The housing benefit bill is still rising under the coaliton

Even with the cap, in-work poverty means the bill has risen to £23bn.

Housing benefit is becoming the curse of the coalition. The Prime Minister promised to cut the benefit bill and back those who work hard. But the latest DWP data (19 July) shows that the number of housing benefit claimants continues to rise and is now well past the five million mark. The housing benefit bill is £23bn and rising, despite the welfare caps and cuts. Dig deeper and you see that by far the largest increase is among those in employment, most of them part-time workers  (the Smith Institute estimates that in-work poverty alone will add £1bn a year to the housing benefit bill).

Contrary to Conservative claims, it is the under-employed, not the unemployed, who are pushing up the cost of housing benefit. In-work claimants now account for nearly 90% of the net increase in overall housing benefit claims. The rise of in-work poverty belies Conservative propaganda about the "underserving poor" and benefit scroungers.  Low growth and falling real wages are pushing more people to the margins of the labour market, where pay is not enough to live on. In London, and other high housing demand areas, the problem is exacerbated by higher private rents.

But this is not a problem made by the recession and the coalition’s welfare reforms.  The housing benefit bill has been increasing since 2000, and doubled between 1997 and 2010. New Labour got hooked into a spiral of subsidising higher social rents. The number of housing benefit claimants stayed roughly the same between 2003-2007, but payments to landlords rose year-on-year.  As the recession hit, the situation got worse as the numbers of unemployed increased. Now we are in the third stage, with more claimants as a result of falling real wages and under-employment.

Social and private rents are still going up (social rents have increased by a fifth over the last five years), but they will arguably have less impact on the future housing benefit bill because of the cap. However, they are being offset by cost pressures because more people in work are claiming. This is evidenced by the fact that the gap between pay for the bottom 10% and their rents has widened significantly.

Rising rents, falling wages and benefit caps are a triple blow for low income households and will lead to higher levels of poverty. Labour can’t ignore the problem, which started on its watch. Part of the solution must be reversing the decline in real wages. But a future Labour government is also going to have to grapple with subsidies and the balance between revenue and capital subsidies for those who simply can’t afford to pay higher rents.

The housing benefit bill is £23bn and rising, despite the welfare caps and cuts. Photograph: Getty Images.

Paul Hackett is the director of The Smith Institute.

Photo: Getty
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Every day, Theresa May's mask slips a little further

First the Human Rights Act, now Dfid. What's next, asks Jon Ashworth.

The news that the new International Development Secretary is about to slash development spending and channel Britain's aid budget into defence spending is yet another major slip of the new government's centrist mask.

Theresa May has tried to pitch her policy agenda as prioritising social justice and a “Britain that works for everyone” but the reality is that this announcement is the true right-wing colours of her government shining through.

The appointment of the most right-wing Cabinet for decades was a major warning sign, with figures such as David Davis, who said he was “very worried” about sexual discrimination legislation, and Liam Fox, who said equal marriage was “social engineering”, now at the highest level in government.

Those of us passionate about development were horrified when Priti Patel, who has previously called for the Department for International Development to be scrapped, was appointed as the department's new Secretary of State, but few of us would have imagined such a dramatic break with Britain's strong development legacy so soon.

Not only is what is reported very dubious in terms of the strict regulations placed on development spending- and Priti Patel has already come dangerously close to crossing that line by saying we could use the aid budget to leverage trade deals - it also betrays some of the very poorest in the world at a time when many regions are facing acute humanitarian crises.

It was Gordon Brown who put international development at the heart of 13 years of Labour government, massively increasing aid spending and focusing minds in Britain and abroad on the plight of those suffering from poverty, famine and the ravages of war. David Cameron followed Gordon’s lead, enshrining the 0.7 per cent aid budget in law, making Britain the first G7 country to do so. In light of these new revelations Theresa May must now restate her commitment to the target.

Sadly, it now seems that Theresa May and Priti Patel want to turn the clock back on all that progress, diminishing Britain's role in international development and subverting the original mission of the department by turning it into a subsidiary of the Ministry of Defence, focused on self-interest and security. Not only will this create the opposite of the "outward-looking and globally-minded country" Theresa May said just weeks ago she wanted Britain to be, it’s also a betrayal of some of the poorest people across the planet.

Other examples of the right-wing traits of this Government surfaced earlier this week too. On Friday it emerged that Gerard Lopez, a tax-haven based businessman with links to Russian State banks that have been sanctioned in the wake of the Ukrainian conflict, donated £400,000 to the Tory party just months ago. Theresa May needs to tell us what meetings and interactions she has had with Lopez.

Earlier in the week Liz Truss, the new Justice Secretary, brazenly insisted that the Government would proceed with scrapping the Human Rights Act, despite fierce opposition from politicians of all parties and the public.

With so many right-wing announcements trickling though when the government has hardly had time to change the name plaques above the doors you've got to wonder and worry about what else is set to come.

Jon Ashworth is Labour MP for Leicester South.