David Cameron’s plans to cut Housing Benefit for under 25 year olds may be little more than political kite flying and will only happen should he win the next election. It does however demonstrate the direction of travel that this Government of millionaires intend to pursue. Support with housing costs is fundamental to the welfare state, meeting as it does most people’s biggest expense in times of difficulty.
Available, as it is, to those in and out of work alike, as well as pensioners, parents, sick and disabled people, Housing Benefit attempts to ensure that no-one faces homelessness due to old age, ill health or unemployment.
It doesn’t always work. Street homelessness is testament to that. But even though the cuts already implemented to Housing Benefits have barely begun to bite, homelessness is rising fast. The social costs of this will be devastating, the personal costs for some almost unbearable to think about. Yet still some will cheer every cut, as if the Government is finally acting in their interests and cracking down on the feckless and the workshy.
Housing Benefits, along with Support for Mortgage Interest (SMI) schemes – also under threat, operate as a form of social insurance. An attack on these benefits is an attack on the vast majority of us. You don’t need to claim Housing Benefit or SMI to benefit from their existence. Were these benefits to be abolished then other, far greater costs, would replace them.
According to the Daily Telegraph, someone on as much as £50,000 a year only pays out around £493 annually towards Housing Benefit payments, out of a total of £4,727 towards the welfare bill as a whole.
What the Telegraph neglects to mention is that two fifths of the total welfare figure is spent on pensions. Just ten percent is spent on housing benefits. A deeper analysis of the figures shows that this is similar to the sum spent on sickness and unemployment benefits. So just one pound in every five of welfare spending is directed at housing costs, unemployment benefits or sickness benefits, the three payments that seem to infuriate most benefit bashers.
This means that someone on as much as £50k a year is paying around a grand a year towards these parts of the benefits system. Of course, most people don’t earn £50k a year. Someone on £25k a year pays around £400 a year.
Some will demand this is still too much. That the benefits system is broken, and even that it broke Britain. That not one penny should be spent on these scroungers,chavs and layabouts.
But let’s look at what someone on £25k gets for that money. A comprehensive system of social insurance, that will attempt to ensure you don’t lose your home, not just if you fall ill or face redundancy, but even if your income slips below a certain level. Insurance that not just covers you, but your children, and your parents. Forget any tree hugging hippy crap. Think about yourself for once.
Without a Welfare State it would be a foolish and irresponsible parent who did not have insurance should they find themselves out of work for any reason. No-one likes to think about worst case scenarios, but even those who consider their jobs secure or themselves permanently employable can fall ill, have an accident or develop a mental health condition. Even those most assured of their own ability should remember what happened to the miners in the 80s and countless other workers before and since. Sometimes even very specific and bankable skills can become redundant as politics, society and technology changes.
Income protection schemes vary in price, complexity and level of cover. One of the larger companies, British Insurance has a handy online calculator. Someone in their early forties, taking out income protection against redundancy, accident or illness, which would leave them with £1,500 a month, would be expected to pay around £80 a month in premiums. To receive £750 a month, a level similar to the amount which might be received on unemployment benefits and a low Housing Benefit award, would cost just under £40 a month.
This is more than a wage earner on £25k a year pays for these protections from the Welfare State. Unlike the benefits system, the payments from British Insurance only last a year. Unlike Housing Benefit, British Insurance will not make any provision to meet housing costs should your salary drop below a certain level. All in all, their cover is a bit shit, and almost worthless should you develop a long term health condition.
There are many other insurance schemes, some cheaper but with less cover, some more costly but with better cover. None of them matches the value of the Welfare State for all but the very richest. Even our chap on £50k a year is better off with Government insurance than finding themselves and their family at the mercy of private insurance companies.
Less than the top 5% of earners would find themselves better off if the Welfare State were abolished completely. The rest of us would be forced to take out costly and complex insurance policies that offer far less protection than offered by the current system. Either that or we could chance our arm and live without insurance, knowing that a heart attack or accident could mean our children face starvation.
We are all benefit scroungers. Like with all insurance policies, many people will hope never to be in the position of having to rely on welfare, but all will thank fuck for its existence should the worst happen.
Yet with every cut, this cover is being eroded. Until recently you were unlikely to be forced to move should you lose your job. With the Housing Benefit caps now in place, many in rented accommodation will face homelessness should they be unable to work. Should you fall ill, then you will be forced to undergo demeaning and punitive health assessments, based on those already carried out by the private insurance sector. Should you become unemployed then you may be sent to work somewhere for no wages.
The Government is planning to erode support for mortgage interest payments, currently paid to those unable to work, often temporarily,to allow them to avoid facing repossession. In the clearest intention of their policies yet, it is made clear in new regulations that home owners are to be expected to take out some form of income protection insurance. Already Mr and Mrs £50k are getting shafted, as are those on £25k and those on much, much less.
Sure there have been anomalies and abuse. A handful of large families placed temporarily in expensive London properties, or people claiming when they shouldn’t. But these cost us pennies. Far less even than the rampant abuse of tax loopholes, often by the very same people who want to strip the Welfare State away. More money is lost to official error than fraud in the welfare system, which is not something that can be said about the tax system.
If the welfare state was removed completely, and if the Government knocked every last penny it cost from the tax bill (which they wouldn’t), then whatever form of private sector protection that replaced it would cost far more and deliver far less than is currently the case.
That the Welfare State also makes a notional attempt to keep children out of poverty, provide protection for sick and disabled people and help elderly people pay their heating bill, is beside the point. Get selfish. Welfare is the best value social insurance that money can currently buy. Let’s not let insurance company spivs and the rich trick us into believing anything else.