Five reasons why the benefit cap is wrong

The £26,000 cap, which is introduced in four London boroughs today, will raise child poverty, increase homelessness and cost more than it saves.

Whichever Conservative first came up with the line that "no out-of-work family should receive more in benefits than the average family receives from going out to work" probably deserves some sort of prize. The policy to which it refers - the benefit cap of £26,000 - has been framed so as to make reasonable disagreement appears impossible. Who can argue that it should pay more to be on welfare than in work? It’s unsurprising, then, that the policy is one of the coalition’s most popular (perhaps even the most popular). A YouGov poll published earlier this month found that 79 per cent of people, including 71 per cent of Labour voters, support the cap, with just 12 per cent opposed. But while politically astute, the cap, which is introduced in four London boroughs today (Bromley, Croydon, Enfield and Haringey), before being rolled out nationally from July, may be the most flawed of all of the coalition’s welfare measures. Here are five reasons why.

1. An out-of-work family is never better off than an in-work family

The claim on which the policy rests - that a non-working family can be better off than a working one - is a myth since it takes no account of the benefits that an in-work family can claim to increase their income. For instance, a couple with four children earning £26,000 after tax and with rent and council tax liabilities of £400 a week is entitled to around £15,000 a year in housing benefit and council tax support, £3,146 in child benefit and more than £4,000 in tax credits.

Were the cap based on the average income (as opposed to average earnings) of a working family, it would be set at a significantly higher level of £31,500. The suggestion that the welfare system "rewards" worklessness isn’t true; families are already better off in employment. Thus, the two central arguments for the policy - that it will improve work incentives and end the "unfairness" of out-of-work families receiving more than their in-work equivalents - fall down.

(And it will hit in-work families too)

Incidentally, and contrary to ministers' rhetoric, the cap will hit in-work as well as out-of-work families. A single person must be working at least 16 hours a week and a couple at least 24 hours a week (with one member working at least 16 hours) to avoid the cap. 

2. It will punish large families and increase child poverty

The cap applies regardless of family size, breaking the link between need and benefits. As a result, most out-of-work families with four children and all those with five or more will be pushed into poverty (defined as having an income below 60 per cent of the median income for families of a similar size). Iain Duncan Smith has claimed that “[at] £26,000 a year it's very difficult to believe that families will be plunged into poverty” but his own department’s figures show that the poverty threshold for a non-working family with four children, at least two of whom are over 14, is £26,566 - £566 above the cap. The government's Impact Assessment found that 52 per cent of those families affected have four or more children.

By applying the policy retrospectively, the government has chosen to penalise families for having children on the reasonable assumption that existing levels of support would be maintained. While a childless couple who have never worked will be able to claim benefits as before (provided they do not exceed the cap), a large family that falls on hard times will now suffer a dramatic loss of income. In view of this, the House of Lords voted in favour of an amendment by Church of England bishops to exclude child benefit from the cap (which would halve the number of families affected) but the defeat was subsequently overturned by the government in the Commons.

The DWP has released no official estimate of the likely increase in child poverty but a leaked government analysis suggested around 100,000 would fall below the threshold once the cap is introduced.

3. It will likely cost more than it saves

For all the political attention devoted to it, the cap is expected to save just £110m a year, barely a rounding error in the £201bn benefits bill. But even these savings could be wiped out due to the cost to local authorities of homelessness and housing families in temporary accommodation. As a leaked letter from Eric Pickles’s office to David Cameron stated, the measure "does not take account of the additional costs to local authorities (through homelessness and temporary accommodation). In fact we think it is likely that the policy as it stands will generate a net cost. In addition Local Authorities will have to calculate and administer reduced Housing Benefit to keep within the cap and this will mean both demands on resource and difficult handling locally."

4. It will increase homelessness and do nothing to address the housing crisis

Most of those who fall foul of the cap do so because of the amount they receive in housing benefit (or, more accurately, landlord subsidy) in order to pay their rent. At £23.8bn, the housing benefit bill, which now accounts for more than a tenth of the welfare budget, is far too high but rather than tackling the root of the problem by building more affordable housing, the government has chosen to punish families unable to afford reasonable accommodation without state support.

The cap will increase homelessness by 40,000 and force councils to relocate families hundreds of miles away, disrupting their children's education and reducing employment opportunities (by requiring them to live in an area where they have no history of working). 

5. It will encourage family break-up

Iain Duncan Smith talks passionately of his desire to reduce family breakdown but the cap will serve to encourage it. As Simon Hughes has pointed out, the measure creates "a financial incentive to be apart" since parents who live separately and divide the residency of their children between them will be able to claim up to £1,000 a week in benefits, while a couple living together will only be able to claim £500.

Work and Pensions Secretary Iain Duncan Smith speaks at the Conservative Party conference in Birmingham last year. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Labour must reclaim English patriotism if we are to beat Ukip and the Tories

We can't talk about the future of our country unless we can discuss the past. 

I was a parliamentary candidate for Thurrock, but the place which I currently call home is Hackney, London. This distinction is worth explaining. The questions of Labour and Englishness – what exactly is the English problem that we’re trying to solve, why do we need a progressive patriotism, does it already exist, if not why not and if we had one what would it look like? – are, above all, questions of identity and place. We need to build a patriotism that includes and resonates with residents of both Hackney and Thurrock. Currently they are very far apart. 

I’m the little girl who sat on her dad’s shoulders to wave a flag at Princess Anne’s first wedding. And I was also, like Sadiq Khan, waving a flag at the Silver Jubilee in 1977. I’m an ex-Catholic, I’m a Londoner, I’m English and I’m a woman, and all of those identities are important although not necessarily equally so and not necessarily all of the time.

But I’m also a member of the Labour party, not only as a candidate, but now as an activist in Hackney. And that is where I see the difference very strongly between Hackney and what I experienced in Thurrock. 

Thurrock was Ukip ground zero last year - 12,000 people voted for Ukip in a general election for the first time, on top of the 3,500 that had voted for them before in 2010. Most of those 12,000 people had either not voted before, or had voted Labour. 

This isn’t just about being in two different places. Sometimes it feels like more than being in two different countries, or even like being on two different planets. The reality is that large swathes of Labour’s members and supporters don’t identify as patriotic, fundamentally because patriotism has been seized and colonised by the right. We need to understand that, by allowing them to seize it, we are losing an opportunity to be able to reclaim our past. 

We do not have any legitimacy to talk about the future of our country unless we can talk about our past in a better way. We have tried but our efforts have been half-hearted. Take Ed Miliband's call for One Nation Labour, which ended up amounting to a washed-out Union Jack as a visual for our brand. It could have been so much better – an opportunity for an intellectual rebranding and a seizure of Conservative territory for our own ends. Ultimately One Nation Labour was a slogan and not a project. 

There is a section of the left which has a distinct discomfort with the idea of pride in country. It has swallowed the right-wing myth that England’s successes have all been Conservative ones. This is a lie, but one that has spread very effectively. The left’s willingness to swallow it means that we are still living in a Thatcherite paradigm. It is no wonder progressives revolt at the idea of patriotism, when the right’s ideas of duty and authority quash our ideas of ambitions for equality, opportunity for all and challenging injustice. But we risk denying our successes by allowing the right to define Englishness. It’s England that helped establish the principle of the right to vote, the rule of law, equal suffrage, and the fight against racism. 

If Englishness is going to mean anything in modern England, it needs to be as important for those who feel that perhaps they aren’t English as it is for those who feel that they definitely are. And a place must be reserved for those who, though technically English, don’t see their own story within the Conservative myth of Englishness. 

Although this reclaiming is electorally essential, it is not an electoral gimmick. It is fundamental to who we are. Even if we didn’t need it to win, I would be arguing for it.

We need to make sure that progressive patriotism reclaims the visual language that the Conservatives use to dress up their regressive patriotism. Women need to be as much in the pantheon of the radicals as part of the visual identity of Englishness. Women tend to either be there by birth or by marriage, or we are abstract manifestations of ideals like "justice" or "truth" – as seen on city halls and civic buildings across the country. But English women need to be real, rather than just ideal. Englishness does need to be focused on place and connection, and it should include Mary Wollstonecraft and Sylvia Pankhurst as well as Wat Tyler and Thomas Paine. 

We can’t pretend that we’re always right. The most patriotic thing you can do is to admit sometimes that you’re wrong, so that your country can be better. I love my country, for all its faults. But I do not live with them. I try to make my country better. That is progressive patriotism. And I know all of us who want to be part of this can be part of it. 

This article is based on Polly’s contribution to Who Speaks to England? Labour’s English challenge, a new book published today by the Fabian Society and the Centre for English Identity and Politics at the University of Winchester.