night of March 27.

This is a difficult moment in Ukraine’s history, which requires consolidation of all reform efforts, while embracing mutual respect and eschewing violence. Lasting reform in Ukraine will be a long and complex process. To be credible, it must remain democratic, transparent, and peaceful and be pursued exclusively in coordination with the nation’s democratic institutions. As in the past, we call on all sides to refrain from violence and to stick to legal methods for expressing their views and concerns and to avoid any actions which may destabilize the situation.

We welcome the statements of Pravy Sector’s leadership that they intend to keep their actions “within the framework of the law”. We urge all political forces to distance themselves from extremists, who undermine the efforts to stabilize Ukraine and to protect its sovereignty.

We urge the Ukrainian Government to ensure that those who broke the law are held accountable. We stand by previous assertions that any death which occurs in unclear circumstances should be investigated impartially in order to provide citizens the feeling of security and accountability of law enforcement organs. We welcome the establishment of the special parliamentary commission which will scrutinize all evidence on the events involving the police and resulting losses.

During this process, the United States and European Union remain committed to standing with the Ukrainian people to help them build the prosperous, democratic future they deserve.

So to summarize... the government has a plan that dramatically raises living costs for Ukrainians (ensuring that various internation factions will need to lend them more money in bailout terms)... while restructing what the Ukrainian people can spend... promising fair elections in May as the EU and US barely flutter an eyelid at the riots that occurred against the new government... and all of this as Putin gathers increasing amounts of military might on the borders...

Spanish protests

Thousands of Spanish police officers march against austerity

Around 5,000 Spanish police officers marched through the streets of Madrid on Saturday to protest government austerity measures, including frozen pensions and the elimination of their Christmas bonuses.

RT,

17 November, 2012

Officers travelled from across Spain to take part in the demonstration which was called by the nation’s main policing union.

Protesters blew whistles, shouted slogans, and carried anti-austerity banners as they marched through the city centre to the interior ministry.

"Citizens! Forgive us for not arresting those truly responsible for this crisis: bankers and politicians," read one banner.

The Spanish government has imposed harsh spending cuts aimed at saving 150 billion euros between 2012 and 2014. The move has been met with anger and protests from hundreds of thousands of Spanish citizens.

The austerity measures are in exchange for a rescue loan of up to 100 billion euros from the EU to help the country’s stricken banks.

"The problem is they take from us to give to others, like the autonomous regions and the banks," 33-year-old police officer Antonio Perez told AP. 

Spanish police officers take part in a demonstration against the Spanish government's latest austerity measures in the center of Madrid on November 17, 2012 (AFP Photo / Dominique Faget)

But it’s not just their pay the police are worried about.  

A spokesman for Spain’s Unified Police Union, Jose Maria Benito, said the cuts will affect the nation’s security, adding that working conditions have become more precarious and law enforcement equipment was no longer up to standard.

“We are here to tell the government that security has to be its priority…in socially convulsive times, we need an adequate police response,” Benito told AP. He added that 15,000 workers who have left the force were not going to be replaced.

"Each year, between 1,500 and 2,000 police officers retire and 125 are recruited, which means in three or four years, there will be more insecurity and crime in Spain," the union’s general secretary Jose Maria Sanchez Fornet said in a speech.

The rally comes just three days after an anti-austerity strike in Spain rolled out across the EU – hitting Portugal, Italy, Belgium, and Greece.

Spanish police officers take part in a demonstration against the Spanish government's latest austerity measures in the center of Madrid on November 17, 2012 (AFP Photo / Dominique Faget)

Spanish police officers hold a banner of the Unified Police Union (SUP) depicting Spanish Prime Minister Mariano Rajoy (L) and Spain's leader of the opposition Socialist Party (PSOE) Alfredo Perez Rubalcaba and reading "They are the same" during a demonstration against the Spanish government's latest austerity measures in the center of Madrid on November 17, 2012 (AFP Photo / Dominique Faget)

Spanish police officers hold banners of the Unified Police Union (SUP) and a giant banner reading "Against the cuts, all the policemen together" as they take part in a demonstration against the Spanish government's latest austerity measures in the center of Madrid on November 17, 2012 (AFP Photo / Dominique Faget)

Spanish police officers take part in a demonstration against the Spanish government's latest austerity measures in the center of Madrid on November 17, 2012 (AFP Photo / Dominique Faget)

Spanish police officers march past police vehicles as they take part in a demonstration against the Spanish government's latest austerity measures in the center of Madrid on November 17, 2012 (AFP Photo / Dominique Faget)

Health cuts in the UK

Fears for patient safety as 60,000 NHS jobs face the axe

The NHS is "sleepwalking" into a nursing crisis with thousands of frontline posts lost and training positions axed, the Government is warned today.

The Independent,

12 November, 2012

The Royal College of Nursing (RCN) said that despite the Coalition's promise to protect frontline staff from cuts the NHS workforce has fallen by almost 21,000 since the Coalition Government came to power. This includes a loss of more than 6,000 qualified nursing posts – from a total of 312,000 nursing posts in the NHS.

The RCN's report also warns that parts of the health service face the prospect of nursing shortages within three years as thousands of training posts are slashed, meaning trusts will have to recruit from overseas.

Patient safety will be seriously undermined by falling numbers of nurses, with the RCN's chief executive warning that standards of care "are going to get a lot worse".

The nursing union has been tracking job cuts since the Coalition came to power in May 2010. It has found that about 1,000 posts are being earmarked as "at risk" by NHS trusts every month as they try to find savings of £20bn during this parliament.

As well as job losses, the number of new nurses being trained has fallen sharply, by 14 per cent in just two years. In London, training places for adult nurses have fallen by 21 per cent, which will lead to substantial shortages by 2015 – highlighting failures in long-term workforce planning, warns the RCN. District nursing is heading towards crisis, as numbers of nurses have plummeted by a third since 2001 to 8,000.

The RCN questions how the NHS can re-focus care from hospitals to the community – essential for improving patient outcomes and saving money – if the cull of district nurses continues.

Nurse leaders warn today that the Government will soon be stranded in a "perfect storm" of an ageing population with increasing numbers of long-term conditions without enough nurses safely to care for patients.

Peter Carter, the RCN's chief executive, said: "London is facing a workforce crisis within three years. The remedy will be to go overseas to countries like the Philippines to raid their workforce again, and an over-reliance on agency and temporary staff – in order to bail out the Government's poor workforce planning." He added: "The standards of care are under huge strain across England and if this trajectory continues unchecked then things are going to get a lot worse. There is no rogue information in our data. This is not the worst-case scenario: it is the declared scenario from trusts."

The pledge to protect frontline staff was a key Coalition promise even as it announced the need to save £20bn to cope with increasing healthcare demands as budgets flatline after years of record investment.

But official figures reveal that there were almost 6,150 fewer full-time equivalent qualified nurses in July this year compared with May 2010 despite Coalition promises to protect frontline staff. In total, there are 20,790 fewer NHS staff, but the number of doctors has increased by 7,000, according to the NHS Information Centre.

The long-awaited report into the Mid Staffordshire hospital scandal is expected to recommend minimum nursing levels to improve patient safety in hospitals. On average there is one qualified nurse to every four paediatric patients, but only one for every nine elderly patients.

Yet there is compelling evidence from King's College London that patient outcomes improve when science is applied to nurse-patient ratios – in short, making sure there are enough nurses safely to care for patients in different settings.

The Government has repeatedly dismissed the RCN's figures as scaremongering, but does not monitor proposed cuts by NHS trusts centrally. Furthermore, the growing number of NHS contracts being awarded to private companies such as Circle, Virgin Health and Care UK will soon make it even more difficult to track job losses. Private companies do not submit such data to the NHS Information Centre, nor will workforce plans be available for public scrutiny.

The Health minister Dr Daniel Poulter said: "NHS performance is strong: waiting times and infection rates are at record low levels. To say that the NHS is in 'crisis' is scaremongering and doesn't reflect reality.

"The health service is changing – the workforce is changing to reflect this, but changes must be decided at a local level, based on evidence that they will improve patient care."

A spokeswoman for the Department of Health added: "In the past, governments have failed to give workplace planning the priority it needs. Health Education England [a new training organisation] is the first of its kind and will give training [and education] unprecedented clarity and focus."

More budget cuts in Greece

Cuts and more cuts: Athens passes 2013 budget

The Greek government has passed a 2013 budget stipulating new rounds of harsh budget cuts. It comes just after Greece announced the passage of more austerity measures, triggering violent clashes in Athens.

RT,

12 November, 2012

The budget was approved with 167 voting in favor and 128 opposed, while 5 abstained.

The recent austerity package, passed in a narrow vote, was apparently insufficient to appease eurozone finance ministers into granting the cash-strapped nation another tranche of much-needed bailout money.

Without the rescue loan, Greece would effectively default on November 16, the date it must repay a three-month treasury bill worth €5 billion.

Greek trade unions called for another demonstration outside Parliament on Sunday ahead of the lawmakers’ vote on the budget.

Earlier in the week, around 70,000 demonstrators rallied as Parliament voted on the new austerity program.

On Saturday, MPs began debating the 2013 budget. It was the second budgetary test the Greek government has faced in less than a week.

Athens is planning further spending cuts totaling 9.4 billion euro, mainly in state wages, pensions and benefits, all of which have already seen drastic reductions over the past two years.

Several hundred Greek civil servants staged a protest on Saturday in front of parliament, where initial discussions over the 2013 draft budget were held ahead of the vote. The protesters railed against the reduction of 125,000 civil servant jobs by 2016, part of the new austerity package that squeezed through parliament on Wednesday.

Cutting it close

Greece's 2013 budget predicts that the economy will shrink by a worse-than-expected 4.5 percent next year, and that the country's debt will swell to 346 billion euro ($434.3 billion), or 189 percent of the country's gross domestic product.

Athens is hoping to securing a further 31.5 billion euro of desperately needed international aid. Even then, it would still need to borrow over 68 billion euro next year, the draft budget says

This is in addition to the new austerity package, which includes 18.5 billion euro ($23.6 billion) in cuts and labor law reforms.

Greece has so far avoided default by introducing a series of austerity measures needed to secure two huge bailout loans from a 'Troika' of creditors: The EU, the International Monetary Fund and the European Central Bank.

The recent push for further austerity has sparked popular anger in a country facing its sixth year of recession, while unemployment rose above the 25 percent mark in July.

Meanwhile, the government admits that the program is unfair, and will probably drive the country deeper into recession, Dimitris Yannopoulos, an Economist and Editor at the Athens News newspaper told RT.

According to Yannopoulos, the only benefit the new set of austerity measures will bring is the long-awaited rescue package – which Germany is in no hurry to release.

“Berlin implies that we want more conditions attached to the program dealing with the control of these funds as well as the control of the budgetary administration [in Greece],” he explained.

Civil unrest in Athens

Chaos in Athens: Greek police use water cannons, tear gas against protesters

Demonstrators and police clashed in Athens Wednesday, with tens of thousands gathering to protest in front of the Greek parliament. Demonstrators threw Molotov cocktails, while police used water cannons, tear gas and batons to disperse the crowd.

RT,

7 November, 2012

A bus stop and kiosk were set on fire, according to RT correspondent Peter Oliver, who was at the scene. A deluge of water was used to douse the flames.

At least 100,000 protesters are estimated to be gathered in front of the Parliament building.

“Protesters are fighting a running battle… It’s an Athens urban warzone… I can barely see,” Oliver said.

"There are huge flash bangs near Syntagma Square. Protesters are chanting for bread and freedom – they're accusing Greece of being a dictatorship," he continued.

Police tried to move demonstrators away from banks near the square. 

A protestor kicks away a gas canister during clashes with riot police during a 48-hour strike by the two major Greek workers unions in central Athens.(Reuters / Stringer)

The clashes came ahead of a Parliament vote on new austerity measures demanded by the EU in exchange for further bailout funds. 

Opposition MPs forced a voting delay on the matter Wednesday. 

The demonstration was the latest in a string of weeklong nationwide protests that shut down most public transport, schools, banks and government offices. 

The new measures would amount to some €13.5 billion in cuts to Greece's national budget by 2016.

Once the vote takes place, Prime Minister Antonis Samaras is expected to narrowly win the support required to pass the new austerity package. Samaras’ 176-member conservative-liberal coalition needs to gather 151 votes out of 300 in Parliament for passage.

The second day of the nationwide strike, which is expected to last for the rest of the week, has seen most of the country brought to a standstill. Hospitals are working with skeleton crews, while media broadcasts and publications were halted until further notice after journalists joined the strikers.

Brussels demands a new draft of budget cuts in order for Greece to qualify for another loan – totaling more than €31 billion ($39.63 billion) – from the ‘Troika,' which consists of the European Commission, the European Central Bank and the International Monetary Fund.

The new bailout was put on hold after Greece failed to reach earlier fiscal commitments. The Greek Parliament remains divided over the issue, with the Democratic Left Party, which comprises one third of the governing coalition refusing to back the measures, pledging to vote ‘present’ instead of ‘no.’

The measures stipulate a two-year increase in the Greek retirement age to 67, and several tax hikes. The new package also includes provisions making it easier to fire civil servants, which has provoked the ire of public workers amid a current unemployment rate of over 25 per cent.

The vote represents a crucial test for Samaras’ government, as a ‘yes’ vote would ensure more cash for Athens to pay off its debts later this month, despite the multibillion-euro new debt taken on. A ‘no’ vote could shatter Samaras’ fragile coalition.

A protestor throws a molotov cocktail at riot police during a 48-hour strike by the two major Greek workers unions in central Athens.(Reuters / Stringer)

More cuts, more protests

Anti-austerity demonstrations in Greece have frequently turned violent, leading to clashes between police and disgruntled youths.

On Tuesday, crowds numbered as high as 35,000 in Athens as Greeks marched to condemn the government for sparing the nation’s wealthy while saddling the poor with austerity.

Earlier, Samaras said that this round of budget cuts would be the last to affect wages and pensions. However, Panagiotis Sotiris, a lecturer at the University of the Aegean, thinks there's more budgetary pain ahead.

“Every austerity package in the last two and a half years was supposed to be the last one. So it won’t be the last one this time. We are going to see more of this,” Sotiris told RT. “In just two days of discussion, the Parliament is going to pass a huge law. We are very far from democratic procedure. This is a set of measures, which are actually dictated by the Troika.”

The government also needs to clear another hurdle on Sunday: The passage of the 2013 budget, which will require gaining the support of the Democratic Left.

Protestors gesture in front of a riot police water cannon during a 48-hour strike by the two major Greek workers unions in central Athens.(Reuters / Stringer)

A protestor throws a molotov cocktail at riot police during a 48-hour strike by the two major Greek workers unions in central Athens.(Reuters / Stringer)

A protestor throws a molotov cocktail at riot police during a 48-hour strike by the two major Greek workers unions in central Athens.(Reuters / John Kolesidis)

A protestor kicks away a gas canister during clashes with riot police during a 48-hour strike by the two major Greek workers unions in central Athens.(Reuters / John Kolesidis)

British protests

No Cuts! Tens of thousands turnout for British anti-austerity protests

Nurses, teachers and off duty policemen marched with anti-war activists, politicians and the unemployed in a massive protest against the Conservative led Government’s austerity measures, which they say are killing Britain.

Tens of thousands of people took to the streets in the demonstrations, which was led by a group of jobless young people. More than 250 coaches brought people to London to take part. There were similar protests in Belfast and Glasgow.

Protesters blew whistles and held up flags and banners as they marched though central London. One homemade banner read, ‘Cameron has butchered Britain’.  Other banners read ‘cut war not welfare’, and ‘need before greed’....

http://rt.com/news/austerity-cuts-protests-march-869/

Venizelos: The Arrogance of Power

"We Embittered the People to Protect the Future of the Nation"

If you want to understand the reason PASOK went down in flames in a crushing defeat in Greek elections, simply look at the arrogance and gall of party leader Evangelos Venizelos in a statement following the election.

“We embittered the people so we could protect the future of the nation", said PASOK party leader and troika sponsored clown, Evangelos Venizelos.

Ekathimerini reports Election swing leaves Greece teetering.

PASOK leader Evangelos Venizelos and New Democracy chief Antonis Samaras both declared themselves open to the idea of forming a pro-European national unity administration that would include other parties and would seek to renegotiate the terms of the EU-IMF loan agreement.

“All Greeks have to get to know each other again,” said Venizelos, who admitted that PASOK had paid the price for carrying the burden of the crisis. “We embittered the people so we could protect the future of the nation.”

He said that the possibility of forming a national unity government with a “European orientation” regardless of parties’ positions on the bailout should be explored.

Samaras said he would seek to form a “national salvation government” to keep the country in the eurozone and pledged to “amend” Greece’s debt deal with foreign creditors in a bid to boost growth. He attributed the outcome of the elections, in which voters punished the two main parties, to “the disappointment of the Greek people for dead-end policies that have pushed them to the limits.”

However, the possibility of a third group joining such a government looked extremely slim last night. Perhaps the best hope for Greece’s two main parties would have been Democratic Left, which maintained a clear pro-European stance during the campaign.

However, party leader Fotis Kouvelis repeated his position that cooperation with New Democracy and PASOK was not in Democratic Left’s intentions. “The results show people’s frustration and anger,” he said.

A failure by PASOK and ND to form a government would leave second-placed SYRIZA, the night’s big winners, with the option of trying to form a government. Greece’s electoral law means that in case of a hung parliament, the first party has three days to form a government, followed by the second party and then the group that comes in third.

National Salvation Party

The idea that Troika sponsored clowns can form the basis of Greek salvation is ridiculous. Furthermore, Venizelos' statement is right up there with other top Orwellian idiocies.

Top Orwellian Comments Of All Times

An American major after the destruction of the Vietnamese Village Ben Tre: "It became necessary to destroy the village in order to save it."

Vice President Joe Biden: "We Have to Go Spend Money to Keep From Going Bankrupt."

President George W. Bush: "I've abandoned free-market principles to save the free-market system."(For a discussion please see The Most Redeeming Feature of Capitalism is Failure)

Nancy Pelosi said "We have to pass the health care bill to see what's in it." (YouTube Video)

Larry Summers says "The central irony of financial crisis is that while it is caused by too much confidence, too much borrowing and lending and too much spending, it can only be resolved with more confidence, more borrowing and lending, and more spending." (Reuters)

We can safely add “We embittered the people so we could protect the future of the nation" to that list. As I said, Best thing For Greece is Tell the Troika "Go to Hell", and the election proves most Greek voters know it, even though they have been brainwashed into wanting to stay in the euro.

UK: The Poor to Suffer

Early warnings for 90,000 people facing benefits cap

Tens of thousands of families living on benefits are to be warned in the coming days that they face losing their homes as the Government begins the process of capping payouts.

The Telegraph,

5 May, 2012

An estimated 90,000 people will receive letters from today warning them that they are likely to have their benefits cut under Government plans to overhaul welfare.

From next year, couples or single parents in England who receive more than £500 a week in total from the state through different benefit will have their payments cut.

The Government insists that the reforms, spearheaded by the Work and Pensions Secretary Iain Duncan-Smith are essential to make work worthwhile and stop people claiming housing benefit on expensive homes.

The cap of £26,000 a year is the equivalent of earning £35,000 before tax for those in work.

But the plans faced bitter opposition, led by Church of England Bishops in the House of Lords, who warned that children in poor households would suffer.

They argued that refusing to exclude housing benefit from the list of payouts affected would make it almost impossible for the unemployed to live in many parts of London and other areas where rents are soaring.

Boris Johnson, the Mayor of London, warned that the reform would to “Kosovo-style social cleansing” in parts of the capital – remarks which earned him an unprecedented slap-down from David Cameron.

The Department for Work and Pensions said the letters were the first step in a process which would “bring fairness back into the benefits system”.

The letters, being sent to a total of 67,000 households, will warn people that they might be affected by the cap, what it might mean and give details of a helpline.

A spokesman said the early warnings meant people who would have to move to a less expensive house would have a year to make other arrangements.

But it is feared the shake-up will force thousands of families to move to less expensive areas of the country putting pressure on resources there.

The National Housing Federation, which represents housing associations, said the cap would have “brutal effects”.

David Orr, its chief executive, said: “The letters will come as a shock to many vulnerable families.

“The overall benefit cap is a crude measure that fails to reflect the stark differences in housing costs across the country, caused by the desperate shortage of affordable housing.”

The organisation is calling on local councils, which have been given lists of families likely to be affected to share the details with housing associations to help them plan for the possible upheaval.

Anyone receiving more than the capped amount through housing benefit, child benefit, jobseekers allowance, carer’s allowance and other payouts will be affected.

But it will not apply to war widows, disabled people or anyone in work but receiving some benefits.

A DWP spokesman said: "It's not fair that people are able to claim as much on benefits as the average household earns.

"Instead the Welfare State should work as a safety net and then support people to financial independence.

“We have promised to work intensively with people ahead of the benefits cap to prepare them and the letters sent this week are the first step.

"We expect people to use this support to help them make the right decisions ahead of the benefit cap coming into force in April 2013.”