The poor could be the losers from Labour's welfare cap

If measures designed to tackle low pay and reduce rents fail to make sufficient progress, the danger is that families will be further impoverished.

Ed Miliband was right in his speech on social security today to suggest that it is neither a decrepit structure, nor an underclass of lazy layabouts, which is the real source of stress in the system. Instead, an analysis acknowledging that it is the broader structural causes of need that are testing the workings of (or at least sympathy for) social security is clearly the right way to go. We all know that in part it is low wages that underpin a large tax credits bill, and rising rents that have to some extent driven up housing benefit in recent years.

Where Miliband went off track, however, was in then echoing coalition rhetoric on expenditure control, and in particular his suggestion that a Labour government would cap ‘structural’ social security spending on a three-year basis. The politics behind this move are clear– talking tough on spending - but does the proposal make good sense in policy terms?

To begin, there is a problem of definition. The distinction between structural as opposed to cyclical social security spending is not as neat as one might like. While unemployment benefits are clearly connected to the rise and fall of the economy, few other working-age benefits are immune from the vagaries of the cycle. It is underemployment alongside low wages that has driven up demand for tax credits, and a rising caseload that, to some degree, explains the growth in cash terms of the housing benefit bill since 2008.

In addition, the structural-cyclical dichotomy is from a decidedly pre-universal credit world. When in and out-of-work benefits, housing benefit and children’s support are rolled up into one from October this year the distinction will be even harder to fathom. While the practicalities of the coalition’s plans for capping annually managed expenditure have already been questioned, it’s hard to see how adding hazy distinctions into the exercise will make it any more workable.

That said, in the last three years the social system has been riddled with caps of one sort or another. While the overall benefit cap has attracted most attention, the coalition has also sought to hem in housing benefit in a number of ways: since April 2011, for example, support to claimants has been restricted to smaller sized properties, to more limited levels of rent, and if single, is cut according to age.

This tangle of new rules is designed to constrain housing benefit expenditure, albeit in an opaque and confusing manner. But has it? A quick look at housing benefit statistics shows that the increase in the average award since April 2011 is actually no different than that observed prior to these changes being introduced, suggesting that rents have not responded as anticipated.

Instead, to date, the squeeze from the various caps has been felt by claimants, not budget lines. Low income families and individuals have had to eke out already meagre budgets to cover shortfalls, make difficult decisions about whether to move and disrupt their and their children’s lives, or go cap (ha) in hand and apply for discretionary housing payments or charitable forms of support.

If Labour, or indeed the coalition, were to limit the overall social security budget, what we would see is this scenario writ large. It would be ordinary families who would bear the risk that programmes designed to tackle low pay, reduce rents, and connect the unemployed more effectively to the labour market fail to make sufficient progress; families whose lives would be constrained in ever-more oppressive ways; and families who would be further impoverished as a result. 

If Labour wants to rein in social security spending they have to do this by reducing need, not by rationing decency. But of course, whether social security expenditure really is out of control, as we are all incessantly told, is an entirely different question

A boy walks through the Heygate Estate in the Walworth area in London. Photograph: Getty Images.

Lindsay Judge is senior policy and research officer for the Child Poverty Action Group.

New Statesman
Show Hide image

Quiz: Can you identify fake news?

The furore around "fake" news shows no sign of abating. Can you spot what's real and what's not?

Hillary Clinton has spoken out today to warn about the fake news epidemic sweeping the world. Clinton went as far as to say that "lives are at risk" from fake news, the day after Pope Francis compared reading fake news to eating poop. (Side note: with real news like that, who needs the fake stuff?)

The sweeping distrust in fake news has caused some confusion, however, as many are unsure about how to actually tell the reals and the fakes apart. Short from seeing whether the logo will scratch off and asking the man from the market where he got it from, how can you really identify fake news? Take our test to see whether you have all the answers.

 

 

In all seriousness, many claim that identifying fake news is a simple matter of checking the source and disbelieving anything "too good to be true". Unfortunately, however, fake news outlets post real stories too, and real news outlets often slip up and publish the fakes. Use fact-checking websites like Snopes to really get to the bottom of a story, and always do a quick Google before you share anything. 

Amelia Tait is a technology and digital culture writer at the New Statesman.