I am still amazed at the naivety of the general public or maybe I am grudgingly admiring the Tory-led coalition’s marketing strategy over the welfare benefit reforms. 76% are apparently in favour of the government reversing the welfare reform defeat from yesterday and the pithy ‘how dare you get more in benefits than the average wage’ seems to emanate from every news bulletin.
Currently the welfare benefit bill stands at £192bn per year and yesterday the savings sought were £290m per year. This £290m per year saving – assuming it is not all swallowed up in additional cost of homelessness – will take an average £83 per week from 67,000 families which comprise 94,000 adults and 200,000 or so children.
In reality we have placed 200,000+ children in poverty for a saving of 0.15% of the benefit bill. If the figures stay the same the welfare benefit bill will be 99.85% of what it is now, a whopping saving I’m sure you will agree!!
A major factor Joe Public doesn’t still get is that the impact is directly because of high rents in the private sector in and around London that will take these families above the overall benefit cap. Of course it’s not the first time that national policy has been set because of 16% of the housing supply in London, but it’s the most pernicious.
Some explanation is needed as to why it is London private sector rents that will cause this.
(a) National average rent levels in the private sector were £718 pcm in December 2011 and this includes London which increases the national average figure to this £165.71 per week. In London itself average private sector rent levels are far higher than this.
(b) Last year when HB reforms announced CIH and NHF produced research which was not contested to say that a family with 3 children gets a total of £317 per week in all benefits and reliefs and this excluded Housing Benefit.
Work out the maths (a) plus (b) above comes to £482.71 and is below the overall benefit cap (OBC) threshold of £500pw. Given that welfare benefits such as income Support, JSA and ESA are all the same rate anywhere in the country, unlike rents, then a non-working family with two adults in private sector accommodation with 3 children would not exceed the OBC. That example includes the highest form of rent and the lowest state of employment or in the usual jargon the workless and feckless scrounging off the state in the highest cost property.
The average private rental figure in London varies according to surveys but it usually stated to be between £1100 and £1200 per calendar month (though some have it as high as £1800pcm) and so taking a midpoint of £1150 this equates to about £266 per week which is we add on to the £317pw in all other benefits from the CIH /NHF figures comes to £583pw.
It is therefore the added cost of private rent in London that sees tenants break above the OBC and will be penalised. Tenants not in London are likely to see their overall benefit (welfare benefits and housing benefit) fall below the OBC.
Even the Bishops who launched the amendment argued that the Bill didn’t factor in children’s issues and they won their amendment to take Child Benefit out of the calculation. They too were misguided in that view and argument as this does discriminate against children in the capital but unlikely to elsewhere. The issue was and is not children it is the high rents charged in the private rented sector in the capital that is the issue.
Perhaps the Bishops and everyone else can be excused that oversight, although it is abundantly and unambiguously clear, by the fact the impact assessment was only published yesterday morning – an affront to democracy and parliamentary democracy if ever there was one.
Yet to return to my opening statement, we have had months and months of the government telling Joe Public (without having the full figures which were released yesterday anyone?) that it is outrageous that benefit claimant get on average a £35k per annum gross wage. That is a wonderful piece of propaganda of which Goebbels would have been proud and with 76% support in the public at large for putting 200,000+ children in poverty for a saving of 0.15% doesn’t back up the rhetoric and sophistry.
Finally this government could have sought to reduce the overall benefit bill by capping private rents at a more realistic figure yet the 3bed cap is £340pw or more than double the national average private rent figure! It chose not to out of political dogma an instead chose to spin some propaganda and blame ALL of those on benefits.
These same people have no choice on the level of rent which this government conveniently never said is decided by the private landlord. More importantly these tenants have no alternative such as choosing lower cost (and better standard) social housing due to a chronic shortage of supply. The government also conveniently forgot that these tenants that ‘play the system’ as they were labelled would surely have chosen the better quality and more secure social housing as part of ‘playing the system’ if that choice was open to them.
You don’t play the system to get an £83pw loss do you?