Charities revolt against plan to abolish housing benefit for under-25s

13 charities, including Shelter, Barnardo’s and the Teenage Cancer Trust, warn that the move will "take away a vital safety net".

The abolition of housing benefit for the under-25s would be the coalition's most irresponsible cut yet, inevitably leading to a sharp rise in homelessness. With George Osborne nonetheless expected to confirm the move in his Autumn Statement on 5 December, 13 charities, including Barnardo’s, the Teenage Cancer Trust, Crisis and Shelter, have written to today's Times (£) urging the government to think again. They warn that the cut will "take away a vital safety net for young adults who lose their job, experience domestic violence, become ill or disabled, or who are themselves bringing up children. And it will penalise working young adults with low earnings."

The latter point is an important one. Osborne and David Cameron have consistently sought to portray housing benefit as a payment for the unemployed, with the Prime Minister recently stating: "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."

What Cameron either doesn't know or won't say is that nearly a quarter – 23.2 per cent – of working age claimants are in employment, with 93 per cent of new claims between 2010 and 2011 made by households containing at least one in-work adult. Those who claim housing benefit do so to compensate for substandard wages and/or extortionate rents. If Cameron wants to "tackle" the welfare bill, he should seek to increase the former and reduce the latter.

The letter goes on to note that while the PM "suggests that young adults who fall on hard times should move in with their parents... for many, this is simply not an option and could place them at risk."

It states: "Their parents may be violent or abusive, or may have thrown them out because of their sexuality, or relationships may have broken down. Some will be young people leaving care. What’s more, many under-25s are already parents themselves. If they fall upon hard times they cannot be expected to squeeze their own young family back into their childhood bedroom."

Quite so. Of the 381,000 under-25s who claim housing benefit, 204,000 (54 per cent) have children. Cameron has at least pledged to exempt those who are leaving care or those who have suffered abuse from the cut, but he has said nothing to suggest that it will not apply to those with children. Thus, as the letter concludes, "It will blight the future of some of our poorest and most vulnerable young adults and that of their children. We urge the Government to reconsider." Let us hope it does.

The 13 charities warn that the abolition of housing benefit for the under-25s will "lead to increased homelessnes". Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty Images
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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR