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