To many, the new benefit cap announced on Monday 7 November sounded like sensible fiscal policy. After all, even those in favour of a generous welfare state broadly agree that social security payments shouldn’t be more profitable than working. Even for families.
All is not as it seems
At £20,000 a year (£23,000 in London), the upper limit sits just below the annual salary of a newly qualified teacher (£22,461) or midwife (£21,962). So far, so reasonable. But look beyond the figures to find out who is affected and the cuts take on a far less reasonable appearance.
Benefits in the UK are a complicated, ad hoc affair, and with the long-promised, supposedly simplified Universal Credit system plagued by rumours of unviability and falling further and further behind schedule, it’s likely that the system will remain just as complicated for the foreseeable future.
One thing that isn’t complicated is this: forget the stereotypes of work shy, bone idle layabouts in designer sportswear lounging on DFS sofas. No single, working age, non-disabled person personally receives £20,000 in government handouts.
The rate that an adult ‘needs to live on’ in government parlance is actually the incredibly modest sum of £73.10 per week (£3801.20 annually). If you are under the age of 25, this drops to £57.90. That’s it in terms of what you actually have, in your hand, to spend on food, utilities, toiletries, travel, etc.
In addition, a person is also entitled to help to pay their rent, known as Local Housing Allowance.
LHA is paid, not by central government, but by councils, often directly to private landlords. The amount varies from region to region, as it should, and for example, the maximum LHA rate in Hull, recently surveyed as the most affordable private-rent city in England, is £69.73.
An example from the other end of the spectrum is Islington, London. There, the maximum one bedroom LHA rate is published at an astonishing £260.64 per week, but at the time of writing, the number of Islington N1 self-contained properties advertised on a leading property website that fall within budget? Zero.
The story isn’t much different in Hull. Out of 112 properties advertised on the same website today, only 13 are under the LHA threshold. If you happen to be under 25 and limited to the single room rate of £60.80, the number of properties to choose from drops to three.
We’re told that the benefit cap is necessary to reign in out-of-control welfare spending. But an enormous proportion of the welfare bill goes, not to support the vulnerable, nor the benefit-fraud-bogeyman, but into the business profits of private landlords.
A crisis is brewing
The new London weighted cap for single people over the age of 25, adds up to a real-world loss of almost £2,000. And it’s just not possible to make up that shortfall from £73.10 a week.
Still, those without dependents theoretically have the option of leaving friends and family behind and relocating (Hull may soon experience an influx of economic migrants) and perhaps the threat of impending homelessness will provide motivation back into work, despite a study concluding the contrary.
The government’s 2013 assurances of exemptions for pensioners and those in receipt of certain disability benefits are being upheld, for now at least. And advocacy charities recently forced a u-turn on plans to apply the cap to those in supported housing and domestic violence shelters. These welcome exemptions have, however, left one category to face this year’s cuts alone: families, primarily one parent families.
It’s here that the pretence of reasonability is exposed. Single parents receive additional benefits, not for themselves, but for their children. The market costs of privately rented family-sized homes push total benefit incomes beyond the cap, but strict limits on per person allowances leave no extra to make up new rent shortfalls.
Tory inflicted austerity is once again attacking some of our most vulnerable citizens and the benefit cap will be to thousands of children what the new assessments have been to thousands of chronically ill and disabled people.