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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Who benefits, and who loses out, from David Cameron’s housing plan?

The prime minister’s plan to scrap the affordable rental homes requirement, explained.

What has Cameron actually announced about housing today?

In David Cameron’s closing speech to the Conservative Party conference in Manchester today, he announced plans to change the requirements to build affordable rented homes in new developments so developers can build "starter homes" instead of homes to be leased at affordable or social rents. 

The policy is geared toward ensuring that his party meets its campaign pledge of building 200,000 new homes by the close of this parliament, by taking the emphasis off renting (affordable housing requirements usually refer to rented, not owned houses) and onto owning. It should, claims Cameron, take us from “Generation Rent” to “Generation Buy".

What sort of houses will they build instead?

"Starter homes" are homes sold at 80 per cent of market rates to those under 40. These an be sold for a maximum of £450,000 in London, and £250,000 everywhere else. 

That sounds quite good!  

There is a chance that Cameron is right – that removing these obstacles will make developers move through the planning process more quickly, and will help boost the number or houses built. 

But (and this is a big but): most predictions so far are that this won’t happen, and if it does, it’ll only help a very specific demographic. As my colleague Stephen Bush has already pointed out, the announcement is good politics, but bad policy. It makes it look like Cameron is doing something about the housing crisis, while scoring points with big property developers along the way.

My colleague Jonn Elledge, meanwhile, notes that this system could actually slow down housebuilding, as the houses will take longer to sell than they would to let. Moreover, if housebuilding is more profitable in the long run, this will push up land – and therefore house – prices. 

Who'll benefit?

Tory voters and their children, in a nutshell. The starter homes will mostly be one or two bedrooms, and will be aimed at working couples.

Shelter calculated earlier this year that a couple would need a combined income of £76,957 in London and £50,266 in the rest of the UK to afford one of these homes, which makes it clear that they're aimed at well-off professionals. If you're in a stable relationship, earn £40,000 or £26,000 a year each and are looking to get on the housing ladder, you're in luck. 

Who won't it help? 

Everyone else. Under this policy, the Conservatives are effectively redefining “affordable”, just as they co-opted the phrase “living wage” earlier this year. By most peoples' definitions, a housing option only available to those with access to £80,000 in earnings a year is not affordable. The situation outside London is a little better. 

That’s not to say the affordable housing requirements were perfect before – these, too, were defined by some councils as 80 per cent of market rents, which in many places equates to anything but affordable. Yet removing the requirement for affordable rentals leaves nothing for those unable to afford to buy, leaving the squeezed lower-middle (and most young people) increasingly in the lurch.

Barbara Speed is a technology and digital culture writer at the New Statesman and a staff writer at CityMetric.