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.

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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.