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