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.
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48 Responses to “Housing benefit changes even more unfair than child benefit cuts”
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.
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.
John Lees
Sorry 26k – still more than I get for working.
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.
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.