Labour needs to confront the welfare reform crisis

By guest blogger Monimbo

Red Brick quite rightly castigated both Iain Duncan Smith for peddling more of his myths about housing benefit and Andrew Marr for failing to challenge him in his show on Sunday.  Full Fact has now examined IDS’s claims about people getting over £100,000 per year in housing benefit, showing that probably it amounts to five cases.  And as Polly Toynbee points out in Tuesday’s Guardian (‘Paying the minimum required for survival is only part of the cure for Britain’s dangerous levels of inequality’) it is not as if the money went to those families anyway, it went to the landlords who are raking it in and able to charge virtually any rent they like in the current shortage.

Andrew Marr not only failed to challenge the IDS myths, he didn’t even show how the IDS welfare reforms will hit people who are on the margins, whether unemployed or working.  These ‘reforms’ are going to do terrible damage, made worse by the fact that they are being staggered over a period of years. While this might (conceivably) make more administrative sense than a big-bang approach, it has two inescapable disadvantages.

One is that people are going to be hit by ‘reform’ after ‘reform’ affecting their benefits and their calculations about their earnings and rents if they are on low pay, so they will (perhaps) reconcile themselves to one only to be hit with the next.  The second problem, which of course for the government is a blessing, is that cumulative effects are harder to identify and publicise.  Both of these factors are made worse by the fact that not only are the reforms staggered over time, but they affect multiple benefits so people may be hit by a housing benefit change followed by a cut in council tax benefit followed by more changes linked to universal credit.  If it is difficult for professionals to keep up, for those at the receiving end it is going to seem like a never-ending maelstrom.

Your Homes Newcastle (the ALMO) has given one small example of the effects, on a single tenant called Joe.  He works when he can on ‘nil hour’ contracts, where he gets sent home if there is no work. Just at the moment he gets £67.50 in jobseeker’s allowance. He lives in a two-bed council flat – after paying his crisis loan of £2, water rates of £6, gas and electricity of £25, and TV license of £5.50 a week he is left with £28.90 to live on. From April 2013 he will lose £7.57 per week from housing benefit (through the bedroom tax) and have to pay £3 towards council tax. He will then have just £18.33 to live on.  If his flat carries any service charges that are ineligible for universal credit when he moves onto it, he will no longer be able to eat.

Let’s suppose Joe finds a regular part-time job on a low wage which restores or improves the amount he is left with each week.  Once universal credit comes along (and it will affect different people at different times, right up until 2017), he may well have to find a job with longer hours just to retain his new earnings.   Any claimant of working benefits will be required to meet an earnings threshold equal to national minimum pay rates for a 35-hour week, to be earned if necessary through working longer hours, getting their employer to increase their hourly wage or getting an extra job on top of their current one. Research by the Resolution Foundation shows that nearly 1.2 million working adults face losses under universal credit if they do not comply with new requirements.

As Polly Toynbee also says, ‘Labour is failing to challenge this government’s constant smears about idle scroungers’.  Most of the poor are already in work, struggling to juggle their benefits, tax credits and wages while paying ever increasing rents.  Labour is right to back the Living Wage, but it won’t begin to tackle the growing struggles that the working poor or would-be working face, unless it also shows how it will put a stop to the erosion of benefits and start to tackle the housing crisis. ‘Benefit cuts are popular for lack of Labour defending the already poor from cuts that send them into food-bank destitution.’  That’s Toynbee’s conclusion, and she is right.

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One Response to Labour needs to confront the welfare reform crisis

  1. Reblogged this on Socially Housed and commented:
    I am at a loss as how not only Labour isnt challenging what is happening, but HOW NO ONE seems to be challenging what is happening… Im not a politician/statistician or in finance/economics BUT I can easily see the non-sense arguments that are fed to the populace to justify these welfare reforms… Why cant anyone else? I don’t understand how we all know that just a small recoup of the Millions of Tax that has been “forgotten” about by the biggest companies trading in the UK could turn this recession on its head, isn’t pursued?

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