Memo to Cameron: 93% of new housing benefit claimants are in work

The PM described it as a benefit for the unemployed. But most new claims are made by in-work households.

Is David Cameron a fool or a knave? Challenged by Today presenter James Naughtie on his plan to abolish housing benefit for the under-25s (including the 204,500 claimants with children), the Prime Minister implied that it could only be claimed by the unemployed. He said:

We should ask this question about housing benefit: if you're a young person and you work hard at college, you get a job, you're living at home with mum and dad, you can't move out, you can't access housing benefit.

And yet, actually, if you choose not to work, you can get housing benefit, you can get a flat. And having got that, you're unlikely then to want a job because you're in danger of losing your housing benefit and your flat. We have to look at the signals we send and I think we should have a system where we say 'you shouldn't be better off out of work than in work'. The system doesn't work today, so we need to reform it.

The truth, as I've noted before, is that just one in eight claimants is out of work, the remainder being employed, retired or registered disabled. Indeed, years of falling living standards mean that housing benefit is increasingly a subsidy for the working poor. Of new claims between 2010 and 2011, 93 per cent were made by households containing at least one employed adult.

If Cameron really wants to reduce the welfare bill, he should seek to lower rents and increase wages (when did you last hear him speak of a "living wage"?). Punitive cuts to housing benefit might win the Tories favourable headlines in the right-wing press, but this approach will do nothing to help "the strivers" that Cameron purports to support.

David Cameron listens to William Hague deliver his speech at the Conservative Party conference. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.