Many of the new jobs created under the coalition have been low-skilled, low-paid, and insecure. (Photo:Getty)
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Low wages and high prices, not laziness, are driving up the social security bill

Low wages and rising prices are pushing up the cost of in-work benefits. Labour will raise wages and keep the cost of social security down.

Britain needs a responsible and fair social security system that works for working people. One that rewards contribution, and protects those who cannot work or cannot earn enough to support themselves and their families. To deliver those aims, our system needs to be affordable.

But under David Cameron, low pay and high housing costs are pushing up the welfare bill, meaning that despite changes such as the cruel and unfair Bedroom Tax, the Tories have spent £25 billion more than planned over this parliament.

Housing Benefit makes up the second largest area of social security spending after pensions. Under the Tories, spending has risen over the parliament to reach £24 billion this year, a rise of £1.5 billion on 2010.

A toxic combination of low pay, a crisis in housebuilding, and rising rents plays a key part in explaining this rise, with the number of people forced to rely on housing benefit to pay the rent rising by over 440,000 since 2010 – clear evidence of the Tories’ failing plan.

And because of the mismanagement of the benefits system under Iain Duncan Smith, there’s also been a surge in housing benefit overpayments due to fraud and error, adding an extra £470 million to welfare spending. Overpayments now represent six per cent of total spending on housing benefit, the highest level since records began.

This can’t go on. As Ed Balls has said, will need to make tough choices to get the deficit down. Today, in our interim Zero-Based Review of the Department for Work and Pensions spending, Labour is setting out a plan to control the housing benefit bill and ensure that we can deliver a sustainable social security system.

We have listened to the independent Work and Pensions select committee and will consult on how to use data from credit reference agencies and the payments industry to make sure the information provided by people claiming housing benefit is correct.

And we will give councils back the fraud investigation powers that this government wants to take away. Just bringing error and fraud levels down to the levels seen under the last Labour Government would save the taxpayer £1 billion over the next five years, and we will set a target to save at least that amount

Labour will also take action to bring down the high cost of rents – which is pushing up the housing benefit bill – by building at least 200,000 more homes a year by 2020, and introducing stable tenancies with predictable rent rises.

At the same time we will tackle low pay which is forcing more and more working people to rely on housing benefit because they can’t afford to pay the rent. A Labour government will raise the minimum wage to at least £8 an hour by 2020 and giving tax rebates to firms who pay their staff a Living Wage so they can pay the rent.

We will deal with the rising costs of temporary accommodation and turn around a system that is trapping thousands of families in, poor quality hostels and B&Bs, while costs continue to rise. And we will reward councils that negotiate lower rents with landlords, by letting them keep these savings so that they can build more affordable homes.

Labour has a better plan to ensure we have a social security system that is fair and affordable, and that works for working people. 

Rachel Reeves is shadow Secretary of State for Work and Pensions. Chris Leslie is shadow Chief Secretary to the Treasury.

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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.