Benefits Cap and Propaganda

A rather aggressive and self-congratulatory column in this morning's Guardian from Iain Duncan Smith. Under the banner of "I'm proud of our welfare reforms", with his now customary distortion of data and facts, he sets out to defend such policies as the Benefits Cap and Universal Credit. As you might expect he makes it all sound so wonderful. Admittedly these are some very politically astute moves, which are popular with many voters and his party's right wingers. Politically astute they may be but expert opinion thinks that they represent the most flawed of all of the coalition’s welfare measures.

Let's just take the Benefits Cap. Here are five reasons why the policy is not going to work the way that Duncan Smith tells us it will.

1. An out-of-work family is never better off than an in-work family. The claim on which the policy rests - that a non-working family can be better off than a working one - is a myth since it takes no account of the benefits that an in-work family can claim to increase their income. For instance, a couple with four children earning £26,000 after tax and with rent and council tax liabilities of £400 a week is entitled to around £15,000 a year in housing benefit and council tax support, £3,146 in child benefit and more than £4,000 in tax credits. Incidentally, and contrary to ministers' rhetoric, the cap will hit in-work as well as out-of-work families.
2. It will punish large families and increase child poverty. The cap applies regardless of family size, breaking the link between need and benefits.

3. It will likely cost more than it saves. For all the political attention devoted to it, the cap is expected to save just £110m a year, barely a rounding error in the £201bn benefits bill. But even these savings could be wiped out due to the cost to local authorities of homelessness and housing families in temporary accommodation. As a leaked letter from Eric Pickles’s office to David Cameron stated, the measure "does not take account of the additional costs to local authorities (through homelessness and temporary accommodation). In fact we think it is likely that the policy as it stands will generate a net cost. In addition Local Authorities will have to calculate and administer reduced Housing Benefit to keep within the cap and this will mean both demands on resource and difficult handling locally."

4. It will increase homelessness and do nothing to address the housing crisis. Most of those who fall foul of the cap do so because of the amount they receive in housing benefit (or, more accurately, landlord subsidy) in order to pay their rent. The cap will increase homelessness by 40,000 and force councils to relocate families hundreds of miles away, disrupting their children's education and reducing employment opportunities (by requiring them to live in an area where they have no history of working). 

5. It will encourage family break-up. Duncan Smith talks passionately of his desire to reduce family breakdown but the cap will serve to encourage it. As a fellow-coalitioneer Simon Hughes has pointed out, the measure creates "a financial incentive to be apart" since parents who live separately and divide the residency of their children between them will be able to claim up to £1,000 a week in benefits, while a couple living together will only be able to claim £500.

I used to think that Duncan Smith was a reasonable sort of man. But that was well before his dodgy use of statistics to support any case he wants to make (he has been rebuked twice by the UK Statistics Authority for misrepresenting figures) and who could forget his laughable claim that he could live on £59 a week. Here is the problem (actually, it's just one of very many) I've got with him and it's a problem shared with Posh Dave, Hapless Clegg and the rest of them. You cannot design a compassionate system if you have no compassion for those dependent upon it. You cannot achieve justice and equity if you believe in a fundamentally unfair and unequal society. You cannot empathise with the lives of others if you believe that people are inherently greedy and selfish. And that's what it means to be one of Posh Dave's Tories. A pox on the lot of them!