New Times,
New Thinking.

  1. Business
  2. Economics
9 October 2012

Memo to Cameron: 93% of new housing benefit claimants are in work

The PM described it as a benefit for the unemployed. But most new claims are made by in-work households.

By George Eaton

Is David Cameron a fool or a knave? Challenged by Today presenter James Naughtie on his plan to abolish housing benefit for the under-25s (including the 204,500 claimants with children), the Prime Minister implied that it could only be claimed by the unemployed. He said:

We should ask this question about housing benefit: if you’re a young person and you work hard at college, you get a job, you’re living at home with mum and dad, you can’t move out, you can’t access housing benefit.

And yet, actually, if you choose not to work, you can get housing benefit, you can get a flat. And having got that, you’re unlikely then to want a job because you’re in danger of losing your housing benefit and your flat. We have to look at the signals we send and I think we should have a system where we say ‘you shouldn’t be better off out of work than in work’. The system doesn’t work today, so we need to reform it.

The truth, as I’ve noted before, is that just one in eight claimants is out of work, the remainder being employed, retired or registered disabled. Indeed, years of falling living standards mean that housing benefit is increasingly a subsidy for the working poor. Of new claims between 2010 and 2011, 93 per cent were made by households containing at least one employed adult.

If Cameron really wants to reduce the welfare bill, he should seek to lower rents and increase wages (when did you last hear him speak of a “living wage”?). Punitive cuts to housing benefit might win the Tories favourable headlines in the right-wing press, but this approach will do nothing to help “the strivers” that Cameron purports to support.

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