Analysis | Housing Benefit Cuts – Another Tory own goal
Ideas, New in Ceasefire - Posted on Monday, July 2, 2012 19:17 - 1 Comment
David Cameron’s housing benefit cut is another attempt at “stirring up those on quite low incomes against those on very low incomes”
David Cameron launched yet another assault on young people this week with his proposal to cut housing benefit for those aged under 25, generating even more controversy than usual across wide sections of the British public. His justification for such an idea was based on the view that many young people choose to stay at home even though they are working and that it is unfair for other young people to claim off the state when they too could move back into the parental home.
We must, however, raise the question: is this really either fair or indeed accurate?
Taking a closer view of the realities of this issue, we find the Prime Minister’s proposal is in fact riddled with far-fetched and quite plainly incorrect assumptions, many of them emanating from the his own privileged background, a personal history that is the subject of continual discussion with widespread notions of a £30 million fortune based on family wealth.
Irrespective of the truth of the Prime Minister’s personal circumstances, his proposal immediately ignores the dramatic increases in market rents seen across the country over the last few years. The letting agents Countrywide have seen soaring demand recently with five prospective tenants to every available home and rents in East Anglia rising by 5% since March 2011.
Owning a home is now considerably cheaper than renting according to the high street bank Halifax who also reports that the average market rent for a reasonably-sized property is around £722, a figure echoed by property company LSL.
Consequently the pressure on household budgets has been enormous with Shelter reporting that families are now being priced out of the rental sector in more than half the local authority districts across England.
To penalise young people for claiming benefit while doing nothing to lower market rents is grossly unfair, yet millions of pounds in donations to the Conservative Party from property developers – approximately amounting to a total figure of £3.3 million over the past three years or so, according to The Telegraph - mean that such actions remain highly improbable.
Cameron’s proposal is based on outmoded but typically archaic Tory notions of the role of the family in British society. It relies on an assumption that a ‘parental home’ is both available and adequate, despite the fact that even if a room in a family home is available British houses are often notorious for being among the smallest in Europe. Indeed, according to a recent study by the Commission for Architecture and the Built Environment (CBE), the average British home is now a quarter smaller in terms of available floorspace than a similar home in Denmark.
More crucially, many young people simply do not have a parental home to return to. Some of them will have been abused in various ways either physically or sexually while others will have suffered parental prejudice on the basis of their beliefs or sexuality.
Even for those families who do have a room available the main effect will be to place even more strain on households that are already struggling under the effect of increasing market rents and rises in fuel bills. A report by Market Harborough Building Society on the so-called ‘Boomerang Effect’ revealed that in households with children who don’t leave until the age of 26 an average of an extra £10,000 is added to household expenditure. A further knock-on effect is that this places greater strain on family relationships.
In many parts of the country, young people will also be claiming housing benefit having just left university. Bristol is one such city where students tend to settle after completing their courses, bringing widespread benefits to the city’s economy and culture. Councillor Gus Hoyt of the Green Party, who represents the city’s Ashley Ward, says that if Cameron’s proposals are enacted, all this will end. “With little hope of immediate employment and now no access to housing benefits they will leave to go back home, maybe to never return” he says.
Mr Cameron revels in the idea that these cuts will save some £2 billion for the public purse, yet this is grossly hypocritical when considering the £70 billion lost to the state through tax evasion according to the Department for Work and Pensions (DWP).
In any case, the proposal is also wildly unrealistic, since only 163,000 young adults are unemployed and claiming housing benefit according to the homeless charity Shelter, and most of those will claim for only six months before finding work. The stark reality is that most people claiming housing benefit do actually work, most of them in low paid jobs or faced with escalating market rents. Even the august Adam Smith Institute confirms such findings in its recent survey of housing benefit.
For their part, Shelter point out that Mr Cameron’s proposal contradicts the government’s own previous legislation which, among other things, has encouraged parents to downsize after their children leave and forced those in social housing to give up their spare rooms.
Many predict the main effect of these cuts, should they be implemented, would be more homelessness. The charity Centrepoint for example points out that homelessness has been rising steadily for some time and so cuts in housing benefit will produce a significant increase in the number of homeless young people, something it condemns as a ‘catastrophe’.
As Polly Toynbee pointed out in The Guardian last Monday, Cameron is conducting a classic Tory ‘divide and rule’ tactic, “stirring up those on quite low incomes against those on very low incomes”. The Tories know full well that their Lib-Dem partners will never countenance such an assault on housing benefit, which is why they will leave this idea until the next election before implementing it, if they do so at all.
It is more likely that Cameron’s rhetoric is little more than political point-scoring aimed at keeping the party’s back-benchers happy. Yet if the PM’s intention was to rally the country behind him, this foolish and extremely ill-considered proposal will have done him no favours at all.