Cameron is repeating the housing benefit myth

The statistic Cameron ignores: only one in eight claimants is unemployed.

Having long abandoned the pretence that "we're all in this together", David Cameron is preparing yet another raid on the welfare budget. In a speech today, he will announce plans to abolish housing benefit for under-25s and will indicate that the government is considering "time-limiting" Jobseeker's Allowance, reducing the new benefits cap to £22,000 and restricting payments for large families (specifically, limiting child benefit to three children, although this proposal will not be mentioned in the speech).

As previously signalled by George Osborne, the cuts are designed to save the government £10bn but so far Cameron hasn't chosen to focus on the alleged savings. Rather, he has argued that the plans are necessary to reverse a "culture of entitlement". In his pre-speech interview with the Mail on Sunday, Cameron claimed that housing benefit "discourages" young people from working:

A couple will say, 'We are engaged, we are both living with our parents, we are trying to save before we get married and have children and be good parents.'

But how does it make us feel, Mr Cameron, when we see someone who goes ahead, has the child, gets the council home, gets the help that isn't available to us?

One is trapped in a welfare system that discourages them from working, the other is doing the right thing and getting no help.

With those words, Cameron perpetuated the biggest myth about housing benefit: that it is a benefit for the unemployed. The truth is that just one in eight claimants is out of work (not a statistic that you'll find reported in most papers). The majority of those who claim housing benefit, including the under-25s, do so to compensate for substandard wages and extortionate rents. A recent study by The Building and Social Housing Foundation showed that 93 per cent of new housing benefit claims made between 2010 and 2011 were made by households containing at least one employed adult.

It is meaningless of Cameron to claim that the housing benefit budget is "too large" without considering why. The inflated budget, which will reach £23.2bn this year, is the result of a conscious choice by successive governments to subsidise private landlords rather than invest in affordable social housing. Yet rather than addressing the problem of stagnant wages and excessive rents, Cameron, in a bid to appease his querulous party, has chosen to squeeze the already squeezed. 

That he should do so by abolishing housing benefit for under-25s is particularly egregious. Of the 380,000 young people who claim the benefit, a significant number do so because they have been thrown out by their parents. As Shelter notes, "Last year nearly 10,000 households in priority need were recognised as homeless after they were thrown out by their parents. Many more won’t have shown up in the statistics and will have resorted to sofa surfing, hostels or at worst the streets."

Others may be unable to live at home after their parents divorced or downsized or, as Petra Davies previously noted on the site, may have been rejected due to their sexuality. As she noted, around 25 per cent of the young homeless population in urban areas is lesbian, gay, bisexual, or transgender. 

But such objections will do little to deter Cameron's drive to shrink the state. With his latest attack on the working poor, he has finally outed himself as a compassionless Conservative.

David Cameron has vowed to tackle what he calls "a culture of entitlement" in the welfare system. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Why Theresa May is wrong about immigration

The inconvenient truth: migration helps Britain.

Immigration is a disaster. Well, Theresa May says so, anyway.

May’s speech to the Conservative conference is straight out of the Ukip playbook – which is rather curious, given that she has held the post of Home Secretary for five years, and is the longest-serving holder of the office for half a century. It is crass and expedient tub-thumping (as James Kirkup has brilliantly exposed). And what May is saying is not even true. These are saloon-bar claims, and it is striking that she should unleash them on the Conservative party conference.

“When immigration is too high, when the pace of change is too fast, it’s impossible to build a cohesive society,” May says. Yet, whatever she might say, racism is on the decline. The BNP’s vote in the general election collapsed from 563,000 in 2010 to just 1,667 in 2015. Research by Rob Ford has revealed that the nation is becoming far more tolerant to marriage between races: while almost half of those born before 1950 oppose marriage between black and white people, only 14 per cent of those born since 1980 do. And between 2011 and 2014 (when the figure was last measured), the British Social Attitudes Survey reported a decrease in self-reported racial prejudice, from 38 to 30 per cent.

May also said: “at best the net economic and fiscal effect of high immigration is close to zero.” This is another claim that does not stand up. An OECD study two years ago found that the net contribution of immigrants is worth over £7bn per year to UK PLC: money that would otherwise have to be found through higher taxes, lower spending or more borrowing.

May also asserted that “We know that for people in low-paid jobs, wages are forced down even further while some people are forced out of work altogether.” This ignores the evidence of her own department, who have found “relatively little evidence that migration has caused statistically significant displacement of UK natives from the labour market in periods when the economy is strong.” An LSE study, too, has found “no evidence of an overall negative impact of immigration on jobs, wages, housing or the crowding out of public services.”

The inconvenient truth is that rising net migration is both proof of, and a reason why, the UK economy is doing well. As immigration has increased, so has growth; employment has risen, including for Britons. This is no coincidence.

To win the “global race”, a country needs to attract skilled immigrants who work hard and put in more than they take out. That is exactly what the UK is doing: net migration has just risen to 330,000, a new record. As a whole these migrants “are better educated and younger than their UK-born counterparts”, as an LSE study has found. In the UK today there is a simple rule: where immigration is highest, growth is strongest. The East Coast and Cornwall suffer from a lack of migration, while almost 40 per cent of a immigrants live in the thriving capital.

Lower immigration would make the UK a less dynamic economy. Firms in London enjoy a “diversity bonus”: those with an ethnically diverse management are more likely to introduce new product innovations, and are better-able to reach international markets, a paper by Max Nathan and Neil Lee has found.

Puling up the drawbridge on immigration would have catastrophic consequences for UK PLC. The OBR have found that with zero net-migration, public sector net debt as a share of GDP could rise to 145 per cent by 2062/63; with high net-migration, it would fall to 73 per cent.

So May should be celebrating that the UK is such an attractive place to live, and how immigration has contributed to its success. By doing the opposite, she not only shows a lack of political leadership, but is also stoking up trouble for the Prime Minister – and her leadership rival George Osborne – during the EU referendum.

Tim Wigmore is a contributing writer to the New Statesman and the author of Second XI: Cricket In Its Outposts.