George Osborne has said that he wants to cut benefits by a further £10bn in the next five years on top of the £18bn already announced. He singled out Housing Benefit for special treatment, slamming people claiming it for having an easy life compared to people working.
What Osborne chose to ignore in his rhetoric is that almost one fifth of housing benefit claimants are in work. Even more startling is that between January 2010 and March 2012, 82% of new claims, yes 82% were made by employed people. Low wages and high rents mean that even with working and child tax credits people still need to claim Housing Benefit.
Something needs to change, but it’s not what George Osborne thinks.
Plans to cut further benefit payments should be scrapped until:
1) Everyone receives a living wage. There are at least 1.5 million people that work full time and more earning less than £11000 per year. The best way to show people that it pays to work is to pay them fairly in the first place - £7.20 ph, £8.60 in London. This would take swathes of people outside of the benefit system. Business could be supported over five years by reducing employer NI contributions. LOOK GEORGE – A TAX CUT!
2) The government take action on rent. This will need a package of measures:
- Disincentives (e.g. different stamp duty) at point of sale to buy to invest and buy to let
- Support housing associations to acquire new properties rather than relying on the insecure private sector and then paying housing benefit to them for ‘market rents’. The social housing sector is far from perfect but does provide security, reasonable quality and fair redress where things go wrong.
- build the right kind of accommodation. Construction companies are desperate to build posh one and two bedroom apartments, but this does not directly resolve the housing crisis in the UK.
If these don’t work more radical measures such as capping private sector rents will need to be considered.
3) Tax havens are closed down
The rich are hiding at least £13bn in tax worldwide, with British dependencies like Cayman Islands, Isle of Man and Jersey being major and secretive players. The UK can lead internationally on taking definitive action on stopping tax haven cheats – businesses and individuals. Corporate companies and the rich should pay the tax that we as a society have agreed (one parliamentary report said that they owed £25bn) – saying that nobody else pays is not a defence.
Not the whole picture
We do need to tackle the welfare system. Benefit payments take up a third of our national expenditure – that’s unsustainable. Our welfare system leaves people rotting when with the right support they could find work and has been arbitrary in deciding who gets and keeps disability benefits. I’m in favour of universal credit, because it removes most of the risks of taking work and supports long term unemployed to move towards work (although I’m seriously worried about the implementation).
But it’s not the whole picture and not even half the story. The Conservatives need to get the other big things right. We won’t believe that we’re all in it together until people are paid fairly for the work for the work that they do, have rents that are affordable and the tax haven cheats are caught and their schemes closed down.
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