Commons misled over impact of benefit cap on homelessness

Ministers repeatedly claimed that the risk was "not quantifiable" despite clear warning from Eric Pi

Ministers have been accused of repeatedly misleading the Commons about the impact of their £26,000 cap on welfare payments.

Yesterday, we noted the incongruence between David Cameron's claim that the cap would not lead to greater homelessness, and the warning in a leaked letter from the Communities Secretary, Eric Pickles (written by his private secretary Nico Heslop). The letter warns that welfare cuts could make an additional 20,000 families homeless (on top of 20,000 already anticipated because of other changes to housing benefit). It also warns that the plan will cost more than it saves because of the bill for temporary housing.

Now, Labour has highlighted several instances where ministers have acted disingenuously, given that this letter was sent in January. In February, the Department for Work and Pensions (DWP) published an impact assessment saying it was "not possible to quantify" the cost to local councils of the welfare cap, and the likelihood of greater homelessness. Grant Shapps, the Housing Minister, and others, quoted this assessment when asked about the impact on homelessness -- despite the fact that a specific estimate is included in Pickles' letter. Maria Miller, a welfare minister, told a Labour MP to "get real" when asked if the benefit cap would increase homelessness, while Chris Grayling said that it would not "exacerbate" the problem.

It is profoundly worrying that these concerns were not only ignored by government but repeatedly kept secret. The reason is easy enough to see - a dogged ideological commitment to encouraging work by punishing those on benefits. The Guardian quotes a governmental source pointing out that entering part time work exempts families from the cap, adding:

There might be some people who have to move to a less expensive area. But that doesn't mean they won't have anywhere to live. We are very optimistic about the behavioural change that this will bring about.

However, it is worth noting that the letter does not argue with the underlying principle that a family on benefits should be better off than a family that works. Rather, it suggests measures which would mitigate the negative effects while still retaining this fundamental aim. These include excluding child benefit from the cap, which would reduce the homelessness and child poverty risks, while still ensuring that most families with four children would not be able to live in "London or the south east" (Boris Johnson referred to this as "Kosovo style social cleansing" of poor people from cities).

Labour will try to force Pickles and the Welfare Minister, Iain Duncan Smith, to respond to an urgent question in the Commons today.

Unless it is modified, this policy risks failing on two counts: is not only inhumane but impractical and expensive too.

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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How the Conservatives lost the argument over austerity

After repeatedly missing their deficit targets, the Tories can no longer present spending cuts as essential.

“The age of irresponsibility is giving way to the age of austerity,” declared David Cameron at the Conservatives' 2009 spring conference. Fear of spending cuts helped deny his party a majority a year later, but by 2015 the Tories claimed vindication. By framing austerity as unavoidable, they had trapped Labour in a political no man's land. Though voters did not relish cuts, polling consistently showed that they regarded them as necessary.

But only two years later, it is the Conservatives who appear trapped. An austerity-weary electorate has deprived them of their majority and the argument for fiscal restraint is growing weaker by the day. If cuts are the supposed rule, then the £1bn gifted to the Democratic Unionist Party is the most glaring exception. Michael Fallon, the Defence Secretary, sought to justify this largesse as "investment" into "the infrastructure of Northern Ireland" from "which everybody will benefit" – a classic Keynesian argument. But this did not, he hastened to add, mean the end of austerity: "Austerity is never over until we clear the deficit."

Britain's deficit (which peaked at £153bn in 2009-10) was the original and pre-eminent justification for cuts. Unless borrowing was largely eliminated by 2015, George Osborne warned, Britain's public finances would become unsustainable. But as time has passed, this argument has become progressively weaker. The UK has cumulatively borrowed £200bn more than promised by Osborne, yet apocalypse has been averted. With its low borrowing costs, an independent currency and a lender of last resort (the Bank of England), the UK is able to tolerate consistent deficits (borrowing stood at £46.6bn in 2016-17).

In defiance of all this, Osborne vowed to achieve a budget surplus by 2019-20 (a goal achieved by the UK in just 12 years since 1948). The Tories made the target in the knowledge that promised tax cuts and spending increases would make it almost impossible to attain – but it was a political weapon with which to wound Labour.

Brexit, however, forced the Conservatives to disarm. Mindful of the economic instability to come, Philip Hammond postponed the surplus target to 2025 (15 years after Osborne's original goal). Britain's past and future borrowing levels mean the deficit has lost its political potency.

In these circumstances, it is unsurprising that voters are increasingly inclined to look for full-scale alternatives. Labour has remade itself as an unambiguously anti-austerity party and Britain's public realm is frayed from seven years of cuts: overburdened schools and hospitals, dilapidated infrastructure, potholed roads, uncollected bins.

Through a shift in rhetoric, Theresa May acknowledged voters' weariness with austerity but her policies did not match. Though the pace of cuts was slowed, signature measures such as the public sector pay cap and the freeze in working-age benefits endured. May's cold insistence to an underpaid nurse that there was no "magic money tree" exemplified the Tories' predicament.

In his recent Mansion House speech, Philip Hammond conceded that voters were impatient "after seven years of hard slog” but vowed to "make anew the case" for austerity. But other Tories believe they need to stop fighting a losing battle. The Conservatives' historic strength has been their adaptability. Depending on circumstance, they have been Europhile and Eurosceptic, statist and laissez-faire, isolationist and interventionist. If the Tories are to retain power, yet another metamorphosis may be needed: from austerity to stimulus.

George Eaton is political editor of the New Statesman.

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