The Benefit Cap SAVES money??

There is so much wrong with the Conservatives approach to the reform of Housing Benefit and let’s be very specific as by ‘reform’ I mean Conservative policies all aimed at reducing the cost of Housing Benefit.

  • The cost of Housing Benefit has increased under the Tories watch
  • The cost of Housing Benefit has increased in real terms under the Tories.
  • The taxpayer pays more in tax to pay for the increased cost of paying for Housing Benefit

All of the above statements are correct and factually correct and all of the purported welfare reforms (which without irony means to improve) that are aimed at reducing the cost of Housing Benefit have failed

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 Institute of Fiscal Studies or IFS, a think tank whose name and opinion have been all over the papers, our TV screens and on social media in saying if the Chancellor’s Budget sees a cut in Benefit A he will save X and if he cuts Benefit B he will save Y .

It has almost become a national sport with the media asking in article after article “What benefit would you cut to save £12 bn?”  and the IFS think tank is omnipresent in all of the games.

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.

It means that despite the deductions taken at source by reducing Housing Benefit to bedroom taxed households and to benefit capped households the cost – in real terms – of Housing Benefit increased and did not fall.

The cost to every taxpayer went up because collectively these policies failed.

In real terms allows for inflation as rents have increased.  It allows for a full like for like comparison even though the number of claimants has changed.  It means that taking into consideration all factors that when we  compare the official Housing Benefit overall cost the Conservatives inherited from Labour in May 2010 with the latest official Housing Benefit cost figures we have for February 2015 that the cost has INCREASED on a like for like basis.

I don’t much care for the IFS figure as they give no substantiation for it and a few months back before the above IFS report from May I did a detailed comparison here and found the increased cost to be £440 million per year more.

Additionally the reasons they ascribe for the increased costs do not bear out as private sector housing benefit now has a smaller proportion of the HB bill than at 2010 and HAs now receive more in HB than private landlords in actual and real terms although private landlords do receive 24% for each claimant on average. Moreover the real increase is the in-work claimant who now receives £5.3 billion per year in housing benefit compared to £2.8 billion in May 2010 and for a stark comparison the total JSA bill or dole is £4.3 billion so the in-work HB claimant gets £1 billion per year more than all claiming and receiving dole.

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

Tomorrow sees George Osborne’s budget and he has already said he will reduce the overall benefit cap from £500 per week to £440 per week in London and the South East and to £400 per week in the rest of the country.

A cap SHOULD logically mean that the cost is curtailed and reduces.  Yet the existing overall benefit cap, the Local Housing Allowance cap and the SAR cap have all seen the Housing Benefit bill increase and that is because Housing Benefit by direct consequence of these caps increases in other areas.  That is the ONLY answer for this conundrum of how a cap increases the overall cost.

So when in 24 hours you watch or hear or read about George Osborne in his budget saying a further reduction in the benefit cap will SAVE money you can and must take such an assertion with a crystalline


The strong likelihood is a reduction in the benefit cap will cause a significant INCREASE in the overall cost of Housing Benefit and an increase that can only come from the general public in increased taxation.

What I can say with absolute certainty is that the benefit cap reduction will see a monumental increase in the numbers of CHILDREN made homeless.

What I can say againwith absolute certainty is that the benefit cap reduction will see huge numbers of those unable to work being made homeless and working is the only way to avoid the benefit cap is you are of working age and in receipt of SEVERE DISABLEMENT ALLOWANCE or INCAPACITY BENEFIT whose names are self explanatory and mean you are unable to work.

On Sunday George Osborne said on the Marr BBC show that the reduced benefit cap will come into force and be part of his budget and also said that the benefit cap is FAIR.

What could possibly be FAIR about a policy that says work or you and your children will be evicted when that person is unable to work and in receipt of severe disablement allowance or incapacity benefit?

There are 166,000 SDA claimants and 137,000 IB claimants as well as 1.62 million ESA claimants (IB has been replaced by ESA) and what about the 1.15 million who get Carers Allowance who largely are unable to work because they care for a family member and save the country BILLIONS per year in doing that thankless task we all hope we would do in that situation – care for a family member.

All of these families will cost you the taxpayer more in both national taxes and local taxes as much of this hugely increased cost will fall on local councils.

That increase LA costs will run into billions per year so not only does this mean the highest permissible council tax increase next year and every subsequent year, but also far fewer libraries and bin collections and other core LA services will have to go.


6 thoughts on “The Benefit Cap SAVES money??

  1. So, exactly what the hell do we do?? We have no choice but to accept what they are going to do to us and deal with the consequences.
    Have they taken notice of the recent Austerity march’s?? NO.
    How about all the people that have already died due to their policies?? NO. They don’t give a toss.
    People having to go to food banks?? NO. They don’t care.
    So, many people are going to be pushed to the brink, after this Budget.
    You can quote all the figures you want. It will make NO difference to them.
    One thing you can be sure of, is that more people are going to die.
    Mental Health services, are already, underfunded.

  2. As if the austerity measures aren’t bad enough, ill thought out and ineffective as they are, causing suffering for recipients of welfare benefits, now we know they are actually failing to save money. I am annoyed, but in no position to change anything. I’ve joined campaign groups, spoken out at meetings etc etc. What to do next?

  3. When are the 90% of people in the world controlled by idiotic governments like ours going to realise that until people band together we will always be treated as the rich man`s slaves because we have always allowed them to divide and conquer. There is not one political party that really cares what happens to the majority of the population, its always been the same, first it was strength and power, then education, then religion and now it is just money buying political power. The rest just mill about like sheep saying what can we do, the answer is use your vote wisely vote out the idiots, and control your own lives before we have martial law and total control of this world.

Please leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s