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.

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

  1. 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.

  2. 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.

  3. Duncan Stott

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

  4. Matthew Bennett

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

  5. 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.

Comments are closed.