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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Theresa May's big thinker - an interview with George Freeman

The Conservative policy board chair on the meaning of Brexit, state intervention and whether "Mayism" exists.

Theresa May’s three months as Prime Minister have been marked by ruthless changes of both personnel and policy, from grammar schools to fiscal targets. The man tasked with overseeing the latter is George Freeman, a newly bearded 49-year-old who jokingly describes himself as “a designated thinker”.

“It’s a huge privilege,” Freeman told me when we met recently in Westminster. “As [May] has indicated, she’s determined to open up the policymaking process to good ideas from a much wider pool.”

After entering parliament as the MP for Mid Norfolk in 2010, Freeman distinguished himself as one of the most intellectually energetic Tory MPs. He founded the 2020 group of Conservative modernisers and became the first ever life sciences minister in 2014. Before this, he had worked for 15 years as a biotech entrepreneur.

Politics is in his blood. The Liberal prime minister William Gladstone was his great-great-great-uncle and Mabel Philipson, the first female Conservative MP, his great-aunt. Yet Freeman attributes his reformist zeal to the belief that “with privilege comes responsibility”. He boarded at Radley College after his parents, both alcoholics, divorced and has spoken of his “emotionally damaged” childhood.

It is unsurprising that May, confronted by the greatest policy challenge since 1945 – EU withdrawal – has called on his services. The chair of the Prime Minister’s policy board, to give Freeman his official title, was a passionate Remainer but told me “we are now all Brexiteers”. The “Brexit roar”, he explained, was “a mixture of very deeply felt concerns and complaints about globalisation, powerlessness and the growing gap between London and [other] places . . .

“There’s an understanding that if we simply delivered Brexit, and didn’t tackle the rest, we would only have dealt with some of the problem.”

His ambition was “to do for our generation what Disraeli did in the 19th century, in understanding that the extraordinarily challenging pace of franchise extension was also a huge opportunity to harness and fashion a New Model Conservative Party”.

Besides abandoning the surplus target (“to boost growth and investment in infrastructure”), Freeman cited welfare policy as a point of departure. The government would “better differentiate” between changes in the welfare budget and systemic reform – a division that May believes was eroded by George Osborne.

The Prime Minister underlined her commitment to industrial strategy by naming a new department after it. But what does it mean? “I think there is a recognition that we are embracing something unrecognisable from the failed ‘beer and sandwiches’ interventionism of the Sixties and Seventies,” Freeman said. “Twenty-first-century Conservative industrial strategy is about backing our science, innovation and knowledge economy, and other sectors where we have serious global leadership.” He spoke of “stepping in where only the state can”, citing the publicly funded Diamond Light Source synchrotron facility, which he recently visited with the astronaut Tim Peake. The government must be not merely “pro-enterprise”, but “more enterprising”.

May has endured her heaviest dissent over education, and Freeman was notably lukewarm about the idea of new grammar schools. “As well as her position” on the latter, he emphasised, “the Prime Minister set out a much broader vision”. Asked whether he understood MPs’ objections to academic selection, he said “there will be all the usual consultation and discussions through parliament about specific measures”.

The Prime Minister has entered office with greater ideological definition to her thinking than David Cameron, who struggled to reconcile his early vision with austerity. Can we speak of “Mayism”? “I’m not sure the ‘ism’ is helpful or appropriate at this stage. The Prime Minister is very strongly driven by her conservative values, and converting those values into effective policies to tackle the challenges we face. I think we have to wait for the judgement of history to define the ism.”

Freeman is close to “DC” (as he calls Cameron) and praised his premiership. “I was very sorry to see him go. But in the end, given the way the referendum turned out, it was inevitable. I thought he handled that whole last week in the most exemplary way: typical of the man. In time, I think he will come to be recognised as a transformational leader who brought the Conservative Party to terms with modern Britain.”

He rejected the former education secretary Nicky Morgan’s suggestion that May would struggle to “reach into” the marginal seats that the Tories won under Cameron. “Theresa May is appealing widely across whole swaths of the country as a One-Nation leader,” he declared.

With the re-election of Jeremy Corbyn, Freeman said, “the centre ground of British politics, once dominated by Blair and New Labour, has been vacated . . . That is a huge opportunity for a One-Nation Conservative Party to demonstrate our relevance beyond our core vote to those around the country who have clearly felt so marginalised.”

Corbyn’s triumph “illustrates the extraordinary challenge for mainstream political parties in this age of asymmetric, post-Brexit politics . . . We now have to use the opportunity of incumbency in government to tackle the root causes of the insurgency that has taken out the Labour Party.”

Freeman acknowledged the risk that Labour’s divisions would produce an internal Tory opposition.

“It also creates a question for the Conservative Party. Will we turn in on ourselves and generate our own arguments, or unite and reach out into the space that Corbyn has vacated?” 

George Eaton is political editor of the New Statesman.

This article first appeared in the 29 September 2016 issue of the New Statesman, May’s new Tories