£23k benefit cap will save just 0.2% of benefit bill - but cause huge hardship

Mon, 20/10/2014 - 13:46 -- nick

At last month's party conference, George Osborne revealed a central plank of the Tory party's offer for the next election, reducing the benefit cap from its current £26,000 to just £23,000.

We wrote recently that three-quarters of people support this policy, and suggested why this was, with the endless vitriol heaped on workless people by politicians and papers the main culprit, along with ever-decreasing living standards making most workers poorer - and less sympathetic - every year.

Today David Cameron has put more meat on the bones of the policy, claiming it will save £300 million and affect 100,000 families, with the money going towards a big expansion in apprenticeships.

Obviously more people getting training is a good idea, but some number crunching shows just how tiny the saving is.

On last year's figures the total benefit bill is £171 billion, a huge figure.

That makes £300 million less than 0.2% of this bill.

It may sound like a decent chunk of money, but in the context of welfare and pensions it really isn't.

Osborne recently announced another freeze on working age benefits for two years from 2016, and this will save ten times as much - £3 billion.

In last year's sweeping cuts, the bedroom tax lost £465 million per year for those affected, legal aid cut £350 million from its budget, council tax lost £480 million, and the 1% cap on benefit rises could see savings of £2.3 billion by next year.

The misunderstanding about the benefit cap is that those who receive more than the £26,000 it currently sits at have a huge amount to spend.

Not so: the only variable aspect of this income is housing benefit, and this cost has risen so much only because rents have increased so hugely, beyond any other aspect of British life.

The reduction to the cap simply means a cut to the maximum housing benefit a family can receive of £3,000, cleansing many areas of the poor and leaving much of London and the south-east as rich ghettoes.

Moving these families to poorer areas is likely to reduce their chances of finding jobs as cheaper rents correspond to higher unemployment, meaning often-unemployed people ending up in areas that hamper their life chances.

Of course, there is an alternative to the endless empoverishment of poor workless and working people.

At the same time last year as these cuts were announced the coalition told of another, the tax cut for the wealthy from 50% to 45%.

This is worth anywhere up to £2.5 billion, more than the bedroom tax, council tax, current and proposed benefit caps and legal aid cuts put together and providing money to those who simply don't need it.

At UnemployedNet we have tried to popularise the hashtag #lookupnotdown, with the aim of encouraging people to focus their attention on more appropriate places for cuts among the richest.

The alternative is only entrenching UK poverty even more, and eventually replacing our precious safety net with a Victorian system of charity that ends universal care and destroys the lives of those least able to look after themselves.