Getting real about the benefit cap

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…