According to data obtained by Eastlondonlines through a Freedom of Information request 553 households in Croydon are set to be affected by the changes with 180 losing £100-£300 a week and seven losing over £300 a week.

Combined with the bedroom tax which came into effect on April 1 and saw tenants with one spare bedroom receiving a 14 per cent cut in their housing benefit and 25 per cent for those with two or more, many residents are expected to be forced to move home. The average weekly rent for a three-bedroom property in Croydon is £258, for properties with four bedrooms or more it is £381.

One local housing association, Wandle, told ELL that they have 95 under-occupiers and 20 households affected by the benefit cap and confirmed that a number of families are planning on moving due to the changes.

Amicus Horizon, one of the biggest housing associations in the South-East said: “For many of our families already struggling on low incomes, there are difficult times ahead.” The association have identified 34 households affected by the cap in Croydon and already have up to 200 affected by the bedroom tax across the borough.

Croydon Council said that 25 per cent of affected residents they have spoken to have “expressed an interest in learning more about moving home”.  Alternative housing could well be outside of Croydon.

The changes come against the backdrop of a severe housing crisis across the borough which has lead to scores of families being illegally housed in bed and breakfast accommodation for more than six months.

Food banks have also reported a dramatic increase in visitors since Christmas, and at least one new food bank, in New Addington, is soon to open. At the food banks stories of struggle and desperation are rife. One volunteer at the Norwood Food Bank told of a mother who had walked over eight miles from Purley with her twins in snowy conditions to collect food as she could not afford public transport.

Touting his support for the policy, Gavin Barwell, Conservative MP for Croydon Central, said: “I strongly support the introduction of a cap on benefits. It was outrageous that under Labour some out-of-work families could receive more than £100,000 a year in benefits.

“Labour used to be the party of the working man. Today they support families on benefits having higher incomes than those of us who work for a living.”

According to data from the Department of Work and Pensions, nationally just 34 per cent of those who will be subject to the cap are on Job Seekers Allowance. The majority of those affected will be low paid workers or those out of work due to health issues.

No household in Croydon affected by the cap is receiving £100 000 a year in benefits. According to the data obtained by ELL the highest received by one household is £46,168. The vast majority - 428 out of the 553 affected households - receive under £32,240 a year in benefits.

Large families will be worst affected by the cap: it is predicted that nationally 64 per cent of affected families will have three to five children. Half of all affected households will have a single parent.

The Children’s Society have gathered data showing the disproportionate effect the cap will have on children, accounting for 70 per cent of those affected nationally.

Steve Reed, Labour MP for Croydon North, has also expressed support for the principle of a benefit cap. He told ELL: “Capping benefits is fine as long as the cap is set at a fair level. However, the cap that the Tory-led Government has introduced is set at the same level in London as it is in Blackpool, Swansea or Sunderland despite living costs in the capital being far higher than elsewhere.

“Thousands of low income families in Croydon are already going to be hit by the Tory bedroom tax while the cost of rent, energy and food are all going up. The Government has decided to experiment on people in Croydon by piloting their plans in our area first.  I am very afraid that will result in yet more hardship for many families in Croydon.

According to data from the DWP, over 50 per cent of Croydon residents affected live in Reed’s constituency. The data also predicts that 900 households in Croydon will be affected by the cap, contradicting Croydon Council’s figure of just 553.

A DWP press officer said that this was due to when the numbers were gathered,  adding: “We wrote to people affected in May last year, so it is fair to assume people have taken action and moved into work or move to homes that are affordable under the cap.”

Initially, the DWP had claimed that Croydon had been chosen along with Bromley, Enfield and Haringey, all of which have Conservative controlled councils, as the four represent a diverse cross-section of areas within London.

However the DWP press officer told ELL that it is in fact largely because the benefits for these boroughs are processed through a separate office in Stratford. Furthermore, the DWP website states that the phased roll-out will allow them to “test our systems and processes end to end in a controlled live environment”.

Jules Pipe, Chairperson of London Councils and Mayor of Hackney, has accused the Government of using the staggered implementation primarily as a trial for the their own administration - using the relatively small centre at Stratford - and not to gauge the effect the policy will have on people’s lives.

Croydon Council have received £192000 in government funding to help with implementation of the policy.

Number of households the DWP predict have been affected in the current four trial boroughs - Croydon, Enfield, Harningey and Bromley; and the numbers that will be affected in the remaining ELL boroughs from July 15.

With no regional variation in the cap,  due to high rent prices, half of all affected households will be in London come summer when the policy is rolled out nationally. Although over 500 families are affected by the cap in Croydon and the DWP predicts that Hackney and Tower Hamlets will have over 1000 households affected in each borough, the national average is set to be just 100 households per local authority.

The cap, which will save just £270m a year once rolled out nationally and is set to make only a minimal impact on the overall welfare expenditure of around £90 billion a year, 46 per cent of which is accounted for by state pensions. Comparatively, the cost of bailing out RBS and Lloyds currently stands at over £850bn whilst the Iraq war cost the UK £9.24bn.

In the first instance, the cap will be administered through deductions from Housing Benefit payments, before forming part of the new Universal Credit system implemented nationally in October.

The cap will be applied to the combined payment of benefits including paid in job seekers allowance, income support, housing benefit, employment support allowance and child benefits.

Severe Disablement Allowance, Incapacity Benefit and Guardian’s Allowance are also included in the cap. A full list of benefits that will be included in the cap can be found here.

Disability Living Allowance will not be included in the cap and households including a partner or child in receipt of this benefit will be exempt. However, Carer’s Allowance is included. This has raised concerns that parents may have to put their disabled children into care once they reach adulthood as they will be deemed separate individuals and the household will become subject to the cap. The same would apply to carers of friends or parents. It is estimated that 5,000 carers across the UK will lose an average of £105 per week. Specific data for Croydon is not available.

Households entitled to working tax credit will be exempt from the tax with the government claiming that: “This policy is intended to encourage claimants to move into work or increase the hours they work; this will increase the incentive for people to find employment, because once they are in receipt of WTC their benefits will no longer be subject to the cap.”

Families where a member is receiving one of the following benefits will also be exempt from the cap: Personal Independence Payment or Attendance Allowance, the Support Component of Employment and Support Allowance (ESA), Industrial Injuries benefit, War Disablement Pension and the Armed Forces Compensation Scheme.

For those who had been in continuos work for 12 months or more prior to beginning to claim benefits there will be a "grace period" of 39 weeks before the cap is applied to their household.

In Thornton Heath, within the North Croydon constituency - where half of all those affected in the borough live -  the policy has received a mixed reaction:

Jonathan Nelson, 31, unemployed, lives in supported housing in South Norwood:

I don’t understand a lot of what Osborne is saying. The only people who are going to lose are the people who are on benefits. Of course it’s going to make the situation worse. The politicians should take a pay cut.

Susan Mendes, 58, has lived in the UK for nearly 40 years and has never claimed benefits:

There are people who deserve it, old people who need help and children who are in bad situations. But there are people who simply don’t work. My husband died four years ago so I need to work to survive.

Matthew Riley, 19, unemployed, lives in a hostel in Norwood:

Sometimes it makes more sense not to get a job. If you get a job, you have to pay the whole housing benefit. It’s mad. It’s like it’s worse for you if you do work than if you don’t.
It’s hard for young people. You have to eat, save, travel, clothes, college.

Everyone in my hostel is looking for work. These days, everyone wants to work because they can see how hard it is. So it’s difficult to get a job because everyone is looking. I guarantee if you went into Sainsbury’s and asked if they were hiring, they’d say no. Everyone is trying to get a job.

Raj Dower, 47, has run a business in Thornton Heath for more than 40 years:

The government as a whole cannot sustain this level of benefit spending; it’s unsustainable if they don’t put the cap on it. There will always be genuine people who will lose out, but the system has been abused more in the last five years than ever before.

I think the recession has affected all of Western world, not just Thornton Heath. But there are more deprived areas. We are still quite close to London. If you go to the north, there will be worse affected areas because anything that is close to London has a fluid job market.

Leo Baker, 34, unemployed, is affected by the bedroom tax:

I don’t see why we should have to move, we’ve been living in that house for 25 years. It’s my mum’s flat, I live there with her, and the rent has gone up to £40 a month from £8. But there’s nothing you can do about it.

I’ve been working since I left school, I went to prison for a year, came out of prison in 2009 and I haven’t been able to get anything since.

A disabled resident of Thornton Heath, who asked not to be named:

If you happen to have a larger family where you have youngsters who are all on benefits where they’re all actively looking for work, then I think that’s wrong.

A lot of people are genuinely trying to actively look for work and to maintain themselves properly and independently. Without housing benefit, two-bedroom places around here can be a lot of money.

I’ve lived around here for more than ten years It ebbs and flows, has its good months and bad months and good and bad years. Unemployment is a big problem. The only place you can get a job around here is the supermarket or the gym.

Eunice O’dame, 46, Thornton Heath, a mother of one who does not claim benefits:

I work part-time. What I earn doesn’t cover the bills. If you’ve got to pay £100 for gas, £100 for electric and £500 for rent, where’s the money meant to come from?

There might be some exploiting, the system, but there are those in genuine need who are suffering. If you can work, most people, like me prefer to work than claim. But there just aren’t any jobs, and if you do get a job, it doesn’t cover everything. I’ve had to rent out my spare room to make ends meet.

It depends on how many children. But that’s more than I earn and I work. I think £500 is sufficient.