The Disingenuous Discourse of George Osbourne on Housing Benefit Reduction

“I am not going to hide hard choices from the British people or bury them in the small print of the Budget documents. You’re going to hear them straight from me, here in this speech.” Gideon Osbourne 22/06/2011

Budgets are notorious for the difficulties they cause commentators and pundits trying to work out the effects on “typical” families of the “government giveth – the government taketh” nexus. However, in trying to defend the indefensible cuts in housing benefits the government driven discourse has descended into a one sided disingenuous debate, that seeks to portray the unemployed as some champagne supping, free loading spongers living high on the hog, supported by massive state handouts in the form of housing benefit. A group that blows metaphorical raspberries at the poor down trodden employed who are worse off as they doggedly trudge to work to do a minimum wage job.

So, let us look a little more closely at the reductions in Housing Benefit, and the cause and potential catastrophic effect they will have on the unemployed who will be most affected. This is a cut in a benefit that the chancellor capped in the budget. Doing that put the focus of the discourse on the very top end of current housing benefit.

“And, lastly, we will for the first time introduce maximum limits on housing benefit – from £280 a week for a one-bedroom property to £400 a week for a four-bedroom or larger.”

The first thing most people would do when hearing these figures is go “£1200  a month for a one bedroom flat, that is outrageous” quite, if only it were so. The amount of money payable through housing benefit is calculated dependent on the area you live. The Chancellor has chosen to highlight central London prices, that are way above the national average, as this reinforces the public perception of benefits spongers wallowing in taxpayer funded luxury. Channel Four has checked some of the facts from the budget speech with the following results: “Today there are some families receiving £104,000 a year in housing benefit.” George Osborne, Budget 2010 speech.
There are – though not many. Latest figures from the Department for Work and Pensions reveal that just under 100 families got a payout of more than £100,000 a year”  Under a hundred families in a country of 60 million people highlighted in the budget, there is only one logical reason to highlight such a small sliver of society: to muddy the discourse ? As we are in the world of random statistics  being used for effect, let me tell you there are about  120,000 non doms in the UK who enjoy a favorable tax exemption, if we were to put up their one off payment from 30,000 to £50,000, that would raise £ 2.4 billion from the richest sector of our society: its easy being chancellor for a day.

“Different LHA rates will apply in different areas. Within those areas, they will be based on the median rent charged by landlords in the private sector for properties of various sizes.”

https://lha-direct.voa.gov.uk/Secure/Default.aspx

In the most simple of terms, all the rents for a type of property in a specified area are put together, say a one bed room flat and any excessively high or low rents are discarded, and a line is then draw at the mid point. So the level of housing benefit available for a one bedroom flat in that area would fall at the half way point, effectively making half of the rentable one bedroom properties in that area within the reach of the recipient of housing benefit. Not any more.

“2.50 From October 2011, Local Housing Allowance rates will be set at the 30th percentile of local rents. (29)”

I quote from the Red Book: so now only the bottom third of rental properties will be available to those reliant on housing benefit, leaving 66% of all rental properties beyond reach. Quite how this reduction will be implemented is a little unclear. While Gideon is happy to quote the very highest figures given in housing benefit, the more average figure is: “But the average housing benefit payment is much lower – just under £84 a week.” (Channel Four fact check blog)

A case study:

I have a friend, in his mid fifties,  on JSA who lives in a modest one bedroom flat in a more up market suburb of Birmingham, a choice made to enable him to care for his disabled mother, and see his children, who live on the local council estate. The LHA rate for his flat is £403.00 per month, the rent he pays is £450.00 per month. He funds the difference out of his JSA  of £260.00 per month.  If the median line is moved to 30% from 50%, it appears it will reduce the LHA by £80.00 per month for a one bedroom flat to £320.00 per month. The short fall would then become £130.00 per month. Exactly half of his monthly income that has to provide food, clothing, gas, electricity, travel to job interviews, etc etc.

But wait, it goes on, he has now been unemployed for over a year, so he will now lose 10% of his housing benefit:

“2.54 Housing Benefit awards will be reduced to 90 per cent of the initial award after 12 months for claimants receiving Jobseekers Allowance. This will be introduced in April 2013. (33)”

It appears his situation then will be to receive £288 per month to pay a rental of £450.00. his only other income is a monthly JSA payment of £260.00, if he makes up the shortfall in rent  it will leave him £98.00 a month to live on, or £24.50 per week.

Well he could always move house I here you say, well yes theoretically true, but moving house is a costly business, landlords want huge deposits, are ever more circumspect of the person on benefits, the cost of physically moving is hundreds of pounds, and when you have been living on £130 a month for an extended period you have been squeezed so tight for so long there are no more pips left. It would also increase travel costs to his mothers as only inner city properties would fall in his price range. Other negative effects would be for him to be socially isolated by removing him from the area he has lived his whole life. At this point we might want to ask ourselves if this is a fair budget, who else bar the unemployed are threatened with being, at worst, made homeless or at best suffering ghettoisation as they are forced into the cheapest housing stock in any given area. Perhaps we should ask what studies have been done that give a rounded analysis of the effects of treating people this way, the cost to the NHS as their mental and physical health suffers, the cost of  social care support care as the families struggle to cope as the financial pressure increases.

Back to the discourse then, so this outrageously lavish Housing benefit payment, why is it so costly, surely it is the bloody unemployed in their luxury homes that are to blame? A little secret, it is not tenants that put rents up, it is not tenants who receive housing benefit, it is er… LANDORDS. There I said it, nobody else has said it, Gideon doesn’t mention them, ever. All the heated debate about housing benefits never mentions them, perhaps housing benefit should be paid straight to the landlord, so we can remove the illusion that it benefits the tenant, apart from preventing them being homeless. Housing benefits are so high because of market forces, the more difficult it becomes to buy a property, the more in demand rented housing stock becomes:

“The average rent rose to £663 a month in April, 2.2pc higher than a year ago. The monthly increase for rent was 0.6pc, compared to just 0.4pc growth in house prices. This was the third consecutive monthly raise, according to research conducted by LSL Property Services”

(Telegraph 14/05/2010)

Another little hidden dagger is the new budget is this baby:

“2.54 Housing Benefit awards will be reduced to 90 per cent of the initial award after 12 months for claimants receiving Jobseekers Allowance. This will be introduced in April 2013. (33)”

Jobseekers Allowance is currently £65.45 for a single person, and £102.75 for a couple. The average rental as we know from the Telegraph is £663 a month, so it is reasonable to assume that if you lived in an average property an unemployed couple would lose £66.30  a month out of their monthly income of £411.00, a 16% reduction in income, so in this fair and equitable budget, who else has had to suffer a 16% reduction in income? Can’t see many hands raised out there…

Final point, the elephant in the blog, “they can always get a job” .

Well they could, but the government figures show it is now twice as hard as it was to find work two years ago:

“The ONS figures show there are now 5.2 unemployed people per vacancy (in February-April 2010) compared with 2.3 in March 2008.”

“The unemployment rate for the three months to April 2010 was 7.9 per cent, up 0.1 on the quarter. The number of unemployed people increased by 23,000 over the quarter to reach 2.47 million. The number of people unemployed for up to six months fell by 42,000, to reach 1.17 million. However, the number of people unemployed for more than twelve months increased by 85,000 over the quarter to reach 772,000, the highest figure since the three months to April 1997. There were 5.2 unemployed people per vacancy, up 0.1 on the quarter.”

This quarter alone 85,000 more people potentially became eligible for a 10% reduction in housing benefit.

Getting a job is difficult, the UK has not suddenly become a country of work shy slackers, world economic turmoil has produced the perfect storm of factors that make the situation of the unemployed the most difficult it has been for decades, it is a time when they need support till the storm is over, from the only place it can come from, their government. They do not need to bear a very disproportional of the burden, for that is how you break a society.

Aex Barker in the FT sees it this way: “The crackdown on the workshy only raises around £100m a year. But it is as tough as nails. It basically delivers an ultimatum to hundreds of thousands of long term unemployed: find a job or move house. This is the Cameroon version of “on yer bike”.

It is not the fault of the unemployed that rents are so high, it is landlord’s reaction to market conditions, and the acute lack of social housing.

It is not the fault of the unemployed that some people work for a wage that they cannot live on; it is their employers that create this situation.

It is not the unemployed that are responsible for the over 50% reduction in vacancies they can apply for in the last two years.

It is not fair that the very poorest people in the UK  are going to lose 10% of their subsistence allowance to landlords so they can avoid homelessness.

No other sector of UK society is threatened with homelessness as a result of this “fair” budget.

The nasty party are back, and this time they mean business, and they’ve got a new friend, Nasty Nick whose poised eloquence disappeared like politicians promises when challenged by John Humphrys on Today when he failed to address the fundamental question couched so succinctly by Humphrys :

“Why should the poorest ten per cent pay anything to get us out of this mess? They’re the poorest.”

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3 thoughts on “The Disingenuous Discourse of George Osbourne on Housing Benefit Reduction

  1. Pingback: Twitted by taniaglyde

  2. Dickster

    Very worrying: you hould only use these ‘welfare to work’ policies in a booming economy where there is erm, work. Reagan rolled back the Great Society set in motion by JFK and LBJ with disastrous consequences for much of ‘rust belt’ America. Clinton took some very radical steps against the back-drop of a booming economy and to an extent it did ‘work’ in changing a culture of welfare dependency in some areas and sections of society. But Clinton was born in the poorest state in the union and knew what he was talking about with the poor.
    It doesn’t matter so much though about being privately educated and generally privileged back-ground: this was true of Attlee and many of the British post-war reformers. But the point is they had worked and experienced life in the slums and this motivated and inspired them to go into politics. There is no evidence of Clegg, Cameron or Osborne going anywhere near deprived areas in their formative years, let alone living there or working amongst the poor. It seems the ConDem’s are determined to punish the poor for making the terrible mistake of being born poor and the unemployed for living in a time of a declining jobs’ market.

    Reply
  3. strummerman Post author

    “Perhaps we should ask what studies have been done that give a rounded analysis of the effects of treating people this way, the cost to the NHS as their mental and physical health suffers, the cost of social care support care as the families struggle to cope as the financial pressure increases.”

    Is it wrong to quote yourself in the bloggersphere? If i didn’t hate the word with all elemental force of anti-tweeness, I’d say it was serendipity that the BMJ published an article that addresses that very subject, a synopsis of the report is buried on the BBC website “Welfare cuts put added health strain on population”: http://news.bbc.co.uk/1/hi/health/10403797.stm

    The original BMJ article is here:http://www.bmj.com/cgi/content/full/340/jun24_1/c3311
    The following quote seems to be very pertinent to a debate predicated on economic expenditure, one that is not banging the drum of the unemployed are all welfare scrounging layabouts:

    “Nevertheless, the maintenance of social welfare programmes seems to be a key determinant of future population health that should be taken into account in ongoing economic debates.”

    Working for a Law Centre project that provides housing for new and expectant mothers who have no recourse to public funds, that is funded by the local PCT, to fight the effects of current UK BA policy of making certain categories of migrants and asylum seekers intentionally destitute, the following quote resonates deeply. For who can explain the sense of one government agency funding the voluntary sector to ameliorate the effects of the policies of another?

    “The delivery of public services in the UK is recognised to be impeded by pervasive silo mentalities, with interagency collaboration hampered by poor communication and different styles of operation.”

    The final paragraph makes one single point that should endure above all else, the principal task of a government is to protect the lives of its people:

    Sir Michael Marmot’s recent review on health inequalities in the United Kingdom concluded that “Austerity need not lead to retrenchment in the welfare state. Indeed, the opposite may be necessary.”7 The current economic difficulties could be viewed as an opportunity to reorganise provision of services to those in need, creating a broader set of services that reflect the increasingly complex needs of a society facing health challenges as varied as fast food and dementia. It would be unfortunate if this opportunity were wasted. If the first priority of a government is to protect the lives of its people, a statement often made in response to the perceived threat from terrorism,22 then it should take account of the implications of its economic policies for health.

    Reply

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