In a robust attack on environment minister Sir Paul Beresford's plans, Mr Young said the proposals had 'simply gone too far'.
'No justification for the increase in the competition requirements to 65% has been forthcoming,' he said.
Mr Young argued that changes would not even be an advantage to the private sector. 'Whatever the minister may say . . . the market for finance services is undeveloped.'
Mr Young pointed out that this view was increasingly shared by many in the 'responsible private sector'.
'Even if they produce short-term loss-leader savings, the long-term impact, both in terms of cost and in terms of service delivery, could be and will be substantial,' he said.
Mr Young questioned the thrust behind recent legislation which clears the way for councils to contract out benefits administration, saying the notion that such a sensitive service could be reduced down to a simple contract was 'still a highly dubious one'.
He challenged the government's assertion that the few examples where councils had contracted out benefits were justification for all authorities to go down this road. 'We are being asked to believe that arrangements which may be appropriate in a handful of small shire district councils and outer London boroughs may actually be capable of being implemented in some of our largest metropolitan authorities.'
Mr Young asked whether the private sector could effectively tackle fraud, which requires co-operation between public authorities. 'We are very worried this co-operation could be damaged if housing benefit administration were fragmented between different contractors.'