As I write, the Coalition Government’s latest welfare reforms are being hotly debated in the House of Lords. The Government wants to introduce a cap of £26,000 a year in the total amount of benefit an out-of-work household can receive. The cap won’t apply if anyone in the household is working and doesn’t apply to those on disability benefits. According to the Government, the cap will initially affect about 67,000 households, mainly those with large families living in expensive parts of London.
The reforms, says Iain Duncan Smith, the welfare minister, are intended to re-align the benefits system so that it will always be worthwhile to work. One of the problems at present is that some families would not be able to afford their present homes if they were working. In other words, the moment a member of such a household starts work, housing benefit will be lost and the family will no longer be able to pay the rent. Understandably, families in such a situation may be reluctant to seek employment if the result would be that they lose their home.
It can not be fair, says the Government, for people on benefits to live in houses that hard-working families, paying taxes, could not dream of. Polling shows that they are supported by the general public. Indeed, most polls show clearly that the electorate consider that the government is not being touch enough and would like the cap set much lower.
The debate in the House of Lords today is part of a whole package of welfare reforms being introduced during this parliament. Housing Benefit itself has already been capped; the cap came into force in April 2011. From that date, the maximum that can be claimed in housing benefit each week for new claimants is as follows:
- £250 for one-bed
- £290 for two-bed
- £340 for three-bed and
- £400 for four-bed and larger properties
The changes will be phased in for existing claimants from this month, January 2012.
Families in central London will see the biggest impact. Before the cap, the maximum rent payable for a 3 bedroom property in the Central London Broad Rental Market Area was £700 per week. That has been cut by more than half.
With such public support for benefit cuts, the Labour Party finds itself having to back the idea of a cap, their opposition being confined to technicalities about the way it is implemented.
Despite protests from the likes of Paddy Ashdown, Church of England Bishops and the respected Baroness Tanni Grey Thompson, the demands from the public for big cuts in benefits means the government have a strong incentive to push the reforms through. This is one situation where acting tough is likely to win them votes.
If you have been affected by the changes to housing benefit, either as a landlord or a tenant or in any other way, we’d like to hear from you.
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