How Osborne disguised the truth about the rising housing benefit bill

Excessive rents and substandard wages are to blame for soaring housing benefit payments, not workshy 'scroungers'.

Rarely has there been a better example of a politician attacking the symptom, rather than the cause, than in the case of George Osborne and housing benefit. Addressing Morrisons workers earlier today, Osborne sought to terrify his audience with tales of families receiving "£100,000 a year" (just five did). It was such cases, he said, that prompted the government to cap housing benefit payments at £400 a week.

We can’t have a system that penalises you for going out to work and wanting to get on. So we’ve put a stop to those staggering payments and put a cap on housing benefit.

We’ve made sure that you can’t get more than £400 of Housing Benefit a week in this country. That’s still a pretty generous amount.

And yet when we did the pressure groups and welfare lobby attacked it as not enough.

They still say that people should get more than £400 a week housing benefit.

They don’t seem to realise that the money to pay these benefits comes from people who work hard, who pay their taxes, and many of whom can’t afford £400 a week in rent.

On one point the Chancellor is right: the housing benefit bill is too high. But what he chose not to tell his audience is that benefit payments have only soared because rents have. The bloated housing benefit bill (which will reach £23.8bn this year, more than a tenth of the welfare budget) is the result of a conscious choice by successive governments to subsidise private landlords, rather than invest in affordable social housing.

The cost of privately renting a home has increased by 37 per cent in the past five years and is set to rise by a further 35 per cent over the next six years. As a result, the number of working people forced to rely on welfare to pay their rent has increased by 417,830 (86 per cent) in the last three years, a figure that is rising at a rate of nearly 10,000 a month. Ninety three per cent of new claims are made by households containing at least one employed adult. By 2015, a total of 1.2 million working people people will only be able to stay in their homes through state subsidy. It is excessive rents and substandard wages that are to blame for the inflated housing benefit budget, not workshy 'scroungers'. Even with the government's cuts, the bill is forecast to rise from £23.8bn this year to £25.9bn in 2017-18. 

But had Osborne chosen to tell his audience this, rather than launching another lazy assault on the welfare system, he might have been forced to explain why the government isn't building more homes. With 390,000 new families formed in 2012 but only 111,250 new homes built, rents have continued to soar as demand has outstripped supply. And as the OBR, among others, has noted, Osborne's new "Help To Buy" scheme is only likely to further drive up prices. But the government's response to the housing crisis too often remains to change the subject. In this case, by displacing public anger onto those who least deserve it: the poor and the vulnerable. 

Members of the public in north London walk past a poster informing of changes to the benefits and tax system that have come into force. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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​The US and the EU are shaky allies in Theresa May’s stand-off with Russia

Both Donald Trump and Jean-Claude Juncker undermined the PM by congratulating President Putin on his re-election.

With friends like these, who needs Vladimir Putin? Jean-Claude Juncker and Donald Trump have both undermined Theresa May's attempt at a united front against the Kremlin, as both men congratulated the president on his successful re-election.

The Washington Post has the remarkable details of the Trump-Putin phone call, in which the American President ignored a note saying “DO NOT CONGRATULATE” and neglected a briefing note instructing him to condemn the nerve agent attack on the Skripals. You can read the full letter from Juncker to Putin here. In both cases, what's in the message is fairly ordinary: the offence is one of omission.

How much does it matter as far May's stand-off with the Russian government goes? The difference is that Trump's position matters because he has hard power: it is a result of his Russia position that American sanctions and rhetoric about the attack on the Skripals is not tougher. Juncker's position matters because – while he has been condemned by Donald Tusk, Guy Verhofstadt and large numbers of MEPs – he is representative of a significant strain of public opinion across Europe.

We were given a measure of the size of that caucus in Germany, with polls showing that in excess of 80 per cent of Germans have an unfavourable opinion of Donald Trump, but just over half say the same of Vladimir Putin. In the United Kingdom, one of the EU's more hawkish nations outside the Russian-EU frontier, voters, also have a more unfavourable opinion of Trump (80 per cent) than of Putin (74 per cent). 

Bluntly, the problem May has is that the present incumbent of the White House is a shaky ally and most European politicians, including herself, have electorates who are potentially flaky too. Should Sergey Lavrov's threat that further sanctions will invite further reprisals be made good on, it's not a good starting point for the prime minister.

Stephen Bush is special correspondent at the New Statesman and the PSA's Journalist of the Year. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.