Five reasons why the government’s Benefits Cap should be opposed

4:21 pm - July 22nd 2013

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by Matthew Whittley

Last Monday saw the introduction of the benefit cap, the latest of the coalition’s welfare reforms. The cap limits the amount a household can claim in benefits while out of work, regardless of need. The 40,000 families affected will lose on average £93 a week.

Some of the effects will be:

a) It might be possible for some households to scrape together the £14 a week needed to pay the bedroom tax, but those hit by the benefit cap stand no chance. It won’t take long for people to run up arrears and be evicted. Many will end up in temporary accommodation at great cost to the taxpayer.

b) Because of high housing costs, London and the South East will be hit the hardest. Very shortly we will see large numbers of families migrating north, to places with which they have no connection and know no one, because their housing benefit will no longer be sufficient to cover sky-high rents. Some London councils have already relocated residents as far away as Blackpool and Newcastle.

c) By exporting poverty out of the London, this policy will be the final nail in the coffin of mixed communities in the capital. It doesn’t take the foresight of Nostrodamus to fast forward a decade and envisage London looking more like Paris, with the affluent living in the city and the poor pushed out to the suburbs. And we know from Paris, where civil unrest occurs with alarming regularity, that segregation breeds social tensions.

d) It won’t save much money. The Treasury estimates the cap will shave off just £110m a year from a total benefits bill of £159bn. And some believe that to be an optimistic forecast. A leaked letter from the office of Eric Pickles expresses concern that ‘the policy as it stands will generate a net cost’ when the additional cost of homelessness and temporary accommodation is accounted for.

e) The cap will do nothing to bring down the benefits bill because it does nothing to address the root causes of why we’re spending so much on benefits. In London, because rents are so high, housing benefit paid to landlords now accounts for over half of all working age benefits in the city. This is a result of the chronic undersupply of affordable housing. The only way to meaningfully reduce welfare expenditure is to build more homes and create decently paid jobs.

Essentially, it’s a cynical political manoeuvre designed to box Labour into a corner and reinforce the strivers versus skivers narrative by setting the working poor against the unemployed. But we know that at least 70% of those impacted are not feckless scroungers – because they are children. The government’s own impact assessment acknowledges that 140,000 children live in households that will be capped.

And it isn’t fair because it’s a false comparison; it doesn’t compare like with like. The cap is based on average earnings, but a household with a high rent or large family earning £26,000 a year in work – the level the cap is set at – will also be in receipt of benefits, such as tax credits and housing and child benefit, taking their income above £26,000.

The cap is no more than a symbol. For someone who claims to have spent much of the last decade working to alleviate poverty, Iain Duncan Smith should know better than to use the most disadvantaged as a political football.

Matthew Whittley is a researcher for a midlands-based housing association and a Labour party member’

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Reader comments

1. Norman Mailer

The cap is an ideological attempt to alter the geography of the South East in accordance with economic doctrine. Whats wrong with that. If people have large families why shouldnt they expect to pay for them? What’s so special about mixed communities?
Isnt moving to somewhere cheaper alleviating ones own poverty?
I can understand the issue of domestic staff being an issue however.

2. Churm Rincewind

Although I agree that the Benefits Cap is bonkers and gesture politics at its worst, I can’t see that it’s a bad thing for people to leave high-cost areas in the South East for lower-cost areas further North if they choose to do so.

The idea that because the South East is more expensive than the rest of the country then benefits should be higher, seems to me to compound the problem rather than to solve it.

3. alienfromzog

@2 Partly.
But capital cities are always more expensive than other places and I think that is partly unavoidable. Furthermore the wider effects of pricing people out of a certain area are quite significant. Where will the nurses and teachers live? What about the cleaning and clerical staff who work in the city? At some point the cost of living/cost of transport become prohibitive and then these jobs remain unfilled. This has knock-on economic effects and I am sure will end up costing far more than this piece of gesture-politics saves. And that’s in addition to the direct costs caused by making people homeless.


4. Man on Clapham Omnibus

3. alienfromzog

Exactly my point. If all the poor people get shunted off the north where am I going to get my cheap labour from!

In 2004, economist Kate Barker concluded her review into the UK’s housing. She said we needed to build 250,000 homes every year for 25 years to satisfy demand and avert a housing crisis. In 2007 the government set a target of 240,000 homes to be built per year. This target was not met.

On average 164k dwellings have been completed each year since 2004, but there has been a steep decline since a 2007 peak of 211k (compare to 2012’s 101k). Private enterprise built the vast majority, with housing associations and local authorities respectively coming second and a very distant third.

Housing benefit comprises just over 10% of the DWP’s benefits bill (note: HMRC pays child benefit and tax credits) and is a wealth transfer from the public purse to landlords. Credit availability and scarcity skyrockets house prices.

Sure, we can move people about but there aren’t enough places for them to live.

6. CloseShave

@ 3
The out-of-touch multiple buy-to-let MP’s don’t care!

Their kids go to private skool and have private health insurance!

Such things don’t MA-TT-ER to them in ‘their’ world of genocidal wickedness!



Surely you will get a brand new supply of cheap labour in the form of immigrants who will swarm to fill previously ‘under occupied’ houses? Isn’t that the whole point of the benefit cap; to empty previously half empty houses with immigrant labour who normally fill houses to the rafters?

As the recovery continues and employment rises we will continue to see an influx of new immigrants, displacing residents from the labour market as they cannot/will not afford to live in high rent areas of the Country

9. Derek Hattons Tailor

What I don’t understand is why the taxpayer should pay people who don’t have a job to live in one of the most expensive and overcrowded cities in the world. This whole protest smacks of metro liberal hypocrisy, you want “the poor” in London to serve your lattes and clean your toilets, but want the taxpayer to subsidise their housing costs. The very same housing costs that will enable you to sell up at a massive profit and leave London to buy a place in the country once you have kids.

DHT, you’re addressing a surface issue. The fact is that people have to live somewhere but there are not enough homes. Anywhere.

If local authorities built homes and charged low rents housing costs would decline (and as a consequence so would the cost of housing benefit).

What I don’t understand is why the taxpayer should pay people who don’t have a job to live in one of the most expensive and overcrowded cities in the world. This whole protest smacks of metro liberal hypocrisy, you want “the poor” in London to serve your lattes and clean your toilets,

I thought you said the people don’t have a job?

11. Man on Clapham Omnibus

9. Derek Hattons Tailor

I think there is a broader point. Sadly the left appear to be engaged in same space as the right if this site is anything to go by. It isnt about immigrants coming in overfilling houses thus,backfilling the low paid residents forced out of their homes or even the fact that these people are being forced out of there homes its about the capitalist intensification of property values being fought out amongst the citizenry of this country.
The politics of this is that rather question why property values are as they are the right and the so-called left wingers (the epistomological hangers on) are bathing in ideological deficit.

The agents in this matter are a lassie faire government and property owners out to make a killing. Those that dont want to play ball or cant because of low wages or cant because their income (part or whole) comes from the government have no option to leave,but these pressures are largely the result of a free for all market where everyone but the rich are(or will be) being screwed.

There is an answer – its called RENT CONTROL. That way the market is cooled down and people wont be asked to pay ridiculous rents. It would also disincentivise older people from buying to rent to screw those trying to buy a place.

Moreover if we are now gonna have placards being driven around asking us to shop illegal immigrants (stars on jackets will be the next thing!)maybe we should also have residency requirement for home ownership in the UK which means those individuals wishing to hedge against there own dwindling currencies and economies can go somewhere else.

Rather than goosestepping our way into oblivion maybe the left might take an opportunity to some leadership for a change.

12. Richard G

Lib Dem MP Andrew George provided an intriguing twist on the Benefits Cap issue in prime ministers questions:

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