Coffee House

Waiting for welfare reform

6 November 2010

10:31 AM

6 November 2010

10:31 AM

After a summer of sporadic announcements, IDS’ welfare reforms will be published
in a white paper next week. As in 1997, when Tony Blair urged Frank Field to think the unthinkable, there is consensus on the need for radical welfare change. IDS has earned respect as a moral and pragmatic reformer, and he attracts
goodwill from across the House. The Liberal Democrats, Nick Clegg and Steve Webb particularly, were ‘vital’ in securing a spending concession from George Osborne, whilst Douglas
Alexander has described IDS’ plans and ‘noble’ and pledges to support principle that welfare should be a safety net, not a vocation.

He warms to the theme in today’s Guardian. Labour will back government plans to introduce a
universal credit, redefine access to incapacity benefit, drive out fraud and test the availability of incapacity benefit claimants to work. Alexander also agrees that benefits should be withdrawn
from those who refuse to take up work, but he wants assurances that the government will guarantee work if it is to withdraw benefit – at the moment, Duncan Smith has no such plans.


This cordiality evaporates when housing benefit is concerned. Again, Alexander says that Labour agrees to the principle but not the detail. For instance, limiting the level of benefit from the 50th
to the 30th percentile of rents in just one year would mean, he says, that 700,000 of the poorest people lose an average £9 a week. Introduce the changes in stages and the vulnerable are much
better protected.

There are several points on which there can be no compromise: child benefit cuts and the decision to cut 10 percent in housing benefit from dole claimants.

On paper, Alexander’s opposition looks very measured. IDS may be revered but he is not infallible: Ed Howker has revealed how proposed housing benefit changes may penalise those in
work, and the child benefit debacle suggests that this white paper will be knocked around the committee rooms. In principle though, Westminster seems to be on side.

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Show comments
  • treborc

    If having a council house for life is a system which stops mobility, what about buying a home in an area without work or ends up an area without work, an area in which the house buyer has family, does that not do the same. Or is it that council house dwellers are all work shy scroungers.

    God I give up with some people, I have lived in a council house and worked all over the country, my wife stayed in the house and I left to work away.

    If I had bought my own house I would have done the same thing , so whats the difference.

  • John Robinson

    The coalition’s benefit reforms are pernicious, retrograde and unsustainable. Linking housing benefit to the CPI is one example of this, as it rises too slowly to make the benefit serve its purpose.

    Attacking the poor in this way will send us back to a Victorian poorhouse mentality, and I intend to spend as much time as I can fighting it. There is very little intelligent debate about these reforms to be found (IDS is hardly very bright), but ironically the Second Chamber is turning out to be a good sounding board:

    I hope this coalition of the damned will learn to sleep at night, knowing the damage they will do to an already fragile society. Personally, I hope this country will wake up, NOW.

  • Pete Adams

    Interesting point about the capping of housing benefits and landlords in all of this, many of them of course wanted their rental income to be a pension of sorts. Also worthy of a mention are properties let where the tenant stays for a few days and goes and lives in another one for the other half of the week (see – locally a tenant who split from their other half claimed the second home rebate, a month later he moved in!

  • yank

    One of the candidates for the recent New York State governorship was from “The Rent Is Too Damn High Party”.

    A quirky guy, but he had a point, too. Subsidized housing and rent control is a trap and a scam.

    Google up the YouTube videos of this guy… they’re hilarious… and there’s a remix even more so.

    “What’s our problem? (((pregnant pause))) That’s right! ‘The Rent Is Too Damn High!'”

  • Oedipus Rex

    @ John Moss

    Point taken – sure there were previous booms to the 80s, and I totally agree about having a greater private rented sector. But spiraling rents (in NYC &, I believe, Germany there are far stricter rules on increases of rents) has caused the HB problem. How many Estate Agents have the DSS welcome notice in their windows and why do you think that is?
    The Brits are obsessed by property ownership (cf Maggie) and this is the main difference between us and the rest of Europe where private rents are lower as far as I can tell.

  • John Moss

    #Oedipus Rex

    Housing booms didn’t start under Thatcher. They happenned in the late 1920s, the late 1950s and the mid 1970s. However, it was the destruction of private renting through the 50 years after WW1 which drove private house prices upwards, as those who waited – and waited and waited – for “council” homes had no choice but to buy as private landlords refused to re-let on low rents to protected tenants.

    I have argued before that the move to build social homes in public ownership let out at low rents, is a large contributor to housing market boom and bust. If instead, the state had funded the rent of those in need and left the private rented sector alone, then we would probably have a housing market much more like Germany, with fewer owner-occupiers and many more pension funds and other institutions investing in homes to rent.

  • John Moss

    Universal Credit needs to wrap up ALL benefits, including Housing, ICap and Child Benefit and taper these away to nothing at a level somewhere around £40-£45,000 household income.

  • Oedipus Rex

    TrevorsDen – “but oh deary me that would expose us all to the cosy conspiracy we have all been party too – profiting from the property ladder.”

    you said it feller. Of course, some of us never did ‘profit from property’ and a fat lot of good it did us. But I don’t feel like the hypocrites that both those of the right and left are. I can look my son in the face and say “It wasn’t me who screwed it up for you”.

    When this started under Thatcher, most people didn’t notice or willfully ignored it, whether they were scamming HB or speculating on residential property; probably because they were, er, pleasuring themselves over the latest positive bank statement!

  • TrevorsDen

    As I said before Mr Howker talks er … rubbish.

    There are 7500 houses within 5 miles of central london available for rent on ONE website alone.
    And there are 18500 flats. All for £400pw OR LESS.
    And for those who care about these things things – What does it matter about bedrooms? When I was young I had to share my room with my brother. Benefits are a safety net not a sinecure.

    There clearly must be many more within 10 or 15 miles of central London. Rents match the funds available. Landlords can sell their properties or lower their rents.

    All of which might help to keep property prices in check – but oh deary me that would expose us all to the cosy conspiracy we have all been party too – profiting from the property ladder.

  • Molly

    The only people enriched by housing benefits are private landlords. With constrained supply, the higher the benefit, the higher the rents. O level economics. The answer is to cut housing benefits across the board – say by 10% – and watch rents come down. Crude, a bit painful, and very effective.

  • justathought

    “Labour agrees to the principle but not the detail”

    True but then again Labour realise that as Frank Field has demonstrated, that welfare reform makes sense even though they did not have the support of the back benches. Labour can now hide behind a fig leaf arguing over details knowing that they are off the hook on taking the hard decisions.

    Lifetime tenancies are a block to mobility deterring welfare claimants moving to where there is work. Reluctantly accepting that reform of this tax perk for life on the 700,000 living in grace and favour. Future life time tenancies should cease and the move to 80% market rent will be fair on the rest of the working population who are funding this perk.

    Future work needs to pay attention to the link between 700,000 households in lifetime tenancies in London and claims on welfare. Certainly it makes no sense that the majority of these households remain in occupation for years while on occupation. This ‘bed-blocking’ means that £10 billion (?) in local authority housing assets are wasted. In no other private sector would allow such a portfolio remain unvalued. Local authorities should be allowed to sell the highest valued properties. Each £400k property could house 16 large families in alternative temporary accommodation at the new capped rate of £25k.

  • Forlornehope

    Basing the housing benefit on the median value was such mathematical nonsense that only an innumerate could have come up with it. If you put a floor under rents at the median, the next review will almost inevitably find that the median has increased. It is just mathematically possible that it won’t but that requires some pretty strange assumptions. The median based benefit builds automatic inflation into the system and should never have been introduced. That is was is a serious indictment of the intellectual credentials of the last goverment and the civil service.