Tag Archives: housing benefits

The Great Benefit Cap Bullshit

gideon-osborneGeorge Osborne today once again raised the example of working people getting up in the morning whilst their neighbours laze around on benefits as an excuse for yet another raid on welfare spending.

And once again, despite his rhetoric, he used this attack on unemployed and disabled people as an attack on benefit claimants and low income workers alike. The 1% annual freeze on Tax Credits will largely wipe out any gains for low income workers due to raising the personal tax threshold.  If that doesn’t finish them off, then yet more real term cuts to Housing Benefits will further impoverish those who earn least.

Next year the £500 a week benefit caps will be introduced. From now on Cameron has announced that no benefit claimant will receive more than the equivalent family on the average household income. What he doesn’t say is that they don’t already.  Families on average incomes are also benefit claimants as a quick check on the numbers soon reveals.

Using the Government’s own benefit calculator, take typical striver Bob, a fictional person who works as a photocopier sales rep and earns £35,000 a year – the average household income.  Like good tories, Bob’s wife stays at home to look after their three year old child and two older children.  Bob and his wife, Bobbette, live in a private rented three bedroom flat in Lewisham which costs £300 a week, which is cheap for the area. They have no significant health problems and are not disabled.

Bob takes home around £506 a week in wages. So far he’s already beating the skivers down the road. But Bob and Bobbette are also entitled to significant benefit payments, receiving Child Tax Credit of £16.33 a week, Child Benefit of £47.10,  and £187.90 Housing Benefit a week. This boosts Bob and Bobbette’s income to £758.39 a week, or £458.39 a week after rent. They are not rich, but they have a livable income.

Now let’s say Bob gets made redundant. The family can claim £111.45 in Job Seekers Allowance but lose all of their Tax Credits and most importantly Bob’s wages. This leaves the family with £641 a week to live on, or £341 after rent (including Council Tax Benefit which reduces the amount they receive in their hands to 323.82). Tory voting Bob and Bobbette are horrified to learn that they are actually £117.49 a week worse off on benefits than they were in work (and have defected to UKIP in protest).

Should Bob or Bobbette be lucky enough to be diagnosed with a terminal illness and qualify for Employment Support Allowance then they will receive just over £40 a week extra, which still places them significantly worse off than they were in work.

When the benefit cap is introduced next April Bob and Bobbette’s household income will be reduced to just £500 a week, leaving £200 a week for a family of five after rent is paid. Out of this they may now have to pay some Council Tax.  As they already live in a cheap flat, in one of the cheapest parts of London, they are unable to move to cut their rent;  everywhere else is more expensive.  They are the lucky ones.  Most people elsewhere in the capital will have higher rents to pay.  Larger families will suffer most, and could be left with just £100 weekly per family – that’s if they are able to find a property for the maximum available Housing Benefit of £400 a week.

The benefit cap is based on a bare faced lie that those on out of work benefits are receiving more in total than equivalent working families.  It’s only in London where families approach anything like £500 a week on benefits, and even then the bulk of that goes straight into the pockets of grasping landlords.

Both working and non working low income families alike will be poorer due to Osborne’s benefit and Tax Credits freeze.  But from next April many unemployed, unwell or disabled parents of average sized families will no longer be able to afford to feed their children.  And all because of a lie whipped up by Tory politicians in an attempt to blame the poor for the problems caused by the rich.

*UPDATE: Figures amended slightly from earlier cos I fucked them up