The welfare system is already stacked against the young

The decision to remove housing benefit from the under-25s is just another item on the list of ways our welfare system is penalising the young.

David Cameron wants to take housing benefit away from under-25s, arguing the move would save £2bn a year. Housing benefit is mainly claimed by those in work, with 93 per cent of new claimants and 80 per cent of total recipients in a job, so the plan would largely be a redistribution from young low-wage workers to elsewhere.

Thirteen major charities have attacked the proposal, arguing it would take a vital safety net away from young people. What is rarely mentioned is that the welfare state is already stacked against young people in other areas, with the housing benefit plan simply another item on a list.

Working tax credit

Low wage workers over the age of 25 can get their wages topped up by working tax credit by as much as £1,450 a year. This wage subsidy makes working more attractive, and allows businesses to pay a lower rate; these combined means it probably has a positive effect on employment. But despite much political disquiet about record-high youth unemployment, which is bucking the slight downward general unemployment trend, young workers are exempt from this subsidy, leaving many jobs paying very little.

National Minimum Wage

Though now largely forgotten, when the National Minimum Wage was introduced some argued it might have an impact on jobs. While successive governments have been happy to exclude young workers from Working Tax Credit despite the possible resulting unemployment, the opposite is true with the NMW. So, a 20 year old worker only has a wage floor of £4.98, compared to £6.19 for a 21 year old, while those who leave school at 16 and go into work can expect to be paid as little as £3.68 – nearly 60 per cent less than the adult rate. 

Work Programme

When questioned on their strategy to tackle youth unemployment, the Government points to its Work Programme, which Jobcentres usher young people onto three months before their older peers. What is not usually brought up is that the Work Programme is structured in a way that values youth jobs less than jobs for older people, with fewer incentives for providers to find under-25s work. The total payment made to providers who find work for someone over-25 is £4,400, while each young person found a job only nets them £3,800, a full £600 less per case: providers have a built-in financial incentive to focus on helping older claimants, which could help explain why young people are disproportionately unemployed.

Jobseekers’ Allowance

If someone under 25 finds themselves out of work, as nearly a million across the country do today, they don’t get the £71-a-week JSA payment afforded to those over 25 – instead they get £56.25, a full 20 per cent less. Since the amount of money paid from JSA doesn’t cover anything more than subsistence levels, and prices in shops are the same for everyone regardless of age, this almost certainly affects the standard of living of the young unemployed who have to fend for themselves.

Defenders of the set-up might argue that young people are less likely to have a family or other commitments and so have lower costs. But the welfare system already takes these things into account through situational payments like child benefit. Moreover, it would be difficult to imagine such restrictions imposed solely on the basis of age at the top end. It’s not clear that further sanctions on the young is consistent with the Government’s claim to want to share the pain of austerity equally, when they already get significantly less out of the system.

Under-25s on Jobseekers' Allowance receive a full 20 per cent less. Photograph: Getty Images

Jon Stone is a political journalist. He tweets as @joncstone.

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Lord Sainsbury pulls funding from Progress and other political causes

The longstanding Labour donor will no longer fund party political causes. 

Centrist Labour MPs face a funding gap for their ideas after the longstanding Labour donor Lord Sainsbury announced he will stop financing party political causes.

Sainsbury, who served as a New Labour minister and also donated to the Liberal Democrats, is instead concentrating on charitable causes. 

Lord Sainsbury funded the centrist organisation Progress, dubbed the “original Blairite pressure group”, which was founded in mid Nineties and provided the intellectual underpinnings of New Labour.

The former supermarket boss is understood to still fund Policy Network, an international thinktank headed by New Labour veteran Peter Mandelson.

He has also funded the Remain campaign group Britain Stronger in Europe. The latter reinvented itself as Open Britain after the Leave vote, and has campaigned for a softer Brexit. Its supporters include former Lib Dem leader Nick Clegg and Labour's Chuka Umunna, and it now relies on grassroots funding.

Sainsbury said he wished to “hand the baton on to a new generation of donors” who supported progressive politics. 

Progress director Richard Angell said: “Progress is extremely grateful to Lord Sainsbury for the funding he has provided for over two decades. We always knew it would not last forever.”

The organisation has raised a third of its funding target from other donors, but is now appealing for financial support from Labour supporters. Its aims include “stopping a hard-left take over” of the Labour party and “renewing the ideas of the centre-left”. 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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