From the TUC

Housing Benefit and the Living Standards Crisis

31 Oct 2013, by in Labour market, Society & Welfare

The government claims that the Bedroom Tax and other cuts in Housing Benefit are needed to cope with a system that is “out of control”. In fact, spending on HB didn’t start to go up faster than rents until the recession began – and it’s the stagnant incomes of low paid workers that have been the biggest cause.

The government’s line is that these tough measures had to be brought in to re-establish control. There’s also the constant suggestion that only unemployed people will lose out because they’re the ones who have driven up the HB bill. The Prime Minister reflected this view earlier this year when Alison Seabeck, the MP for Plymouth Moor View tackled him about one of her constituents, who was hit by the Bedroom Tax:

I will happily look at the case that the hon. Lady mentions, but our reforms to housing benefit have a clear principle at their heart. There are many people in private rented accommodation who do not have housing benefit and cannot afford extra bedrooms. We have to get control of housing benefit. We are now spending, as a country, £23 billion on housing benefit, and we have to get that budget under control.

And it’s certainly true that, if you look at the government’s benefit cuts, a lot of them target Housing Benefit: the Bedroom Tax is only the best known. The Benefit Cap, which mainly hits the Housing Benefit of larger families, is the most mean-minded: three quarters of those who lose out are children. And there have been a series of small but painful changes: ending the freeze on non-dependent deductions, various caps on the maximum rate of HB, extending the “shared room” requirement from under-25s to under-35s and moving to uprating the benefit in line with the Consumer Price Index even if rents are actually going up faster.

And it’s certainly true that the Housing Benefit bill has shot up: between 2000/01 and 2011/12, spending on the benefit rose from £11.2 to £22.8 billion. But this isn’t because there’s been a constant rise in the number of people relying on Housing Benefit. If we look at the numbers on HB, this was very steady until the recession hit:

HB1

Until the recession, the best match for rising spending on Housing Benefit was the increase in rents (*). In the chart below, private rents, local authority rents and HB expenditure are all indexed to 2000/01, and it’s clear that, again, total spending and the level of rents were in step with each other until the recession:

HB2The government loves to blame this sort of thing on unemployed people, but that doesn’t really wash. The other big change has been in the proportion of Housing Benefit claimants who claim because their wages aren’t enough to pay the rent:

HB3This proportion has risen ten percentage points since the start of the recession.

The government has this story wrong: spending on HB was bound to go up because rents have gone up. The caseload went up when the country went in to recession: a sign of the system working as it is supposed to. But one thing that definitely should worry us is the fact that, five years after the crash, wages are still so low that a quarter of the people on HB are in work.

(*) Rents are figures, local authority rents are for UK (table 701), private rents are for England (table 704).

3 Responses to Housing Benefit and the Living Standards Crisis

  1. A John Coles
    Nov 1st 2013, 5:15 pm

    This whole mess is being made far worse by the Governments allowing firms to either pay low wages or no wages. Then having to make up the barest minimum of wages out of the benefit system

    Pay people a living wage, getting them off benefits, buying more goods so that life can move on for everyone. Not for the tiny majority, as now is.

  2. Cheap Ugg Kensington Uk
    Nov 28th 2013, 11:59 pm

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  3. Anthony Dawson, Ayrshire Photographer
    Dec 2nd 2013, 4:17 pm

    This government is one of self interest. Those few still alive who lived through the depression of the 30’s will tell you, the ideology that kept people homeless, starving, wondering the frozen streets by day and sleeping on the cold floors of a hall at night, is very much present.

    An attitude of contempt and lies. To justify the unjustifiable, to think themselves above law and retribution.

    Some go along with it, stupidly. Others are so worried for their own life they have no time to think about government corruption, others try fighting the system with the system which as has been proven by the comments of Ian Duncan Smith is considered a “publicity stunt” to be fodder, and some fight outside of the system who are then branded terrorists.

    What is certain now, no matter who you vote for at Westminster, they all went to the same schools, know the same people, have the same vested interests and its all about improving their lives, not the electorate.