Government admits cutting benefits won’t increase employment


11:00 am - January 13th 2011

by Don Paskini    


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On Monday, Labour MP Nic Dakin said in the House of Commons:

To ask the Secretary of State for Work and Pensions what evidence he used to determine that planned changes to housing benefit for those out of work for over 12 months will increase employment levels.

Guess what he got in response…

Libdem MP Steve Webb replied:

We did not make any specific assumptions about the impact on employment levels of this measure. Research shows that the reasons for long term unemployment are complex.

However we believe reducing housing benefit after 12 months will provide an additional financial incentive for jobseekers to take up work.

So the government has no evidence that cutting benefits for people unemployed for more than one year will impact on employment levels, but they are going to cross their fingers and hope that the fear of becoming homeless will force people into work.

That’s evidence based policy is it?

In other news, their Universal Credit scheme (which will add nearly £2 billion to the welfare bill) will make 1.4 million people worse off, increase marginal tax rates and reduce work incentives for 1.8 million people, and penalise savers and lone parents.

The government is yet to explain how the Credit will interact with housing or caring costs, and they currently plan to require every local council to set its own rules on who is eligible for council tax benefit, which will make the benefits system even more complicated.

And the whole thing relies on setting up an earnings database which tracks people’s earnings on a real time basis – which itself is going to be set up on the cheap after the Treasury slashed the amount of money available for it.

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About the author
Don Paskini is deputy-editor of LC. He also blogs at donpaskini. He is on twitter as @donpaskini
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Story Filed Under: Blog ,Fight the cuts ,Westminster

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Reader comments


People need protecting from this Evil so called Coalition and their half baked policies that have not been thought out. All this Evil Coalition is going to do, is create complete and total misery to the less fortunate in society ! No wonder Nick Clegg said to his fellow Liberal Democrats during the tuition vote ” We must walk through fire together ” because they have stept into hell and hopefully they will Burn in Hell. This so called Coalition is a Diabolical Mess that is hell bent on creating misery and needs to be stopped.

Thanks Don – cutting housing benefit is one of the most savage things enacted by this government.

There is a national protest day against benefit cuts on the 24th January. More information can be found at these sites:

http://benefitclaimantsfightback.wordpress.com/

http://imspasticus.posterous.com/target-atos-origin-and-the-poverty-pimps

http://www.facebook.com/event.php?eid=173084439389460

Also, Maria Cunty Miller has released the green paper on changes to child support for children with seperated parents – comments are sought from lone parents among others who are affected and/or interested in this:

http://www.dwp.gov.uk/consultations/2011/strengthening-families.shtml

That’s ‘Government admits cutting housing benefit may or may not increase employment’. I suspect their opinion over unemployment benefits (for example) is different.

“The government is yet to explain how the Credit will interact with housing or caring costs,”

I was under the impression that it would all be replaced by universal credit, with the actual amounts calculated by the central system. So a person would enter their postcode, and the HB component of universal credit would be calculated.

5. Prince Hamlet

Absolutely disgusting. How any Lib Dem can support this most Conservative of policies is beyond me.

Can someone provide me of any evidence that anyone is going to be “made homeless” by these cuts?

Don’t you mean “made to live in a house that costs less than £1600 a month”? Savagery indeed!

Mr E – It’s dishonest to pretend the changes are merely about capping HB at £1600 a month. Even now it is very rare for somebody to qualify for that rate (you have to have loads of kids, a disability etc). There are a whole series of changes proposed, and these changes have to be looked at culmilatively in terms of their impact.

The analysis that these changes will lead to a massive increase in hoemlessness is shared by Chartered Institute of Housing, the national housing federation, Shelter, crisis and vitually every organisation in the housing sector including every local authority housing department that is going to have to deal with the fall out.

See these reports from the Cambridge Centre for housing and planning research: http://www.cchpr.landecon.cam.ac.uk/outputs/detail.asp?OutputID=240
http://www.cchpr.landecon.cam.ac.uk/outputs/detail.asp?OutputID=234

“Using the simulation and data from past studies of landlord tenant behaviour, we estimate that between 136,000 and 269,000 households will find their rent payments unmanageable as a result of the measures, and project that half of those will be unable to sustain their tenancy and so will be evicted or will move involuntarily. These include up to 21,000 elderly households and 72,000 families with children. We show that the increased sums available for discretionary payments are unlikely to be sufficient to meet the needs of all those whose housing is at risk.”

8. alienfromzog

@6

You asked for evidence. Planeshift has provided it.

What you have demonstrated is that Osborne’s strategy is working. The cap he introduced on HB is not the real story – it affects a very small minority and the return to the treasury is negligible.

However, that is the story. You clearly have not noticed all the other changes going on which will make a lot of people homeless. George will be so pleased.

AFZ

9. Luis Enrique

Don,

just found this. you might like it, if haven’t already seen it

http://www.ssa.gov/policy/docs/progdesc/ssptw/2010-2011/europe/index.html

Don,

For this to be a story, you need to show the bit where the cutting of housing benefits was claimed to reduce unemployment, which I obviously missed (or which no-one claimed, in which case this argument is against a straw man). Without it, this is claiming surprise that there is no know empirical link between two areas which are seperate.

But considering that housing benefit has not been cut for probably nigh-on twenty years (if then), then of course there is no known link between cutting housing benefit and unemployment – the only way to establish one would be to cut housing benefit and see what happens (and hope that the signal is clear).

And the whole thing relies on setting up an earnings database which tracks people’s earnings on a real time basis

Oh yeah, I can totally see that working…

Watchman, that very much sounds to me like a “what does this button do?” approach to social policy.

The link between the cuts and unemployment has been made by the conservatives, who have made the idea that work always pays central to the idea of their proposed reforms. They have defended their cuts to HB specifically on the grounds that people who work are allegedly fed up of paying for people who don’t to live in areas they can’t afford to rent. (nevermind that most recipients of HB work anyway).

Furthermore it has long been suggested by the free market right that one of the main reasons we have unemployment is that the existance of the welfare state prevents the labour market from clearing, so you need to cut welfare to increase employment.

“Oh yeah, I can totally see that working…”

If you read the white paper on welfare reform, there is a passage that reads along the lines of “our IT supplier assures us that such a system can be built by the time required and within budget”. Which at least demonstrates that the DWP have a sense of humour.

10 –

Mr Douglas Alexander: The right hon. Gentleman has just made a statement saying that this is not about punishing people. Can he reconcile that statement with his policy of cutting 10% of somebody’s housing benefit, when that person has done everything right, turned up for interviews, filled in applications and sought to secure jobs but alas, in a job market where five claimants chase every vacancy, has been unable to secure a job after 12 months?

Mr Duncan Smith: The realities of what we are bringing in around that will make the change happen. [Hon. Members: “What?”] Wait a minute-here is the real point. About 90% of all those who are unemployed are back into work within the year. That leaves us with a target of 10%. Remember that we are now bringing in the Work programme, which will work extensively with all the people in that category and return them to work. As I said to the right hon. Gentleman earlier, the changes we are making to the benefit system will make it much easier for those people to go back to work. My point is simply this: they will be achievable; they get rid of a disincentive to go to work, and we believe that they will actually work.

Hi planeshift,

“I was under the impression that it would all be replaced by universal credit, with the actual amounts calculated by the central system. So a person would enter their postcode, and the HB component of universal credit would be calculated.”

They haven’t got as far as that (e.g. do you treat mortgages the same way as rents?) From the white paper:

“There are many policy and operational issues to work through in respect of housing. The Government will work closely with Local Authorities and the housing sector as plans develop.

We will consider whether changes are needed to the current approach to calculating help with mortgage costs to ensure it is consistent with Universal Credit principles.

In the longer-term, we believe it should be possible to provide support more efficiently, and we will be exploring the full range of options.”

“The Government is carefully considering whether changes to Carer’s Allowance
will be necessary to take account of the introduction of Universal Credit and provide clearer, more effective support for carers.”

“The Government would welcome views from key stakeholders and will work with them to establish how support for childcare could best be delivered as part of, or alongside, Universal Credit. In developing options, the Government will take account of the evidence collected from recent pilots designed to test different ways of accessing the childcare element of Tax Credits.

As a minimum, it would be feasible to pay an additional element for childcare on top of the basic Universal Credit award, at similar rates to those currently offered, but to simplify the way costs are calculated and support is paid. If information about costs was collected through a self-service process this could improve the timeliness of support and reduce the scope for under and overpayments.

But there may be better approaches.”

Hi Luis,

Thank you – I shall spend a happy evening reading that 🙂

Don,

Thanks. However, on reading that I don’t think Mr Hague actually states that the cuts to housing benefit will achieve that on their own – he has a more holistic approach to the benefit system so he sees all the changes combined having an effect.

Mr Dakin’s question is therefore rather silly, since it is asking for information relating to only one of a related raft of changes (which do have empirical evidence as a whole). You can’t pick apart a fundamental programme of change thread by thread, because it is not just an adjustment to the existing system…

Planeshift,

I refuse to believe there is any other way of conducting government. Ultimately the only way of telling what will happen is to do it, and to do so for ideological reasons (i.e. belief) is at least honest, whilst so-called pragmatism (selecting ‘research’ (often not peer reviewed remember) which suits what you want do) is generally a sign of a government drifting, without purpose and without anything to offer.

“You can’t pick apart a fundamental programme of change thread by thread, because it is not just an adjustment to the existing system…”

Except USC is phased in from 2013 over a 5 year period. The cuts to HB apply from 2012 and will be operating until USC replaces everyone. Plus the cuts also get reflected in the housing compenant of new USC.

planeshift,

So the Housing Benefit cuts are not actually directly related to USC and therefore not primarily an attempt to reduce unemployment?

Anyway, I can see don’s point that there is no evidence for the link between reducing housing benefit and lowering unemployment; I just can’t see why anyone thinks there should be or would be…

“herefore not primarily an attempt to reduce unemployment?”

As don has said, and I noted earlier, they are being marketed as such

Planeshift,

You’ll need to show me where this is being done – Don’s example doesn’t actually show this being done, as it is ambiguous.

“You’ll need to show me where this is being done – Don’s example doesn’t actually show this being done, as it is ambiguous.”

OP – Steve Webb said, “we believe reducing housing benefit after 12 months will provide an additional financial incentive for jobseekers to take up work.”

24. Luis Enrique

“Steve Webb said, “we believe reducing housing benefit after 12 months will provide an additional financial incentive for jobseekers to take up work.”

that’s pretty uncontroversial isn’t it – anything that make life worse without a job is going to provide an additional incentive to take up work. The point is that if there aren’t any jobs out there, for most people this will just mean life without a job gets worse after 12 months.

Don

In other news, their Universal Credit scheme (which will add nearly £2 billion to the welfare bill) will make 1.4 million people worse off, increase marginal tax rates and reduce work incentives for 1.8 million people, and penalise savers and lone parents.

The government is yet to explain how the Credit will interact with housing or caring costs, and they currently plan to require every local council to set its own rules on who is eligible for council tax benefit, which will make the benefits system even more complicated.

Your synopsis of the IFS report to which you link is partial in the extreme. Did you think no one would read it?

Let me see if I can provide some balance.

The Universal Credit will dramatically change the welfare system for working age adults. If successful, it will make the welfare system more effective and
coherent……it has the potential to simplify the current complicated overlap between benefits and tax credits, making life easier for claimants and saving money currently wasted on administration and lost to fraud and error…….it will benefit poorer families more than richer ones, on average.

There are two points here – ‘cuts’ – and ‘unemployment.’ Tory led governments are always contemptuous of the unemployed – they are regarded only as statistics to be massaged and convenient scapegoats – not as people with feelings and needs and rights. Spending cuts on the other hand are the chief priority of this government of fair-mindedness and all-in-this-togetherness. However healthy the economy might have been in May 2010 – they would still have cut and cut with a vengeance. The bottom line is that, to Tories, only wars are worth spending limitless amounts of public money on – everything, and everyone, else is fair game. And the rotters must have their Tax Cuts – that again is only fair.

don,

Mr Webb said he believed this would work – not that there was any evidence. The problem here is that the lack of evidence only becomes an issue if someone has suggested that this would definetly work due to the evidence, rather than that they believed it would have that effect.

Anyway, surely the cut in housing benefit was simply to save money?

Mulligrub,

You know, cutting is indeed an ideological choice. But it is not simply a matter of tax cuts (especially considering that spending was outstripping receipts before the recession – i.e. in a period of growth) but rather of ensuring that in future government can spend its money on those who need it rather than on interest charges…

Whether you oppose cuts or nots, due you seriously expect me to believe that a government having to take more and more money to keep spending level due to the interest and repayments on the increasing borrowing is a good idea? Do you seriously believe this?

“The problem here is that the lack of evidence only becomes an issue if someone has suggested that this would definetly work due to the evidence, rather than that they believed it would have that effect.”

Well, some might argue that before bringing in a policy like this, the government should attempt to find some evidence that it might actually do some good.

The DWP instead now runs on “principles based policy”, where policy is based on Iain Duncan Smith’s ideas about what ought to happen if you fiddle about with the benefits system and slash benefits for millions.

Watchman – do you believe that cutting housing benefit for the most vulnerable in our society is the only way to reduce the housing benefit bill? Are you really that blinkered?

The DWP instead now runs on “principles based policy”, where policy is based on Iain Duncan Smith’s ideas about what ought to happen if you fiddle about with the benefits system and slash benefits for millions.

Yes, it’s certainly controversial. Imagine basing policy on principles and ideas.

We haven’t had much of that for a while……

“Principles” is entirely the wrong word in this case. Delusions would be far more appropriate

I think there is actually a lot to like in the USC proposals, but they aren’t as radical or revolutionary as IDS claims they are, and they need a great deal of work.


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