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| George Osborne, get your beady eye off the housing benefit budget | George Osborne, get your beady eye off the housing benefit budget |
| (about 5 hours later) | |
| Ahead of next week’s spending review, many households, councils and charities are wondering where George Osborne’s beady eye will fall. Not without reason: after years of cuts, Osborne aims to keep his manifesto promise to cut £12bn from already ravaged welfare spending. | Ahead of next week’s spending review, many households, councils and charities are wondering where George Osborne’s beady eye will fall. Not without reason: after years of cuts, Osborne aims to keep his manifesto promise to cut £12bn from already ravaged welfare spending. |
| Uncharacteristically roused from their usual slumber, the somnambulant House of Lords pushed back against Osborne’s plans to cut working families tax credits, leaving the government with a black eye, and suddenly scurrying to find the £4bn savings elsewhere. | Uncharacteristically roused from their usual slumber, the somnambulant House of Lords pushed back against Osborne’s plans to cut working families tax credits, leaving the government with a black eye, and suddenly scurrying to find the £4bn savings elsewhere. |
| Now, Osborne may have happened upon another, equally hare-brained way to make the savings. The Treasury is reportedly considering cutting housing benefit instead; research by the Institute for Public Policy Research confirms this would have an equally deleterious effect. The mooted cuts to housing benefit would mean £570 less a year for households in the private rented sector. Social housing tenants would also lose £460. | Now, Osborne may have happened upon another, equally hare-brained way to make the savings. The Treasury is reportedly considering cutting housing benefit instead; research by the Institute for Public Policy Research confirms this would have an equally deleterious effect. The mooted cuts to housing benefit would mean £570 less a year for households in the private rented sector. Social housing tenants would also lose £460. |
| Reducing housing benefit just forces people out of their homes and communities | Reducing housing benefit just forces people out of their homes and communities |
| This is on top of the cap on local housing allowance for private tenants, and the proposed rent cut of at least 1% for social housing tenants. Housing associations have already warned that they can’t take this financial hit without scrapping services such as women’s refuges, older people’s care, and the extensive pastoral care they provide, much of which is necessary because of swingeing cuts to local councils and services. Reducing housing benefit and local housing allowance doesn’t reduce market rents in an area: it just forces people out of their homes and communities. There is no incentive for private landlords to reduce their rents when so many people will pay out of sheer necessity. | This is on top of the cap on local housing allowance for private tenants, and the proposed rent cut of at least 1% for social housing tenants. Housing associations have already warned that they can’t take this financial hit without scrapping services such as women’s refuges, older people’s care, and the extensive pastoral care they provide, much of which is necessary because of swingeing cuts to local councils and services. Reducing housing benefit and local housing allowance doesn’t reduce market rents in an area: it just forces people out of their homes and communities. There is no incentive for private landlords to reduce their rents when so many people will pay out of sheer necessity. |
| Crucially, the 1% rent cut for social housing tenants is no windfall for those on low incomes: the vast majority of people in social housing claim housing benefit anyway, so the cut isn’t passed on. It merely reduces the Treasury’s spending on housing benefit, while massively impacting on social landlords’ income. Instead, housing associations will struggle to provide services and, crucially, to build new homes, and now low-earning tenants in work are facing cuts to their already insufficient income. | Crucially, the 1% rent cut for social housing tenants is no windfall for those on low incomes: the vast majority of people in social housing claim housing benefit anyway, so the cut isn’t passed on. It merely reduces the Treasury’s spending on housing benefit, while massively impacting on social landlords’ income. Instead, housing associations will struggle to provide services and, crucially, to build new homes, and now low-earning tenants in work are facing cuts to their already insufficient income. |
| The problem Osborne faces is writing cheques he simply can’t cash. Desperate for votes in the run up to the election, he announced unprecedented cuts in spending, then unexpectedly won, and had to set to work carrying out his fanciful promises. Work and pensions secretary Iain Duncan Smith – not known for bottomless empathy on behalf of the low paid and poverty-stricken – threatened to quit when Osborne considered cutting spending on the increasingly beleaguered universal credit scheme. | The problem Osborne faces is writing cheques he simply can’t cash. Desperate for votes in the run up to the election, he announced unprecedented cuts in spending, then unexpectedly won, and had to set to work carrying out his fanciful promises. Work and pensions secretary Iain Duncan Smith – not known for bottomless empathy on behalf of the low paid and poverty-stricken – threatened to quit when Osborne considered cutting spending on the increasingly beleaguered universal credit scheme. |
| Related: Tax credit cuts may well spark a turn against the Conservatives | Related: Tax credit cuts may well spark a turn against the Conservatives |
| Seemingly, the answer is to make people struggling to afford rent even worse off. It’s an idea that you’d assume was a joke, if the Conservatives weren’t experts at cutting mercilessly with no regard for possible consequences. The bedroom tax, cuts to council tax benefit, and the decimation of disability and sickness benefits have left millions of households in dire straits. Cutting even further will only increase homelessness, fuel poverty, food bank use and compound years of suffering. | Seemingly, the answer is to make people struggling to afford rent even worse off. It’s an idea that you’d assume was a joke, if the Conservatives weren’t experts at cutting mercilessly with no regard for possible consequences. The bedroom tax, cuts to council tax benefit, and the decimation of disability and sickness benefits have left millions of households in dire straits. Cutting even further will only increase homelessness, fuel poverty, food bank use and compound years of suffering. |
| Wealth inequality is booming in the UK: the Institute for Fiscal Studies reported this week that the poorest 1% of households are in over £16,000 of debt and 9% of households have no assets whatsoever, while the richest 1% have net wealth in excess of £2.4m. | |
| But rather than decide to tax the wealthy, Osborne’s preferred tactic is to hit the one in 10 asset-less households. The Conservatives’ legacy in office will most likely not be to have saved the economy, as Osborne might hope. Instead, it will be to make poverty endemic. | But rather than decide to tax the wealthy, Osborne’s preferred tactic is to hit the one in 10 asset-less households. The Conservatives’ legacy in office will most likely not be to have saved the economy, as Osborne might hope. Instead, it will be to make poverty endemic. |
| • This article was amended on 20 November 2015 to say that the richest 1% have net wealth in excess of £2.4m, instead of 2.4% as was originally incorrectly asserted. | |
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