The hoo-ha over axing child benefit for higher-rate taxpayers goes on – rightly, but for the wrong reasons. But it is extraordinary that what is a relatively minor detriment for the upper middle classes continues to attract blanket news whilst what is little short of catastrophe for working class jobless households – the cap on overall benefits – hardly rates a mention. It reflects once again the sad truth that the media doesn’t report the objective facts of what is happening, but rather on the interests and concerns of those with power. The same of course happens internationally: hurricanes only became real news when Katrina killed 1,000 Americans in New Orleans, not when a typhoon in the Bay of Bengal killed 138,000 persons in Bangladesh in 1991 – an event almost unknown in the West. So what is the Tories’ housing benefit cull about to inflict?
The total benefits of workless families will be capped at £500 a week. That might seem reasonable so long as one ignores the factors that are driving benefit levels sky-high. The key ones are the lack of new housebuilding, the non-availability of so-called ‘affordable’ social housing, the scarcity of rented property, and the consequential large rise in rents in recent years. As a result of all these pressures, average rents in many inner city areas, particularly London, often now reach £350 a week. Given the additional costs of food, clothing, transport, utility bills, etc. for a 2-3 child family, it is impossible to live on £500 a week.
Such families are going to have to move out – ‘downsize’ in the technocrats’ jargon – to the outer suburbs, look afresh for jobs in an area where they’re even less likely to find them, and move children into new schools with all the educational disruption involved. And what for? To save an estimated £300-400m, which is precisely 0.2% of the current budget deficit which is supposed to be driving the cuts. So why are the Tories doing it? Not because of the savings, but because it’s extremely popular with the Tory Party conference, and even more because it is symbolically setting a ceiling on the costs of the Welfare State which can be steadily screwed down tighter in future years.
The Treasury says 50,000 families will be hit (though this may well turn out to be an under-estimate) losing an average of £93 a week, though some will lose up to £300 a week (£15,000 a year) , i.e 3-nearly 10 times the loss for someone on £50,000 a year with 2 children. And all this is on top of the cap already imposed in the June Budget on local housing allowance (the equivalent of housing benefit in the private sector). Then Osborne announced that local housing allowance would be capped at 30% of average local rents, which London Councils believe will force out 82,000 families (about a quarter of a million people) from their homes.
Housing, for several other reasons as well, must be at the centr of Labour’s coming onslaught on the coalition.