Cameron's housing benefit myths debunked

New report shows that the number of working people claiming housing benefit has risen by 86 per cent in three years.

David Cameron and George Osborne are fond of describing housing benefit as a payment for the unemployed. Recently challenged on his plan to abolish the benefit for the under-25s, Cameron 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 [emphasis mine].

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.

By portraying housing benefit as a payment for "the shirkers", not "the strivers", Cameron and Osborne aim to convince the public that their unprecedented welfare cuts are justified. But the truth is that the benefit is increasingly claimed by the working poor, the very group that Cameron purports to care so much about.

Today's report from the National Housing Federation, Home Truths, shows that the number of working people forced to rely on housing benefit to pay their rent has increased by 417,830 (86 per cent) in the last three years, a figure that is rising at a rate of nearly 10,000 a month. Ninety three per cent of new claims last year were made by households containing at least one employed adult. By 2015, a total of 1.2 million working people people will only be able to stay in their homes through state subsidy.

As the figures suggest, it is excessive rents and substandard wages that are to blame for the inflated housing benefit budget (which will reach £23.2bn this year), not workshy "scroungers". The cost of privately renting a home has increased by 37 per cent in the past five years, and is set to rise by a further 35 per cent over the next six years. With 390,000 new families formed in 2011, but only 111,250 new homes built, rents have inevitably soared as demand has outstripped supply.

Rather than making housing benefit ever more restrictive, Cameron should act to lower rents and increase wages (when did you last hear him speak of a "living wage"?). Punitive cuts to welfare might win the Tories favourable headlines in the right-wing press, but this approach will do nothing to help "the strivers".

David Cameron visits a building site in Victoria, where he met a number of apprentices on October 18, 2012 in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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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.