Cameron’s housing benefit confusion

In response to Liberal Democrat MP Bob Russell at the end of Prime Minister's Questions today, David Cameron confirmed that the "key change" in housing benefit was "a cap of £20,000", a measure which, according to the June budget, will save only £65 million by 2014/15 - the least effective revenue raising measure the government has announced.

While standing firm today on the Government’s housing benefit reforms, David Cameron outlined his own failure to fully understand the issue. His hardline approach will cause further unease among many backbench MPs, especially those in London.

Responding to Liberal Democrat MP Bob Russell at the end of Prime Minister’s Questions today, David Cameron said:

“We have a housing benefit bill that is out of control, 50% up over the last five years for working age adults, and what we are suggesting the key change is a cap of £20,000, let me repeat that, £20,000 that a family can get for its rent.”

But the so-called “key change” is actually the least effective revenue raising part of the Government’s welfare cuts delivering just £65 million by 2014-15 according to the June budget. The real problems lie with the dynamic impact of the reforms including proposals to reduce housing benefit awards by 10 per cent for people who have been out of work for more than 12 months.

Housing charities have warned that, if implemented, this reform will “drive poor families into ghettos“, with the National Housing Federation warning the cap will put 200,000 people across Britain at risk of homelessness. Douglas Alexander has said the reform would penalise the long term unemployed who were genuinely seeking work.

The cap will hit properties in central London particularly hard. In July, research by London Councils showed that up to 15,000 families in the capital could lose their homes under the plans. Boris Johnson has called for “transitional arrangements” to ease the impact of the cut.

London Tory MPs and the Lib Dems’ Simon Hughes – who earlier this week described the cap as “harsh and draconian” – failed to hide their disappointment at the prime minister’s refusal to compromise, following reports last night of concessions on the cap. Channel 4 News’s Cathy Newman tweeted:

“London tory mps aren’t cheering cameron too loudly…”

While the BBC’s Laura Kuenssberg observed:

“Simon Hughes looking most displeased during this exchange on housing benefit changes”

In Southwark, where Mr Hughes’s constituency lies, 37,570 people claimed housing benefit – only neighbouring Lambeth (39,920) and Hackney (40,570) have higher numbers of housing benefit recipients in the capital. Nationally, Birmingham (110,840), Glasgow (90,900) and Leeds (65,750) are the local authorities with the highest levels of housing benefit recipients.

The government is also planning a 10 per cent cut to the housing benefit of people who have been on jobseekers allowance for more than 12 months, a change shadow work and pensions secretary

17 Responses to “Cameron’s housing benefit confusion”

  1. Paul Seery

    RT @leftfootfwd: Cameron's housing benefit confusion – his "key change" is small part of damaging overall package //bit.ly/chJPy2

  2. Anthony Painter

    “@shamikdas: Cameron's housing benefit confusion – his "key change" is small part of damaging package //bit.ly/chJPy2 on @leftfootfwd”

  3. Will Straw

    @oflynnexpress That only saves the taxpayer £65m. It's a tiny part of reforms which could make 200,000 homeless //bit.ly/chJPy2

  4. Mr Jabberwock

    “Housing charities have warned that, if implemented, this reform will “drive poor families into ghettos“, with the National Housing Federation warning the cap will put 200,000 people across Britain at risk of homelessness.”

    Well that is just utter rubbish. In what way could this change ever drive someone into a ghetto let alone homelessness. Do please explain.

    My neighbour gets housing benefit – if the cap comes in he may have to move… …to a slightly less well appointed flat in a neighbouring street. If my income went down I would have to move too…

    Labour have got this one totally wrong as the current system is completely unfair and even the beneficiaries of it know that.

  5. Richard

    If Jabber-rot can’t work it out for himself, then he clearly does not have the expertise of the housing charities who can work it out. D’oh!

  6. Kevin leonard

    Dear Mr Jabberwock how say you that in twelve months time regardless of the fact that you have not had a pay rise we are going to increase your mortgage by 10% per month unless of course you wish to downsize to a lesser superior dwelling along with your wife goods and chattle.
    The only thing this measure will ensure is that landlords across the country raise their rents and so profit to meet the new government cap of £400 weekly regardless of where the property is situated.
    The other argument is that this will lead to vast amounts of slum dwellings being left to rot unoccupied as there are no people earning enough to pay for them.

  7. Benefit cuts are "brutal social engineering" - Cruddas | Left Foot Forward

    […] column in this week’s New Statesman to launch a withering attack on the coalition’s changes to housing benefit – likening the policy to a “modern-day Highland […]

  8. Mr Jabberwock

    Richard

    So I take it from your comment that you don’t know either then.

    Did it cross your mind that housing charities have a vested interest (a vested interest is not of itself a bad thing but it does need to be accounted for)

    It is simply not the case that the level of cuts to housing benefit proposed will result in anyone becoming homeless – it might result in some people having to move home. But that is something completely different.

    Kevin

    I am afraid your argument is rather undermined by the fact that mortgages are expected to go up by much more than 10% in the next 12 month’s as interest rates are expected to rise. So that will be the case for anyone with a mortgage… Why are you not protesting against that.

    I don’t have a mortgage as I live in a rented flat and my rent regularly goes up irrespective of my income. When it does I decide whether to stay or move. Moving is a pain but most people do it quite regularly, it is just a fact of life.

  9. David Bouvier

    Kevin – this really is hysterical tosh.

    The cap does not remove the existing housing area limits – it caps the existing limits in expenisve areas, on the basis that it is unfair for typical working taxpayers to pay for better housing than they themselves have any hope of affording. No one gets to increase their rates because of the new cap.

    And if the cost of living goes up, perhaps because of swings in interest rates on a mortgage or shifts in market rentals then yes everyone else is faced with increasing income, negotiating reduced costs, or moving. That is life as a responsible grown-up. 12 months notice is generous.

    It gets even more bizarre in that then you argue that land-lords will keep property empty rather than reduce their rates. There will be a balance. Some families will find a way to cover some or all of the higher cost, some rents will come down towards new limits, and some people will find alternative accomodation. All this is normal.

    And if you look at rental property in London within the capped levels you will find that there is plenty of it about in tube zone 3 and further out; not much in zone 1. I hadn’t realised there was a human right to live inside zone 2. Most people on typical salaries or with children don’t get to live in the centre.

    It is funny watching people cast around for any argument they can come up with to argue against this measure, ignoring sanity or consistency.

    I still want to hear someone hear argue that it is just fine for people on average family earnings to be paying taxs so that other people can be put up in accomodation that the payers have no real prospect of ever affording. You just don’t get it; Labour is condemning itself by its silly posturing.

  10. Sparky

    I’m no fan of the coalition, but I can’t understand why anyone should be allowed to claim housing benefit that amounts to double what my wife earns per year as a skilled worker – not to mention any other claims they might make on top of that.

    After three years as a teacher in Berkshire, I moved north as it was the only way I could afford to buy a house, and it was 13 years later I moved south again.

    Although a caring society looks after those most in need, I’m not sure that the tories and their libdem cronies will do so, or address the bigger problem of the spongers who are not in need but play the system and give the genuinely needy a bad name

  11. Wendy Maddox

    RT @leftfootfwd: Cameron's housing benefit confusion //bit.ly/905kcI

  12. Sky Pendle

    RT @MsWigsy: RT @leftfootfwd: Cameron's housing benefit confusion //bit.ly/905kcI

  13. Mr. Sensible

    The Government need to go back to the drawing board.

  14. Phil

    The key change is the least effective revenue raising measure.
    So why is it getting all the attention at the expense of everything else?

    Answer: Because that’s Cameron’s intention, and Ed has fallen for it big time. And because most of the national media can’t think beyond what’s happening in London.

  15. Jed Keenan

    There are large extended families we can all agree, and they live right across their home cities and have varied needs as well as carrying out economically and socially valuable roles. They have dependants, the usual suspects, children, partner, adults with care needs, elderly parents and their home is supplied to them by their local authority for very good reason. So my question is why not impose a cap on their rent? Or build a greater supply of housing to reduce their rent? Oh, Oh, I know why: Because we hate the weak. Because we are superior in every measure, with the blindingly obvious exceptions of inclusiveness, diversity, creativity, talent, leadership, and now electoral support. The scale of the losses in local government elections will be catastrophic and will produce an incredible generation of angry and talented Labour Councillors. So do go ahead and target the elderly, children, women, the BAME community, none of which we know or associate with. Just who exactly have these people been listening too? Daniel Hannan MEP and his talented Tory Tea Party?

  16. margaret green

    Cameron's housing benefit confusion | Left Foot Forward //bit.ly/9IGtFU

  17. Conjuring Cameron's cap trick | Left Foot Forward

    […] benefit of £30,000, £40,000, £50,000?” and described the cap of £20,000 as the “key change“. The Prime Minister continued this narrow focus today: “Paying over £20,000 a year […]

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