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Getting real about the benefit cap

January 23, 2012 3:25 pm

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Despite attempts to inject some clarity today, Labour’s policy on the ”benefits cap” still feels muddled. That’s partially because the
debate over the cap has only come to life in recent days. Right now the economic argument crowds out everything else. That makes
developing nuanced messaging difficult  - the time needed to flesh out complex viewpoints just isn’t there.

Today the benefit cap will go to a vote in the Lords. This vote has only received substantial media coverage thanks to Labour’s effective whipping of the Lords in recent weeks, which has given the government a bloody nose on a number of occasions. Today the focus of the Labour Lords will be on getting their amendment passed. Their reaction to the so called “Bishop’s amendment” – and the final vote – will probably depend on the success of failure of their own amendment.

Yet as someone who backs reform of our upper chamber, I’m in the unusual situation of having faith in our Lords to do the right thing,
as they’ve done so before (that’s not a feeling I always have about elected members).

So Labour’s messaging on this issue seems unclear – albeit for legitimate political reasons. As Sunny Hundal rightly noted this
morning, that’s not a rare occurrence.

But on this issue, such confusion wasn’t necessary.

Even the most ardent backer of the state welfare system must concede that the safety net can’t be unlimited. Of course we must back those who are out of work (especially at a time when jobs are so hard to come by), but we must also stand by the working poor. A system whereby benefits are potentially unlimited risks pitting one against the other, with the working poor (rightly) feeling aggrieved that they have come off worse off despite their endeavours. For those who argue that this argument pits poor against poor – you’re too late. Speak to the working poor, they were making the argument first. That’s not to argue that £26,000 (the proposed cap) is a large sum. It’s not, and those who are forced to bring up a family on such a sum face incredible struggle. But we must also consider this from the point of view of the working poor,  who often struggle to bring up a family on even less.

At the same time, many within the party have rightly pointed to the risk of surging homelessness – and especially homeless families – as a result of the benefit cap. Homelessness is the greatest of all social ills, and an often hidden side effect of the kind of society we choose to live in. The benefit cap – as currently constituted – would shift thousands into homelessness or debilitating poverty. That’s clearly not an option.

So surely the sensible option, if we wish to keep benefit levels capped to ensure that work pays, but don’t want to see rising
homelessness, would be to decouple housing benefit from the ”universal credit”. It might mean that the DWP saves less money, but surely this reform is about fairness, not making millions for the Treasury off the backs of the inner city poor? (Additionally, no-one seems to have calculated the cost to the taxpayer of a massive shift in families from areas like Inner-London. That means that huge demands will be placed on councils unused to mass deprivation, whilst services like schools will have to be expensively closed in London as families desert.)

The government will try to claim that their “universal credit” will stop people over-claiming benefits. But as long as housing benefit is included as part of the sum, the side-effect will be to unfairly punish thousands of those who continue to be left behind by an over-inflated housing market.

Long term the best way to bring the housing benefit bill down isn’t to hack away at the benefits of those living in areas where property prices have gone crazy, it’s to stop placing families in private rented accommodation – which is where some of the examples of vast bills per family come from. Instead that means doing what Labour are doing in Islington – freeing up family sized social housing – as well as doing what every government should have been doing for the past 20 years – building more houses, rather than building a debt bubble on top of buy-to-let mortgages.

Another alternative would be to deal with the spiralling costs of property - especially in the capital – that make it near impossible for even well paid young people to own their own home. The average age of first time buyers in London is now 32, and rising, as house prices spiral out of control.

But if you’re expecting any party to be brave enough to tackle high house prices, or the scourge of spiralling rent in the private sector fuelled by buy-to-let mortgages, don’t hold your breath. I fear it might take another catastrophic financial crash to do that…

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  • Anonymous

    Mark, it is a great pity that between 1997 and 2005, when Blair enjoyed two landslide victories, he didn;t insitute a policy of large scale council house building. The last major building of council housing, certainly in London was in the mid 1970s under the governments of Harold Wilson and Jim Callaghan.

    I suppose Blair has never been in a council house, and would probably have felt it would be beneath his dignity to have done so, but at a time when we had (temporarily) “put an end to boom and bust”, some of that money that was wasted prosecuting wars could have been usefully spent providing affordable housing (for the many not the few, to quote another of Blair’s threadbare empty vacuous catchphrases)

    • Chilbaldi

      “beneath his dignity to do so”

      Where do dream up this stuff?

      • Anonymous

        Blair obviously had no desire to start a programme of council house building though he had 10 years and two landslide majorities to do it.

        A man who likes to hob-nob with “VIPs” and “celebrities”, the only time he ever went into “ordinary” buildings was when he wanted to launch an election campaign in a state school.

        One supposes you are another of the “Tony can do no wrong” shower

  • Anonymous
    • Anonymous

      Money makes money and Blair has the nerve to tell us he is religious a born again Banker but with a W not a B

    • http://twitter.com/gonzozzz dave stone

      Unbelievable. Utterly unbelievable.

    • http://twitter.com/gonzozzz dave stone

      Unbelievable. Utterly unbelievable.

      • Anonymous

        yes but not really unexpected is it.

      • Anonymous

        yes but not really unexpected is it.

        • Anonymous

          It’s not, but if Blair and all those others who avoid tax were to pay their fair share the financies of the country would be in a much healthier state.

          Also it is always people like Blair, who spoke so much twaddle about people playing the system that are the biggest culprits and the biggest hypocrites.

          No doubt Blair gave advice on personal finance to David Miliband, who has set up a company to avoid tax on his part-time job.

          • Anonymous

            http://www.whichoffshore.com/blog/top-ten-tax-exiles

            few more who get away with no tax or little tax

          • Anonymous

            I  think all those ten old actors, ageing pop singers and seedy businessmen are just as despicable, but the point with Blair is that he claims great religiosity, a desire for “fairness” that dreary word forever  passing his lips, meaningless when he utters it,  he constantly berated benefit claimants, when he is a grasping hypocrite, who will do anything to get more.

            He doesn’t need more – he won’t be able to take it with him – it will probably melt.

            We can only hope that he doesn’t do a Beckham and cavort about in his tighty-whities, in an advert, though if the money was good enough he probably would

          • Anonymous

            well one knows that ones Kids will cost, maybe Labour will  need a few million to return to it’s real ways, the third way.

            What gets me is the Religion, other then that he ‘s no different then Alan Sugar

          • Anonymous

            What really gets me is the way politicians – especially it has to be said New Labour  politicians – seem to think that rules are for everyone else, not them.

            Thus we had Mandelson uttering a forged document (his mortgage application) for which “ordinary” people would go to prison – being bought back time and time again to positions of authority

            We had David Miliband so anxious to be seen as a “family man” that he and his wife didn’t go through the normal channels to adopt but went to America to buy what they wanted

            We had David Blunkett, with the morals of a goat, not only boasting about fathering a child with the wife of another man, but publishing a book of diaries to boast about it – and make money of course, thn we had the old hypocrite holding forth about other peoples behaviour at every opportunity on radio and TV  .

            Then we had Blair: “Faith foundation” even though he and his wife don’t fully follow the tenets of their chosen religion themselves* – “peace envoy” in the middle East though he is plainy biased to one side in the dispute, and his obsession with money making p- a rfeal Walter Mitty  who just indulges his vainglorious fantasies

            (* Cherie Blair’s book confirms this in her own words)

          • Bill Lockhart

            @ Alan Giles
            You know *nothing* David Miliband’s family circumstances. Stick to reading the Sun and keep your deeply nasty sanctimonious gossip to yourself.

          • Anonymous

            Your “fair share” is the tax that you are liable to pay after you have taken into account all of the various allowances that you can rightfully claim.

            Of course, if you evade tax you’ll end up in court.

          • Anonymous

            Joe. Blair like most politicians long ago realised it is not what is right or wrong – it is what you can get away with, and I won’t weary you with a roll-call of names.

            I wish people wouldn’t rush to defend morally bankrupt scum. It might be “legal” but it is not ethical

          • http://twitter.com/Newsbot9 Newsbot9

            Unless you’re a banker, then you get a bailout.

        • Anonymous

          It’s not, but if Blair and all those others who avoid tax were to pay their fair share the financies of the country would be in a much healthier state.

          Also it is always people like Blair, who spoke so much twaddle about people playing the system that are the biggest culprits and the biggest hypocrites.

          No doubt Blair gave advice on personal finance to David Miliband, who has set up a company to avoid tax on his part-time job.

    • Anonymous

      I feel strange defending Tony Blair but as an accountant I think I should put the record straight.
      Blair’s income wasn’t £12 million that’s the company’s income. Any expenses claimed will have been scrutinised by his accountants, any which aren’t “wholly and exclusively” for the purpose of the business would be disallowed. 
      Administrative expenses is a catch-all for all types of expenses.

      From the information given, neither you nor I can categorically state that Blair has avoided or evaded any tax at all.

    • Anonymous

      I feel strange defending Tony Blair but as an accountant I think I should put the record straight.
      Blair’s income wasn’t £12 million that’s the company’s income. Any expenses claimed will have been scrutinised by his accountants, any which aren’t “wholly and exclusively” for the purpose of the business would be disallowed. 
      Administrative expenses is a catch-all for all types of expenses.

      From the information given, neither you nor I can categorically state that Blair has avoided or evaded any tax at all.

      • Anonymous

        We all know he is a greedy grasping old bugger, who would do anything to stuff his wallet, even so far as to “advising” despots, and his little mini-me David Miliband is getting equally avaricous.

        In many ways Blair and David Beckham are very similar – now that Beckham is getting to the autumn of his career he doesn’t mind making a fool of himself for dosh as well – apparently next month during a presigious game in the States, the advert break will include an ad of Beckham in his bloomers.

        I suppose to his credit, at least Beckham had talent.

        • Anonymous

          well in the premiership they have a 41 year old playing, MUFC have two over   thirty seven they even brought one back. The difference a bit of skill will go a long away and it seems with Blair his address book  does just as well

      • Anonymous

        We all know he is a greedy grasping old bugger, who would do anything to stuff his wallet, even so far as to “advising” despots, and his little mini-me David Miliband is getting equally avaricous.

        In many ways Blair and David Beckham are very similar – now that Beckham is getting to the autumn of his career he doesn’t mind making a fool of himself for dosh as well – apparently next month during a presigious game in the States, the advert break will include an ad of Beckham in his bloomers.

        I suppose to his credit, at least Beckham had talent.

      • Anonymous

        Good reply.   That’s exactly how it is. 

        There is a lot of nonsense talked and written about tax, income and accountants by those who want to make political points, but anyone who has run a small private ltd. company would understand your point.   Any expenses claimed by an employee must be incurred in the running of your business and are reported to the HMRC on the P11D otherwise you incur tax and NI on them.

        If there is any discrepency you will find yourself under a tax inspection which will cost you a lot of money in extra accountancy fees.

        • Anonymous

          Joe for God’s sake. Blair IS NOT running a small private limited company. He didn’t give up No 10 to go and run a back street cab firm. 

          He and his plain and pricey wife just love money and they are not too fussy about where it comes from

      • http://twitter.com/gonzozzz dave stone

        There are options. If your business is doing well you can ‘up the expenses’ by, for example, travelling business class instead of taking cheaper options, by driving a range rover instead of a smart car; simply because the extra cost can be ‘written off’ against tax i.e. you’d have to pay more tax if you went for something cheaper.

        It’s not illegal, of course, and it’s common practice but it’s not the sort of thing that you’d expect the Archbishop of Canterbury nor the Dalai Lama to do. What is striking about Blair is that the influences that many considered to be his motivation (e.g. the Old Testament Prophets) seem to have dislimned like the morning mist on a summer’s day.
        And now all we’re left with is a ravenous money making operation. 

      • Anonymous

        How many people work in his company, why is his company split off into smaller business, we all know  what he is doing.

    • Anonymous

      If there are any unexplained expenses in Blair’s business affairs as suggested by that link, he can expect a tax inspection and some hefty penalties.

      • Anonymous

        As if! He has friends in high places. They didn’t call him “Teflon Tony” for nothing

  • Anonymous

    Here is my total.

    IB………………………………£147

    DLA …………………………..£110

    Child credits   ……………..£90

    Total…………………………£347

    Wife ………………………..£137    pension

    Total for the family ……£484       X 52……………………£25.168

    I get the max you can have on ESA or IB    so the only way you can get above this would be housing allowance I do not get this because we have to much income with my wife pension it’s over the limit.

    If your have two children are on the dole ……. £68          JSA

     child credits…………………………………………….£90

    rent council tax…………………………………………£120     which is the rent and council tax for a council house  in my area
                                         
                                                                   Total                       £278   52 times   £14,456

    Which is basically the same for working for the min wage.

    So the only way people can get more is higher rents or more children, so the Government are basically saying the more kids you have the less money you will get  hell of a punishments for kids.

    We are told today that 69% of labour voters agree with the Tories cap,

  • derek

    Some really good points @Mark
     but there will remain a big spread about getting “real about benefit caps” and although you make some interesting pointers to Islington the real reality will be the closing of schools and additional cost to find those left homeless a new home.The more  we examine IDS’s benefits caps and cuts the more ridiculous and vindictive they become. Labour isn’t getting the message across because of the vacuum and spread within the party, a broad church is right and proper but even a broad church has a central “ethos”labour needs a grounding “ethos” and a glue like foundation! “CLAUSE 4″  that would do nicely.                                                                                                                                      

  • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

    The issue is actually a housing one – a combination of housing benefits and their cost, and the price of private rented accommodation in a city with a housing shortage. 
    Housing benefits are only high because of the widespread reliance on the private rented sector which rents at market levels. hence HB expands to cover those levels.

    The difficulty with applying rent control is that there will probably be sale of the properties in consequence, certainly in London.

    The lack of social housing in areas of high demand is the real problem – the rise in HB levels reflects the lack of social housing and the consequent reliance on the private rented sector

    • http://twitter.com/Newsbot9 Newsbot9

      So, properties are sold.

      Give tennants proper protection, there’s no reason they should have to move out simply because the property changes hands!

  • Cory

    As a (northern) Labour voter I find it hard to have any sympathy for the argument that the £26k cap is not enough. I understand the high cost of housing in London (& that part of the reason for a lack of affordable housing goes all the way back to Maggies RTB policy & the failure to replace much needed social housing). 

    I also believe in mixed local communities (by tenure & household income), but all these nuances will be absolutely lost on most voters during the current row, including – the polling shows – a majority of Labour voters.

     A tactical retreat is needed. Perhaps by Labour taking the line  – & repeating it loud & often – that they support the £26k cap, but that their concern is for the WORKING poor of London – particularly those with long-standing family connections to an area -  & that transitional arrangements are appropriate to support this group – either to help them back into work, or to more affordable accommodation in the wider SE of England.

    It is folly for Labour to do otherwise. They are a political party who need to court moderate popular opinion over the whole country, not a lobby group or charitable organisation solely for the long-term unemployed and/or large families in London.

    • Anonymous

      The problem is, Cory, most of the NOT WORKING poor are not working because of a lack of jobs, not as a “lifestyle choice”,(an expression much loved by New Labour and Grayling and IDS)  and also, try getting a job past the age of 50.

      The trouble with politicians is that they don’t understand the ordinary world. When they have to rersign after fiddling their expenses they get an immediate job with DEMOS or the “Faith” Foundation. And retired “investment bankers” reinvent thjemselves as welfafre “experts”

      • Anonymous

        This may be true now, but not true five years ago when we were told that immigration was necessary because of a shortage of labour.  Then we did have a hard core of people who were taking advantage of the benefit system.   

        It is also I believe, the case, that the newly unemployed are actually the least likely to be the recipients of high levels of benefit.  The benefit system should be skewed to give the most help to the newly unemployed to help them overcome the possibility of losing a home because they can’t meet the mortgage or rent, and to help them back into work.  This isn’t the case here, although it is in other European countries.  

        • Anonymous

          What happened five years ago that we needed so many people to fill jobs, and again five years ago we had a hard core, have they now gone.

          Five years ago we did not need 4 million people ,

        • Anonymous

          There might have been a “hard core”  playing the system, but it is true that people as young as 40 were passed by in favour of younger people in employment, and the longer the person has been unemployed the harder it is for them to get back in the labour market.

          Sadly New Labour politicians are and were just as guilty of trying to tar all benefit claimants as workshy and playing the system, just as much as the Tories. 

          Perhaps given the large number of MPs of all parties playing the system with greed in their expense system, they judge everyone by their own low standards.

          Certainly the loudest mouths about “benefit cheats” were those like Purnell, Grayling Duncan-Smith and Byrne who got caught fiddling their expenses so therefore they speak with no moral authority at all. Yesterday we had another greedy hypocrite writing an article on here -Kitty Ussher. People like that should keep their mouths shut IMO

          • Anonymous

            Well said that man….

          • Anon

            Erm you might want to rethink your comment about IDS and his expenses, a quick google finds the below May 2009 -there could be other stuff of course but it seems he really did avoid the obvious temptations of a second home

            Iain Duncan Smith, the former Conservative leader, is one of the outer London MPs who is eligible for a taxpayer-funded second home, but he commutes from his Chingford and Woodford Green constituency rather than joining the gravy train.Last year he claimed nothing at all for his additional costs allowance. In previous years he had claimed for occasional hotel stays.

        • http://twitter.com/Newsbot9 Newsbot9

          So for a few thousand people you’d shaft tens of thousands now and ever-more on an ongoing basis, because that figure if 26k is going to do nothing but fall for the best part of a decade…

          And I see, so if you fail a few job interviews, you should be automatically forced to leave the areas with the jobs. It’s NOT like that in other EU countries: the benefits are typically on the scale of YEARS.

          And the actual benefits involved 5x or more the UK ones, typically!

          • Anonymous

            £26,000 means adding two peoples benefits, plus child credits, plus any extra money like  housing allowance which you do not actually get.

            It’s not a lot, when you state it’s two people

    • Anonymous

      Who were they courting before the last election then the rich.

    • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

      I do agree that because we are talking about a very small and geographically isolated number of families, that the immediate reaction is almost bound to be mystification.

      What I think was a failure was:
      - to decouple the housing issue from the benefits issue. The total benefits figure is only as high because of the needs of large families living in London. Affordable social housing is urgently needed in London and the south-east, in the same way that jobs are needed in the north
      - not to suggest that there should be notice taken of those who become unemployed and are living in private rented accommodation – a growing number. 

      Allowing a myth to be established that most of this number was deliberately engineered is bound to cause further problems

    • http://twitter.com/Newsbot9 Newsbot9

      So all the working people in London with families will lose their jobs to youngsters and be deported from the capital. Great! And that’s on an ongoing basis…

      You’re ensuring a LOT more long-term unemployed.

  • derek

    The stupidity of the governments actions will now force people to question their inconsistent rabbles? if they are putting a cap on benefits at £26,000 then will anyone in employment that is earning £26,000 be removed from tax credit and child support? 

    • Anonymous

      We all know the tax credits and child credits were brought in so labour could hit some of the targets they promised with child poverty, of course would they have brought it in now of course not, and the Tories will for sure start to remove this since we have a deficit.

      The pensioners on TV yesterday saying why are we not getting £26,000 and the  TV saying   it’s a good question, well how many children do you have should be the answer.

      I have given up understanding  Governments a long time ago.

      • derek

        Treborc, It’s a cap mainly on housing benefit and the universal bundled together benefit that comes into play in 2013.It’s not 26,000 for all benefit claimers?

        Take the areas in London where benefit claimers are in privately rented accommodation where the rent costs are on average 400 per week, that’s 20800 per year leaving a family with 5200 or 100 pounds per week to live.

        Now when the government over turns the lords child benefit defeat and the universal benefit comes into play for all, the sums will be done on all areas of Britain and the likely outcome will be a lose to all claimers in the region of 90 pounds per week, no-one out side the crazy rent prices of London will ever get anywhere near the 26,000 cap, yet their benefit will be reduced. 

  • derek

    I think it’s has opened a can of worms! and a national conversation should take place on this issue. If some of our top footballing stars are earning massive sums of money and they have well over £26,000 disposable income, should there be a fairer tax system that collects more of that disposable income?

  • Franwhi

    You’re making the social engineering argument – which I believe weas also made by london mayor BJ . It’s all being made too late I’m afraid and even if labour are whipping – they’re not whipping that hard. IMO the bishops were right to make the case for decoupling child benefit from the total – I’ve always thought it should be a stand alone benefit since it’s for the child. A disproportionate number affected by this change will be children – we need to be really clear about that – the human side of this change. There is a grand humanitarian narrative here which the bishops and some lib dem/labour peers see but in the kingdom of the blind i.e. the Commons nobody sees anything beyond the latest manic polling results    

  • Daniel Speight

    I’m guessing that is mainly boroughs inside London where the cap will kick in because of housing rental costs. Notice therefore should be taken of one of the Tories own, Boris Johnson, comparing it to ethnic cleansing.

    It should be remembered that in London, Westminster in particular, the Tories have form on changing the social composition of better off boroughs. Shirley Porter, the daughter of Jack Cohen and onetime leader of the Westminster council, spent a considerable time on the run, mainly camped out in Israel, due to her attempts to do just this illegally.

    That Shirley is now back in Westminster and never spent a day in prison is comparable with no bankers being charged while kids are given three years for calling on Facebook for riots that never happen.

  • Anonymous

    Mr Miliband is quite right – bankers at the top, scroungers at the bottom.
    So how do you as a government propose to sort out the wheat from the chaff?
    If the answer is just giving as much as people ask for to whoever turns up, then allow me to remind you that the national debt is taking around the same amount of money now as is being thrown at schools.
    But how do you target the deserving ones? Richard Branson at the rich end and the homeless Lithuanian immigrant with child at the poor end?

    Please would someone explain why people on £20,000 a year with two teenage boys should be rewarded less well than the man with three children who is actually building an extension on his house through your taxes?

    • Anonymous

      The paper came out a few years ago and I cannot remember the actual numbers but it was stated the vast majority of people in work will be claiming at least one benefit, which proves that wages are to low for the vast majority of people.

      • Anonymous

        Or that the benefits system urgently needs an overhaul.

  • Anonymous

    Labour will NOT win the next general election. Labour’s shadow front bench is composed mostly of amoral, selfish and dishonourable individuals who have no real connection with Labour values or with the constituency of men, women and children whom the Labour Party was originally created to represent. Most of the current Labour leadership probably decided for whatever reason that they wanted a political career when young and might as well have flipped a coin in order to decide which political Party to then affiliate themselves with. The current Labour leadership, most of whom rose to prominence under patronage from Tony Blair and Gordon Brown,  most likely simply opted to join the Labour Party for no better reason than it offered the best chance to secure serial promotions and career advancement and the best opportunity open to enable them at the time to be elected as MPs and subsequently to feather their own nests in the long run. 

    They are a cowardly, shameless and a sorry bunch.

    This group of morally questionable individuals are NOT and NEVER will be fit to form a government.

    They WILL be rejected by the electorate.

    • http://twitter.com/Newsbot9 Newsbot9

      So just like the Tory front bench then. Didn’t stop them…

      • Anonymous

        Tory? Labour? What’s the diff?

  • Anonymous

    There was the little matter of Betsy (employing the spouse who actually did damn all)

    • http://pulse.yahoo.com/_ZPXYLRVP4XOIGGDJWAL6HUO7U4 David

      For which, in fairness to the man, he was exonerated (admittedly by other MPs, so read into that what you will) and Crick’s report was never broadcast.

      • Anonymous

        Exoneration amongst MPs is so reassuring. It is always a “misunderstanding” – the benefit cheats they castigate wouldn’t just be  “exonerated” they would face the full vigour of the law.

        Gerald Kauffman, 80, was exonerated for buying himself a £2000 TV set with our money – that was because of his “Obsessive Compulsive Disorder”, poor man. At 80 and with mental health issues perhaps it was time he retired.

  • Anonymous

    Never read The Sun and never hav e. David Miliband and his wife went to the States where they made payment to adopt. It is not sanctimonious to mention this, you seem to  be the one with that problem Mr Lockhart.

    Sorry for the delay in replying – only just seen your dismal little message

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    If Labour is to build One Nation, it must be a safe and equal one for women

    By Ellie Cumbo

    Today End Violence Against Women (EVAW) releases a new report auditing the Government’s progress in acting to prevent violence against women and girls. And with the revelations from Operation Yewtree and group exploitation cases set to roll on for many months , we hope the response from Parliament, policy-makers and the media will be unanimous : that prevention must be at the top of the priority list for any government, of any colour, from now on. On that basis, it’s [...]

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