The benefit cap: what does it mean and why is it unfair?

Peers are to fight plans to cap benefits at £26,000, despite public support. Here is everything you

What is the benefit cap?

A cornerstone of Iain Duncan Smith's welfare reform, the principle behind the benefit cap is that unemployed people should not be paid more than working families. Under the proposals, working-age benefits would be capped at £500 per week, or £26,000 a year. This is equivalent to the average wage earned by working households after tax.

What do voters think?

The public are broadly with Duncan Smith on this one. A YouGov poll shows that 76 per cent of the public are in favour of the benefits cap, including 69 per cent of Labour voters. It also shows that 36 per cent would like to see even tougher measures, with no household getting more than £20,000 in welfare payments.

Why is it unfair?

There are several criticisms levelled against the cap, centering on the impact on children, and on the very families -- those in work and paying taxes -- who it is meant to defend.

It takes no account of children
The benefit cap is the same regardless of how many children a family has. Therefore a family with five children would receive the same amount as a family with just one or two. This has proved particularly problematic, with church leaders have called for child benefit to be exempted, while Nick Clegg conceded that government may need to look at "the place of children who were born, if you like, innocently into another set of rules".

Leaked government analysis showed that the move could push a further 100,000 children into poverty. Duncan Smith's team are scathing about an amendment that would exempt child benefit, saying it would encourage people on benefits to have more children. But what about families that already have many children? They should not be penalised for the fact of their existence.

It ignores employment history
A couple who have never worked will end up being less affected than families on a low to middle income who are suddenly affected by unemployment in the recession. This is because families with parents who have never worked will tend to live in social housing where rents are cheaper. However, low to middle earners are likely to rent privately: they are not poor enough to qualify for council accommodation but not well off enough to buy. There are 680,000 working households claiming housing benefit, making up 14 per cent of the total housing benefit caseload.

As the recession claims more and more jobs, many families who need short-term support could find themselves in an impossible position. Duncan Smith has criticised "people being placed in houses they cannot afford", but for these families, it is a case of rapidly changing circumstances rather than flagrantly living above their means.

It penalises those in the south-east
Rents are higher in the south-east, and cutting housing benefit to £100 a week makes it practically impossible for a family with children to rent privately. In the Guardian today, Tim Leunig says that after council tax, rent and utilities, a family with four children would be left with 62p per person per day to live on.

Critics have said that this will result in "social cleansing" from inner-city areas -- the percentage of privately rented properties in central London available to housing benefit claimants will fall from more than 50 per cent to just 7 per cent. Leunig predicts that many people will remain in these areas, where job prospects are better, but will have to "downsize", with siblings sharing bedrooms and parents sleeping on sofa-beds.

Who opposes it?

Lord Paddy Ashdown, the former Liberal Democrat leader, has said that he is unable to support the reform as it will unfairly penalise children in benefit dependent homes. He said:

I voted with the Government on everything until now. I see it as my job as an ex-leader to support my successor, but I will not support the benefit cap in its present form.

Church of England bishops, led by John Packer, the Bishop of Ripon and Leeds, will today table the key amendment around which rebel Lords plan to gather. It would exempt child benefit from the cap. As outlined above, the government is hostile to such a plan, though Clegg has suggested that there may be some scope for "transitional arrangements" to cushion the effect.

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