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Saturday, 4 July 2015

A Budget to eliminate the safety net?

Things cannot get any worse

 By Joan Grant of the KUWG

The Tories said that they would make £12bn of cuts to social security, but would not tell us how. The one measure that we were told about was freezing benefits for 2 years. That saves £1bn. Reducing the benefit cap from £26,000 to £23,000 will save £100m a year. So that left £10.5bn of savings still to be found.

The Budget is just days away now. We still have not been told what is planned but the press are starting to discuss different rumours.

One of the rumoured cuts is to make everyone claiming Housing Benefit pay 10% of their rent. They well know but probably do not care that there are thousands of people who get £73 in JSA but whose rent is £250 a week. No one can afford to pay a third of such a low income towards the rent on a long term basis. People will get into arrears very quickly and then be evicted. The lives of people in the private rented sector are insecure enough as it is, without this as well. In a borough like Brent 100 people a week apply as homeless to the Council. A plan like this will just make things much worse.

The way to reduce the housing benefit bill is to have more social housing so that people are paying lower rents. However, one of the first things the Coalition did back in 2010 was to reduce the amount of money allocated to building social housing. Another short sighted move. Selling off housing association flats (which will ultimately end up in the hands of buy to let landlords) is another very bad policy.

The other possible cut that I have seen mentioned is to reduce the amount that people in the ESA-WRAG get from £102 to the same as JSA, i.e. £73. People currently in the ESA-WRAG face seeing their benefit reduced by £30 a week. In addition they may have to pay 10 % of their rent which could be £25 or more each week. So they face a dramatic reduction in their incomes

The Tories also plan to take away Housing Benefit from young people aged 18-to-25 who are receiving JSA. This is another pointless, petty and vindictive policy. 
I have no wish to scare anyone as these proposals are just rumours at this stage. But there will be more cuts after the budget on Thursday, so we may as well be prepared.

I personally do not expect any meaningful opposition from Labour. They may even support these measures to show that they can take “tough decisions”. But I’d love to be proved wrong. Only Jeremy Corbyn was on the anti austerity march two weeks ago.

These cuts will affect millions of people. The only thing that we down at the bottom have is numbers. We have to find a way to make our voices heard.

And all of this is in stark contrast to the inheritance tax cuts for homeowners which will “cost” a £1bn.

I will do another blog next week after the budget, when we will know exactly what we are dealing with. 

Related post

Benefits for people in work cost 6x as much as for people out of work



  1. An email correspondent has written:

    "Well done on your Budget prediction piece Joan on the KUWG blog,
    "I mentioned to a few people a couple of weeks ago that I thought maybe universal Housing Benefit and Council Tax may be sliced but I never thought it would be by as much as 10%.
    "Anyone currently managing to scrape by on their payments will not be able to now; rent and household utilities arrears will build up quickly.
    "Why would a government that purports 'we are all in this together' want to escalate the deprivation of fuel poverty and homelessness while simultaneously favouring those in line to inherit with a tax break?
    "Is long term squatting of absentee billionaire owned mansions the answer?"
    I would argue that it's a case of 'austerity' and 'the deficit' being excuses for an 'end game' that boils down to the privatisation of the welfare state. I am led to such thinking by having read as far back as 2008 of the influence of American health insurance company Unum as 'advisers' to successive UK governments regarding 'welfare reform' since the 1990's. A development of that analysis can be found on the Disabled People Against Cuts website. See A Tale of two Models: Disabled People vs Unum, Atos, Government and Disability Charities :Debbie Jolly
    Further confirmation of such an analysis comes with reading in The Shock Doctrine: The Rise of Disaster Capitalism by Naomi Klein of 'the holy trinity' of 'corporatists' as Naomi Klein calls 'neoliberals'.
    Sadly, though Klein's book was published in 2007 — before the 2008 banks collapse both sides of the Atlantic and before a right wing, 'free market capitalism' coalition camed into government in the UK — that incisive analysis is far too little known still. And while The Sock Doctrine is extremely heavy reading in itself and hundreds of pages long, it is well-condensed in Ronnie Steinberg's Ms. Magazine Review: The Shock Doctrine

  2. I've been trying to explain to people that I've seen during the last week, that putting a 10% rise in the amount of rent paid will leave some people with £30 a week to live on, even less that that in some cases. This will prove impossible to live on; it would barely cover heating, let alone all of the other household bills.

    And it's bad enough for those claiming JSA, but to think of really sick people being forced onto this income is terrifying. Many in the WRAG can't get around on their own for example so they can't use public transport. How would you then pay for taxi fares to regularly see your work adviser or get to hospital appointments?

    If these people are forced out of their homes, it's likely that many will have to go into care homes, which will cost the government dearly, especially as they won't be able to contribute much to the cost of their care.

    Yes again, a badly thought out policy that will cost the country dear.

    1. Hi, Sasson
      In theory, such a person on ESA in Work-Related Activity Group (WRAG) should be receiving Disability Living Allowance or it 'Personal Independence Payment' (PIP) replacement. But....

      See also Revd Paul Nicolson's guest blog piece, Unfair distribution of austerity.

      Dude Swheatie of Kwug