Housing benefit changes even more unfair than child benefit cuts

Chancellor George Osborne’s other announcement to introduce a cap on benefits at £26,000 is even more unfair than the child benefit changes.

Our guest writer is Pete Challis, chair of the ALG Housing Committee (1990-99)

The media have made much of the unfairness in the proposals to remove eligibility for child benefit to any family where there is a higher rate taxpayer. The unfairness that one person earning more than £43,875 will lose their child benefit while two earners whose combined incomes is £80,000 will keep child benefit was immediately seized on.

But chancellor George Osborne’s other announcement to introduce a cap on benefits at £26,000 is even more unfair. It takes no account of housing costs, family size or council tax and penalises couples.

To illustrate the postcode lottery that is being created and the impact, compare the following. (Note that the calculations do not include child tax credits, which is a further factor and penalty.)

Take a couple (Couple A) on job seekers allowance with 4 children living in a 4 bedroom home in the private rented sector in Camden. They pay £400 a week in rent (£20,800 a year) – the new ceiling being imposed from next year, their council tax is £1,332 (Band D). Their job seeker’s allowance (£5,343) immediately takes them over the cap.

Their job seeker’s allowance is effectively cut from £102.75 a week to £74.38 a week and they effectively lose all child benefit.

Now take the same couple (Couple B) on jobseekers allowance with 4 children but this time living in a 3 bedroom home in the private rented sector in Camden. They pay £340 a week in rent (17,680 a year), their council tax is still £1,332 (Band D). They keep job seeker’s allowance (£5,343) and child benefit for Child 1 but effectively lose some child benefit for Child 2 and all child benefit for children 3 and 4.

Compare them with a single parent on jobseeker’s allowance with 4 children who also lives in a 3 bedroom home in the private rented sector in Camden. The rent is £340 a week (£17,680 a year), their council tax is now £999 (single person discount Band D). They keep job seeker’s allowance (£3,432) and they keep child benefit for all their children.

In order to keep all their child benefits the couple (Couple D) must move into a 2 bedroom home with a rent at £290/week, the children share the two bedrooms and they sleep in the living room but they keep their Jobseekers allowance and all their child benefit.


 

Camden

Camden

Camden

Camden

Birmingham
  Couple A Couple B Sngl prnt C Couple D Couple E
HB £20,800 £17,680 £17,680 £15,080 £11,369
CTB £1,332 £1,332 £999 £1,332 £1,261
JSA £5,343 £5,343 £3,432 £5,343 £5,343
CB 1 £1,056 £1,056 £1,056 £1,056 £1,056
CB 2 £697 £697 £697 £697 £697
CB 3 £697 £697 £697 £697 £697
CB 4 £697 £697 £697 £697 £697

Alternatively, if the couple (Couple E) could move into a 5 bedroom property in Birmingham (£218.63 a week) they would be unaffected by the cap.

48 Responses to “Housing benefit changes even more unfair than child benefit cuts”

  1. Paul Smith Bristol

    RT @leftfootfwd: Housing benefit changes even more unfair than child benefit cuts: //bit.ly/aT0kLK

  2. winston k moss

    RT @leftfootfwd: Housing benefit changes even more unfair than child benefit cuts: //bit.ly/aT0kLK

  3. Darren Burgoyne

    The unfair benefits cap and the new postcode lottery //bit.ly/aT0kLK (via leftfootfwd)

  4. Gordon Gibson

    RT @leftfootfwd: Housing benefit changes even more unfair than child benefit cuts: //bit.ly/aT0kLK

  5. jdennis_99

    You’re missing the point.

    It is even more unfair to have people who are not working (regardless of the reason for that) receiving more in benefits than the average person earns by working. That offers a clear disincentive to work. They’d literally be better off on benefits.

    What’s fair about that?

  6. Evidence based.

    £400 a week is a lot of money on rent. Camden is an expensive area. Move futher out and commute like working people do. Problem solved.

  7. Red Ed

    The rewards for work are completely unfair. Why should we slog our guts out in factories while fat cats earn millions sitting around eating lunch in fancy restaurants. We need wage controls.

  8. Duncan Stott

    I've left a couple of comments on @leftfootfwd: Housing benefit changes even more unfair than child benefit cuts: //bit.ly/aT0kLK

  9. Matthew Bennett

    RT @leftfootfwd: Housing benefit changes even more unfair than child benefit cuts: //bit.ly/aT0kLK

  10. Mr Jabberwock

    What about all the person working in Camden who earns £26,000 and can’t afford to live there so has to commute – reality check needed I think.

  11. Paul Perrin

    RT @DuncanStott I've commented on @leftfootfwd //bit.ly/aT0kLK << Gosh, 2 things we agree on! (comments not article!).

  12. Duncan Stott

    I’m sure there are loads of people employed in London who would love to live in Camden, but can’t afford to.

    Why should people unemployed in London who love living in Camden be able to afford to do so solely at the taxpayer’s expense?

    I’ll try and anticipate an answer to this question: They have established Camden as their home and it would be wrong to force them to move.

    Well I just don’t buy this argument. I resent the idea that the incumbents to an area take priority over anyone else who may want to live there. Taking the argument to its logical conclusion, it basically means that people who fluke born in nice areas get state subsidy to keep them in the nice area at the expense of everyone else. It is government-sponsored privilege, pure and simple.

  13. Mike Thomas

    Why not just blow away any pretence and do this for Islington eh?

    This is an unrealistic scenario.

    It’s unfair that I cannot live in a 5-bed townhouse in Kensington, I demand a progressive solution to this!

  14. Duncan Stott

    Also, a separate point: overly generous housing benefit has an inflationary pressure on private-sector rents. If housing benefit is uncapped, there is a bottomless pit of money that landlords can extract from the taxpayer via unemployed tenants.

    Capping housing benefits will have a deflationary effect on private-sector rents, as there will be a limit to the amount of money a landlord can expect from unemployed tenants. This downward pressure on the rents of all private-sector housing will be benefit all the tenants. Bear in mind that tenants are asset poor as they don’t own their own home.

    So in your example, the landlords to those in Couple A’s situation need to find new tenants, and their rent can’t come from housing benefit. That means lowering their rent to attract new tenants. Across the whole rental market, this means a shift of capital from landlords to tenants, from asset-rich to asset-poor. Capping housing benefit is progressive!

  15. Paul Perrin

    If someone is on ‘job seekers allowance’ for a whole year then they need to recognise that they aren’t going to get a job and need to rearrange their lives to be the minimum burden on those of us who do work.

    I find it shocking that so many people seem to casually accept ‘living on benefits’ as a long term lifestyle choice. Even the government are talking in this way – it shows how far to the left that UK politics has drifted when a supposed ‘centre right’ party are actually acting as a left wing party would have in the 70’s

  16. Kevin Jump

    What no one is telling me is how many people currently claim over £26,000.

    Given the scenarios above I find it increasingly hard to believe this is a big problem or one that can possibly bring any savings vs costs if a cap is introduced and then presumably managed in any way.

  17. John Lees

    Oh didums people can only get 28K for doing nothing, how awful. Absurd, Labour should be for working people not those who chose to leach off others. I guess this is upper middle class socialism – perhpas an extra benefit for cleaners and butlers? I would love to be able to afford a 4 bedroom house.

  18. John Lees

    Sorry 26k – still more than I get for working.

  19. Thomas Hobbes

    If they can’t afford to pay £20k a year for their house, they’ll have to move to another house that they can afford. Just like the rest of us. Simples.

  20. Thomas Hobbes

    Actually reading back we all appear to be in agreement, I was anticipating you’d all demand they be given a butler on benefits too. Good show, perhaps there’s hope for us yet.

  21. Chris

    Over the past few years Clegg has hawked his conscious around over child poverty and continually mislead the public over Labour’s achievements in raising children out of poverty. Yet he is now presiding over benefit cuts that will undoubtedly increase child poverty especially among some of the most vulnerable children in society, punishing them for the sins of their parents.

    @Duncan Scott

    You’re very misinformed about HB!!!

    “Why should people unemployed in London who love living in Camden be able to afford to do so solely at the taxpayer’s expense?”

    HB is paid to those on a low income as well as jobseekers. Recipients generally work or look for work in low wage sectors, moving further out of London would make it much harder for them to commute to work or look for work. If your a cleaner you have to get into the office at 5 am, very little public transport at that time, how does it make work pay if spend all your money commuting?

    “Taking the argument to its logical conclusion, it basically means that people who fluke born in nice areas get state subsidy to keep them in the nice area at the expense of everyone else.”

    LOL, don’t believe the Daily Fail pal! Parts of Camden are fucking horrible yet the rents are still high. HB isn’t renting 5 floor town houses in South Kensington for illegal immigrants.

    “Also, a separate point: overly generous housing benefit has an inflationary pressure on private-sector rents. If housing benefit is uncapped, there is a bottomless pit of money that landlords can extract from the taxpayer via unemployed tenants.”

    That almost makes sense if it weren’t for the fact HB is *already* capped at the median rent in a particular area! Osborne’s reforms cap HB at 30% level of local rents.

    Plus, I doubt you’ve ever claimed HB because you seem to think landlords are falling over themselves to take claimants, they aren’t. Its actually very hard to get a new place paid for by HB, these cuts will make it even harder. Ghettoizing jobseekers and low paid workers into areas of deprivation and squalor that would make Beveridge turn in his grave – real fucking progressive.

    The cuts have been compared by a *tory* minister to the modern day equivalent of the highland clearances, that is the reality that your defeating.

  22. Chris

    oops…

    The cuts have been compared by a *tory* minister to the modern day equivalent of the highland clearances, that is the reality that your defending.

  23. Alan Jon

    The thing is, my girlfriend and I would like to live in Camden, but on our wages we can’t aford it, so we have to live out in a grotty zone 3 suburb.

    I’m not saying that’s a fault of the claimants, it’s a fault of your example.

    I’d love to see some proper data analysis done here on how many people this is going to affect. I bet the numbers of people effected outside of London are tiny.

    What we really need to be talking about is why rents, particularly in London, are so high? Donning my socialist cap for a moment, why are people allowed to take out loans on second and third homes then rent them out and sit back and earn money from doing nothing? We need to go back to a time (if there ever was one) when a house was a home and not an investment.

  24. John Lees

    Chris – why should I pay to put someone into a house I can not afford to live in? If you need 4 bedrooms and can not afford it don’t have children. If it was impossible to travel into work in teh city centre from cheaper housing ouside then the wages would go up until it was possible.

  25. Chris

    @Alan Jon

    “I’d love to see some proper data analysis done here on how many people this is going to affect. I bet the numbers of people effected outside of London are tiny.”

    As I said previously the £400 a week cap is misleading, the cap on *all* HB claims is going to be cut by 20%. As HB is dependant on the area you live in it will affect people all over the country.

  26. jeff marks

    why do way people who don’t work anything? can’t they just starve?

  27. Sam Korn

    “If someone is on ‘job seekers allowance’ for a whole year then they need to recognise that they aren’t going to get a job and need to rearrange their lives to be the minimum burden on those of us who do work.”

    So you want them to move away from where they live, from where they have friends and connections through which they might find a job, to somewhere they don’t know and where they aren’t known, further lessening their chances of getting a job? You want them to spend their time looking for somewhere else to live and organising a move of house (no small task!) rather than looking for a job? You think that someone who hasn’t had a job for a year must be unemployable and can only be considered a “burden” on the rest of society?

  28. jeff marks

    ps well done lff for separating the useless tweets from the comments. would prefer them not to be there at all.

  29. jeff marks

    move them to india and they’ll realise how lucky they are.

    supporting some shirker here for a year, even limited to 26k would provide clean water for hundreds of people in India, would save thousands from waterborne diseases in Africa.

    I can see NO justification for paying someone in this country not to work.

  30. More reflections on child benefit cuts | ToUChstone blog: A public policy blog from the TUC

    […] far more significant cuts in their benefits. Housing benefit cuts will have the same effect on poor Londoners as the Highland clearances once had on Scotland. New Scope research shows that the cuts could have […]

  31. Evidence based.

    Its pretty absurd to say that people who earn less than 26k can commute into the capital, whereas those who get it on benefits can’t. Why the hell not?? Granted it might make there lives slightly more difficult- i am willing to concede they might get slightly sweatier and be distracted by a noisy youth/bob crowe when getting the tube to an interview- but when you are solely in recepit of the state, your comfort is contingent on others paying from it.

  32. Evidence based.

    And yes, they might have to move away from their friends- tough. I have friends who live in Kensington, I don’t get to live with them because as a working man i don’t earn enough, and that fine. When i want to see them I get on a tube/train/bus/bike. Seriously, can people subsidised to 26k not do that??? Madness

  33. jeff marks

    I can’t really understand people who think people in this country should be paid many times what someone in Africa would get for a 70 hour week – for doing absolutely nothing. Sounds like racism to me.

  34. Ash

    As Jeremy Hunt has explained, the solution is really very simple: if there is any possibility that at some time during the next quarter of a century or so, you or your partner might find yourselves out of work and reliant on benefits due to redundancy, ill health, bankruptcy etc, you should simply refrain from having children.

    (Alas, since such things are unforeseeable, this means everyone without a private source of unearned income to fall back on will have to refrain from reproducing. We must face the fact that children are a luxury the working classes can simply no longer afford. Harsh, but fair.)

  35. Chris

    @Jeff Marks

    “why do way people who don’t work anything? can’t they just starve?”

    LOL, are you actually mental or just taking the piss?

  36. jeff marks

    @Chris

    we allow people to starve every day outside the UK. and we allow people to die of preventable diseases. the 26k you wish upon some jeremy kyle watching slob could send 100 children to school in africa. could by 50,000 antimalarial bed nets. are you mental or taking the piss?

  37. Chris

    @jeff marks

    hahaha you’re a funny man.

  38. threeskins

    The total amount of money that is wasted by the gov add to that the amount of money lost to tax avoidance and you have a sum of money that over shadows the money paid to us jeremy kyle watching slobs, which by the way is not a very original slur,an MP in the commons coined that particular gem, as with many comments here not at all original, copy and paste by mouth.

  39. jeff marks

    wasted by government by being given to people that give nothing back.

    and no – people being paid to sit at home overshadows all government expenditure. about 1 in 5 people of working age in this country are paid to stay at home. New Labour’s shame. And don’t say there isn’t any work to do.

  40. Chris

    @jeff marks

    You fool, you have no idea what you fucking talking about. I see CCHQs strategy is going to be vilification of the physically and mentally ill, endless tirades about scroungers to divert attention from the greatest transfer of wealth from the low and middle income majority to the corporate vested interests. I thought Cashcroft had stopped funding all the bloggers and online angry people but it seems they’re here to stay. Unemployment is currently at 7.7%, there are 750,000 18-24 year old NEETs. How the fuck are IB and ESA claimants kicked onto jobseekers going to find work when there are so many able bodied without compromised medical histories looking for work? The idea that those people claiming IB/ESA are all malingers is pathetic and shows your total lack of understanding and compassion, the fact that many are former manual workers such as plumbers who can’t work because of illness related to their profession shows you up as who you really are.

    We can’t all get jobs as online advocates from Lord Cashcroft.

  41. Robert McLaren

    RT @leftfootfwd: Housing benefit changes even more unfair than child benefit cuts: //bit.ly/aT0kLK

  42. Angela Phillips

    You miss a critical issue as do most of your comments. One of the joys of living in London is its social mix. In the USA the poor live in the inner city while the rich live in the suburbs. In France its the other way around. In London most of us live in streets where private, council owned and housing association properties are all mixed up. Certainly there are some parts of London that are poorer than others and some where social housing is thin on the ground but in much of the city our children attend the same schools and we walk the same streets, irrespective of our income. If housing benefit is slashed this City will change for ever and I think we will all be the poorer for it.

  43. stacey

    i think the benfits cuts are going make a lot of homeless. im a single parent and have been fleeing domestic violence with my children the help out there for us is zero. we are currently private renting and the rent is expensive as it is we dont get it all payed and if the benefit is halfed even more i hate to think what we are going to do we cant afford heating because once again its to expensive we cant get affordable housing because ive been through domestic violence its too disturbing for neighbours if it was to accur again. all i want is to be settled with the children in affordable housing and off benefits and how these people get 26,000 is beyond me so personally i think the goverment need to listen to people more and our situations and help us to get off the benefits and in affordable housing and the people who are just to damn lazy to work should deffantly have there benefit stopped!

  44. Ben

    One fundamental thing that has been missed in this debate – a family with median earnings, of the same composition as a family recieving c£26k in benefit, will by definition receive large amounts of state support via the tax credit system. So the mythical ‘working family living on less than a benefit claimant’ simply doesn’t exist if you compare like with like – the system (flawed as it may be) offers extra support so the working family won’t have to live on their median earnings.

  45. 50,000 families will have the rug "pulled from under them" | Left Foot Forward

    […] Foot Forward have previously reported on the unfairness of the government’s housing benefit policy, and their child benefit cuts, […]

  46. Hanworth Labour

    RT @leftfootfwd: Housing benefit changes even more unfair than child benefit cuts //t.co/6DOX3ffd

  47. Thomas Hemingford

    RT @leftfootfwd: Housing benefit changes even more unfair than child benefit cuts //t.co/6DOX3ffd

  48. Gillianrhea203

    Hmm, the family living in Camden could chose not to live in an expensive area at the taxpayers expense or they could move to a cheaper area like people not claiming benefits have to do if circumstances necesitate. Last time I checked there was no universal right for those on benefits to live in Camden at a cost to the taxpayer. Wouldn’t we all like to have loads of children, not work, get everything paid for by the taxpayer and live in Central London. If only…

Leave a Reply