The benefits cap – Response to Gordon Birtwistle

Just a brief post to rebutt some of the distortions and misleading representations that were made today in the course of the debate over the cap on welfare payments. I’m choosing to respond to Gordon Birtwistle’s arguments in particular partly because he’s the MP for the place where I grew up and I object strongly to the way he claimed to speaking for the people of Burnley, a place that I know well enough to know it has a diversity of opinion on welfare issues, particularly because it has been on the frontline of benefit reform recently, but also because his arguments illustrate par excellence those made today by many Tory and Lib Dem MPs.

On BBC Radio 4’s The World Tonight this evening, Birtwistle – PPS to Treasury Chief Secretary Danny Alexander – was wheeled out to make the case for the government’s proposed benefits cap of £26,000 per year.

For starters, Birtwistle made the same disingenuous comparison between a single person’s average earning – for Burnley, £14,000 – and the £26, 000 figure, which applies to the benefit income of a whole family with two non-working parents.  A Burnley family  lucky enough to have both parents working full time (and, by the way, there are 250 Jobcentre Plus vacancies for the 6300 Burnley people who want a job, even worse than the the 2.5m people nationally after 500,00 jobs) would be earning more.

The heart of the problem of the £26,000 figure is not, as Birtwistle and a number of other coalition MPs implied, people being too lazy to work and having too many children, but the exorbitantly high cost of renting property in some areas of the country – particularly London. As the BBC showed in its neat little worked example, half the cost comes from housing benefit. A family with just three children suffering the misfortune of the unemployment of both parents recieves £678 in benefit, £340 of which goes into the pockets of their landlord.  A £26,000 cap would reduce their weekly income by £178, which the government claims is reasonable because the family can move to a smaller home.     This is much easier said than done, though: there a huge undersupply of affordable housing (not helped by the collapse of the building of affordable homes under the coalition) and of social housing, which is, of course, a result of the mass selling-off council homes in the 1980s and 1990s under the Right to Buy and the failure to replace them. It is also worth pointing out here that it is simply not true – again, as many MPs seem to be insinuating –that such families are headed by parents who have not done a day’s work in their lives – if this was the case they would be classed as poor enough to be provided with a social home: those at risk from the cap are people who have previously worked but lost their job and thus have been too well-off to get a social home but not well-off enough to be unsupported, therefore needing assistance paying their rent.

Even the Lib Dems’ own policy experts say that the cap will be a disaster. The Lib Dem think tank Centreform’s chief economist warns that it could leave families with just pennies a day to live on: “Cutting housing benefit to £100 a week – which is broadly what the cap means if you have four children – makes life impossible. After rent, council tax and utilities, a family with four children would have 62p per person per day to live on. That is physically impossible.”*

The result? More than 100,00 children could slip into poverty and 20,000 people could be made homeless, at a huge cost to local councils. Even the coalition’s own Eric Pickles said it could actually result in a net cost.

None of that, though, would compare to what might happen if Birtwistle had his way. On BBC Radio Lancashire this morning he said that the cap should be even lower, at £20,000. Where he got this figure from, I don’t know, but if about 65,000 families would be affected by a £26,000 cap, then this would be far, far more if it were lower by how much he suggested.

This is not just, as coalition figures suggested today, a symbolic gesture that will send welfare claimants a message about the limits of the welfare state without hurting people: it could have a disastrous affect on tens of thousands of families. Birtwistle and his colleagues should think about this before they go on the radio again to pontificate about a policy they don’t appear to fully understand the consequences of.

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*I’m not, by the way, convinced that this is a problem only in big cities with high average rents. As it so punishes larger families, it could affect areas with much lower housing costs, as Leunig suggests. A family with two previously working household heads and four children living in area even like Burnley – which has relatively low housing costs – would struggle to afford a four bedroom home on that £95/£100 figure.

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One thought on “The benefits cap – Response to Gordon Birtwistle

  1. Great point, well made Dan. As a fellow Lancastrian I think it is important to highlight that whilst most press criticism of the Bill draws on the cost of housing in London, there will be an impact in most places which most people will be able to see and experience. Prior to these reforms there have been amendments to the way housing benefit is administered, one of the main issues being the recategorisation of maximum payments for housing benefit claimaints based on the average rentals in an extended geographical location. This itself caused many problems for claimants in areas such as South Ribble (for example) as the average household amount available was lowered when the geographical average area was expanded to include East Lancashire average rents. As such many families in areas outside the lowest rental values found it increasingly difficult to find a home which met the lowered rental amounts available through housing benefit. Whilst I use the Lancashire example above this issue could and in many cases did affect many parts of the UK. These issues have been negotiated at the local government level where the housing benefit is administered and, as yet, the spatial outcome has yet to be known. Clearly many families move to where the rent is within the housing benefit amount and as such, housing benefit claimants are increasingly becoming clustered together in low-income neighbourhoods. If we now add to this the reforms outlined in the Welfare Reform Bill which you discuss above it calls for a great deal of research into the spatial and social increase in ‘ghettoisation’ through the design and implementation of Housing Benefit. Years of research have already shown us that there are very different life chances for many people based on where they grew up and the support they received as a child (i.e. the postcode lottery discussions). As such, your point about the possible net increase in financial and social costs in the future from these reforms today appears most likely and one which will be intensified through the proposals in the new system.

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