Wednesday, 8 July 2015

The Benefit Cap Already Costs the Tax Payer 1 Billion: A Tale of 'Larger Families'.

The Benefit Cap Already Costs the Tax Payer 1 Billion: A Tale of 'Larger Families'.

Long post, but apart from the ethics, learn why the country hasn't saved a penny from all of the changes in benefits (and this post only deals with housing). 

Let me tell you a story. A few years ago, my friend's partner was made redundant from his long term job (lets call them Julia and John). They had 3 children and an adult son living with them (who was unemployed at the time). 

Julia told me that they were managing quite well on benefits; it wasn't the same, but they certainly weren't going without anything necessary, and of course, John was looking for work nonetheless. After a little while, the same company John had worked for had a new position available, so he started back to work again.

We have recently learned that the benefit cap outside London is being reduced to £20,000. Rightly so you might think; £20,000 is still a lot of money (for some), and much more than minimum wage. If Julia's partner was newly unemployed though, or newly employed in a low paying job, they would now have to find around £5,200 a year for rent here (more in the private sector), and not only that, but their main tax credits income would also reduce. 

£14,000 to keep 6 people nevertheless is not a lot of money; it works out at less than Jobseeker's Allowance for each person. You may say that they're only children, so it doesn't count the same way, but children cost a lot more than adults to keep. Adults can use the same clothes and shoes for years on end (I do), but just keeping children in good shoes can cost a fortune. Even a spendthrift adult would find it hard to run a large household on such an income. Most people certainly do not cope financially with Job Seeker Allowance levels. As we know, the £26,000 in benefits that is often quoted, applies where rents are much higher; people still only get a standard benefit rate that is set across the whole country.

People have become very angry about larger families where no one works, which is understandable as the majority of the UK people work, and work very hard, whilst also bringing up a family. The numbers of larger families nevertheless are very small (there were only 130 families claiming benefits where there are 10 or more children in 2011 - The Economist; I will look for further statistics!) in comparison to the numbers of unemployed who haven't got large families, though of course, however big the family is, they should obviously be looking for work.

But the government have (perhaps) solved the problem of big families by bringing in laws from 2017 that will limit benefits to 2 children; it's perhaps something governments should have thought about many years ago, and would certainly be a deterrent to some, though inevitably it won't deter others. 

It's the age old thing of 'deserving' and 'undeserving'. If my friend's family were again thrown into unemployment, what would happen to the children then? People say that there has to be some kind of differentiation in that case since it's hardly fair to penalise a family who have always worked; it's not the children who are at fault! But we can equally say that it isn't the children who are at fault in families who have not done enough to look for work, and it's this that concerns many analysts when governments decide to differentiate like this, or limit benefits to a certain number of children. Time will only tell if limiting benefits to these families is some kind of incentive.

But going back to the cap, if these are the consequences to those in areas that are cheaper to live in, then can you imagine what will happen to people in places like London? Already, 50,000 London families, many who were already working, were forced to leave their homes during the last 5 years due to the existing benefit cap, and few have found work - perhaps just a few thousand - who would have found work anyway.

As it said in the Guardian newspaper today:

Their own civil servants have already advised them that 40,000 more children would fall into poverty as a result of extending the cap (this is likely to be a woeful underestimate of the true figure). They were warned in March by the supreme court that the cap was in breach of the UK’s international obligations on children’s rights. ”

And you think that this is going to save the government billions of pounds? A housing specialist – who is often quoted in the main stream media – wrote this on his blog:

The Bedroom Tax reduces Housing Benefit paid at source – failure

The Benefit Cap reduces Housing Benefit paid at source – failure 

The LHA cap reduces Housing Benefit at source – failure

The SAR cap reduces Housing Benefit at source – failure

The same IFS think tank in the same report all of the newspapers and TV and other media are using for these games said about Housing Benefit that:

ifs hb real terms

“…real housing benefit was still £1 billion higher…“

That means very simply that the bedroom tax, the benefit cap the LHA and SAR caps which all had the explicit purpose of reducing the cost of Housing Benefit failed.

Despite the misery we have seen and will continue to see in the bedroom tax and the pain and misery it brings to 462,896 households and the 1.08 million men women and children who live in these bedroom tax households – a city the size of Birmingham no less – all of that pain has been for NOTHING.

All of the evictions and people losing their home, the family home, and men women and children forcibly made homeless by the bedroom tax and the benefit cap and the LHA cap have all been for NOTHING

All of the men woman and children who have skipped meals and not put on the heating as they could not afford it and put their physical and mental heath in danger because of these misnamed ‘reforms’ has all been for NOTHING

The government know the outcome, but the fact is that they don't care; don't give one hoot if the previous benefit cap level cost them more than 1 billion pounds. They knew people would be behind them and wouldn't consider that it was rents in certain city areas that were too high, not benefits.

It is regularly said by this government, that people claiming benefits shouldn't be getting more than people in work, but the fact is, that whilst benefits used to rise in line with inflation, minimum wage didn't; if it had minimum wage would be £18 per hour by now. Working families wouldn't need tax credits or housing benefit to top up their low wages, and tax revenue would mean that those who couldn't work would be adequately provided for.

The fact is that there are hardly any jobs; 4 million people chasing 700,000 jobs, 6 million if you count the disabled who are 'encouraged' into work. You can try and starve people into work; perhaps that works to a certain extent, but ultimately, we have to ask if this is ethical/moral when there is not enough work to go around, and especially if there are children involved. This is why the U.K. is under investigation by the U.N. at present, which has never happened before to a western state. 

We need a new system that is fair to all nonetheless. It isn't fair that some work until they drop, whilst others play the system. But it also isn't fair to make millions pay for the lack of effort shown by a few. In the end, what happens to the children of families involved is this age-old 'deserving/undeserving' dichotomy - despite the change in the budget - will likely be a heated point of debate by people for many years to come.

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