I can understand the government''s need to reduce / limit spending on housing benefit.... but any plus points of this policy seem hugely outweighed by the negatives.
As you say, finding homes for people in poorer areas is of no benefit in the long run - Not to the people already living in those areas struggling to find jobs, nor to the people frced to migrate to those areas who face competition for fewer jobs.
In the long run, that puts and even bigger burden on the overall benefit spend - But of course Newham Council can balance their own books.
Furthermore, why should people be forced to move a hundred or so miles to a different area, thus losing any family and community networks they already have; this surely can only have a negative impact on the community they're moved to, however indirect.
Perhaps Newham council (and presumably others) should look further into regulating for fair rent schemes for social housing.