Labour is wrong on housing benefit

by Peter Watt

The proposed changes to housing benefit have certainly got people fired up.  “Rightly so”, you may say. It certainly feeds our preferred narrative: a heartless government unfairly slashing that which benefits the most vulnerable. There is also no doubt that thousands of families will suffer from a loss in income and in some cases even be forced to move. The full scale and impact of the changes is unknown, but Crisis has powerfully set out the full range of the government proposals:

  • Local housing allowance (LHA) rates to be recalculated meaning 774,970 households will lose on average £468 per year;
  • 25 to 35 year-olds to be moved down to a share room rate from a one bed flat rate affecting 88,000 people;
  • Cutting housing benefit by 10% after a year on job seekers’ allowance affecting 200,000 people;
  • Index linking of LHA affecting 939,220 households to the consumer prices index;
  • LHA caps for 21,060 households will ensure that no one-bedroom property receives more than £250 in LHA, rising to £400 for a four-bedroom property or larger;
  • Non-dependent deductions will be increased from2011;
  • Limiting working age housing benefit to reflect household size;
  • Limiting total benefit claim by household to £500.

A hard hitting and tough list; so it should be an open goal for Her Majesty’s loyal opposition. Same old Tories, supported by their new supplicant mates the Lib Dems, doing what Tories do best – screwing the poor. And we are certainly putting the boot in with gusto. Ed Milliband has led with it at PMQs and the Labour blogs have been full of technically correct and eloquent arguments that the government is wrong. It is so obviously unfair, the Liberals are split on the issue and even Mayor Boris is worried about the impact. We can’t fail to miss.

Except, we have a problem.  And it isn’t just that our 2010 Labour manifesto said:

“Housing Benefit will be reformed to ensure that we do not subsidise people to live in the private sector on rents that other ordinary working families could not afford. And we will continue to crack down on those who try to cheat the benefit system”.

No, the bigger problem is the flawed message that we are in danger of sending the public.  When the prime minister says

“Paying over £20,000 a year for the housing benefit of some families is too high. I do not think taxpayers who pay their taxes will understand why we are being so extravagant”,

“There are many people who earn less than £20,000 – their whole income is less than £20,000 – who are paying taxes to house people who are getting rents of £25,000, £30,000, £35,000, £40,000. They don’t see that as fair and neither do I”.

He is sending a clear message that he is standing up for families who work and who play by the rules. He is sending a clear message that he is against wasting billions of tax-payers pounds on a flawed benefit system and particularly so at a time that the country can ill afford it. And, on top of that, he knows that the public blames Labour for the deficit and for overseeing a massive rise in welfare dependency. It doesn’t matter if it isn’t true. It doesn’t matter that he is only focussing on one aspect of the proposed changes. These are the messages that he is sending and what much of the public believes. In short, Cameron knows that Labour has no credibility on the economy and no credibility on welfare reform.

So when we say (rightly) that the changes are unfair and are going to cause real hardship – we are simply reinforcing the negative narrative. First, that we are economically illiterate as we support continuing to waste millions of pounds of hard-working taxpayers’ money. And, second, that we would rather support those on benefits over everybody else. I know it isn’t true, but it is the message that we are sending out.  It is what is being heard by the public with whom it resonates, because they believe it.

Many others have written about tactics and strategy (Hopi Sen particularly well). Labour needs to recognise that until we re-establish a reputation for economic competence, we are unlikely to get a fair hearing. So establishing that competence has to take precedence and be seen as our strategic imperative. The housing benefit row is an example of being right on the substance but strategically wrong.

We should be arguing, as we did in our manifesto, that of course the housing benefit system needs reform. We should not subsidise people to live in the private sector on rents that ordinary working families cannot afford. We should be arguing that this government’s proposals are so ill thought out that they are likely to lead to rising welfare bills and so will cost more than the status-quo. And, of course, we should be arguing that the real problem is a shortage of housing and rising private sector rents. And, finally, we should be prepared to acknowledge that we did not do enough to increase the supply of housing when we were in government.

It may be a less comfortable argument for the party than simply branding the government as immoral and unfair. But it might just begin to repair our credibility on the economy and our attitude to work and benefits. Restoring which credibility is central to ensuring that we get a fair hearing at the general election in 2015.

Peter Watt was general secretary of the Labour party.

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18 Responses to “Labour is wrong on housing benefit”

  1. It doesn't add up... says:

    Maybe if Labour could admit to themselves that the real beneficiaries of lavish housing benefits are the landlords with their BTL portfolios, the Housing Association bosses with their fat cat salaries, and the bankers who financed the housing bubble who are paid interest from the rental incomes, and that the real losers are the young in work who do not qualify for benefits, then perhaps they can begin to reconnect.

  2. doreen ogden says:

    And how much does Cameron and the other millionaires on his team claim for their second homes — from us the tax payers. Perhaps they should be means tested before they can claim anything. The problems stem from the right to buy council houses and no plan to replace them – Thatcher – but we carried it on.

  3. Sir Trev Skint MP says:

    And the 8 Labour millionaire cabinet ministers claiming housing second home allowances are exempt are they doreen??

    It’s Labour that has six MPs awaiting trial for fraud

  4. Lynn Hancock says:

    ‘We should not subsidise people to live in the private sector on rents that ordinary working families cannot afford.’ ????

    Any ‘messages’ need to avoid demonising benefits claimants – it’s sickening.

    Many people claiming benefit *are* ‘ordinary working families’ and pensioners. And many others wish they were working – but will still face a 10% cut in HB irrespective of how hard they have been trying to find work, a struggle that looks likely to be lot more difficult over the coming months and years.

    There’s also no mention of the decision to limit claims to the lowest 30th percentile of rents in an area in this article. Is it not important to support the idea of mixed communities?

    The HB measures are unfair and vicious. They should be opposed on principle – the ‘message’ should follow. Any message needs to avoid buying into the stimatising, demonising rhetoric that damages lives and life chances, and in turn justifies draconian measures such as these.

  5. Tim Sewell says:

    It’s depressing to see a Labour veteran coming out with the same divisive formulation as Nick Clegg did the other day in parliament: “He is sending a clear message that he is standing up for families who work and who play by the rules.”

    To say that claiming a benefit puts one outside the ‘rules’ lays bare a contempt for the less-well-off that would be more in place on the Tory benches than on a Labour-supporting website. Divide and rule has always been the Tory strategy and repeating such subtly demonising rhetoric does nothing but aid their cause.

    As to the cap – surely one of the main points of benefits is to spread the pain of failed markets – in employment and housing especially, as thinly as possible throughout the population. It’s not the fault of the unemployed, the elderly, the disabled and the low-paid that speculation and market distortions caused by the rich have rendered housing in any city with good employment prospects unaffordable, so why should they be the ones to have their lives uprooted as a result of that. The end result will be that if you’re out of work you’ll only be able to afford to live in areas where there is no work to be had, all the while being exhorted by Iain Duncan-Smith to get on the bus and get a job.

    Labour should ditch that part of the 2010 manifesto which called for this cap as the Murdoch/Mail-pleasing sop it was, admit that we were wrong and move on to oppose cuts which attack the very roofs over the poor’s heads by every means possible – especially by educating the electorate as to why they are unjust and short-sighted.

  6. Bev C says:

    Why is it that this issue always involves beating up on those people claiming housing benefits and does not address the issue of what landlords can charge? We need a cap on rents not on housing benefit. Greedy landlords have been the cause of the problem not the ‘undeserving poor’ (and how I hate the reemergence of that divisive and unfair category).

  7. Peter Watt says:

    Tim – thanks for describing me as a ‘veteran’. I think that I am pleased. That said, your comment confuses me (as does Lynn’s to be honest). I am not claiming that the Cameron/Clegg message is right, accurate or even fair. I am saying that it resonates with the public. We need to earn the right to be heard on this issue and in my view our current stance plays straight into the Goverment’s hands, reduces our chance of becoming electable at a national level and therefore ultimately further harms the interests of those that we would like to protect.

  8. AnneJGP says:

    It isn’t surprising if Peter differs from many in the Labour party on money matters. He’s had the experience of trying to keep the party solvent when all around him were spending without thought for where the money was coming from.

    At a time when Labour is struggling to be heard at all, the message has to be focussed and concise. Just opposing everything is woolly and verbose.

    I simply don’t believe that the coalition government wishes or intends to hammer poor households for the sake of it. If you believe that, your tribal loyalty is blinding you.

    As well as accepting that the coalition believes it necessary to reduce government spending, try to accept that the coalition partners are acting in good faith. Where you anticipate particular hardship, make your case with facts, not sob-stories. You are far more likely to win amendments & concessions if you behave like grown-ups.

    If you don’t, Peter’s remark (which looks to me like a Freudian slip) is likely to be prophetic:” We can’t fail to miss.”

  9. Bev Clack says:

    Sorry Anne. While I agree we need to show that we are credible, I think you are being far too kind about coalition motivations. And to be honest good intentions on their part are not enough if they don’t understand the complex roots of poverty. Don’t forget that the IFS have shown that the poor will carry the weight of the cuts regardless of how ‘progressive’ the coalition say their measures are.

  10. Trevors Den says:

    Its a hoot to see all you labourites in denial. No one has answered the reality that it is obscene to be paying up to 20,800pa in benefits just for rent.

    And you still argue it is cruel? Hah, a search of the web will reveal 18,000 flats within 5 miles of central London available for 400 pw or less. And 7500 houses.

    Rents rise because the dumb taxpayer is willing to pay for the privilege.

    And thanks to the thickness of you dumb labourites the country is well and truly stuffed. Brown never cared where the money was going to come from for his mad spending. The economy never created the wealth to match his grand designs – but who cares, Carry On Spending.

    And in the end it seems socialism’s success is marked by how many people it can park on benefits and how many immigrants it can bring in to replace them. No wonder Brown thought Mrs Duffy was thick.

  11. Jeremy Poynton says:

    “And, on top of that, he knows that the public blames Labour for the deficit and for overseeing a massive rise in welfare dependency. It doesn’t matter if it isn’t true.”

    But it IS true isn’t it? And until Labour comes to terms with this, they will – rightly – be treated with contempt.

    My partner is self-employed. She earn’s about 16£ pa. Her taxes go to pay people earning more than her in benefits alone, and despite the fact thet she cannot afford to save for a pension, one third of her council tax goes to pay for council workers’ pensions.

    And you tell me Labour is the FAIR party? Your problem is that Labour’s “fair” only applies to those who receive welfare – and not those who stump up for it, even though they are on well below the median salary.

    By the way – I voted Labour from my first vote in 1970 until Iraq. It feels to me now that I helped, in 1997, to elect a Fifth Column that came to destroy my country from within.

    Never again.

  12. Jeremy Poynton says:

    Bev Clack says:
    November 5, 2010 at 8:23 am

    Sorry Anne. While I agree we need to show that we are credible, I think you are being far too kind about coalition motivations. And to be honest good intentions on their part are not enough if they don’t understand the complex roots of poverty.

    Ah yes. Only Labour can do this, as it has been invested in them by a higher power. Christ on a flying bicycle. I suppose that would be why the gap between the rich and the poor grew even larger under 13 years of Labour mismanagement. And along the way, they managed to imppoverish half of the middle classes as well.

    The main task for the Coalition once they have sorted out the deficit is to answer the West Lothian question, so that Labour never ever again are in charge in England. They are welcome to the Socialist Paradise of Scotland, where despite all the evidence that Labour don’t give a toss for them, the impoverished constituencies of the likes of Mick “I didn’t come into politics not to get what I am owed” Martin, STILL re-elect Labour despite the fact that they are STILL, 13 years on, enmired in poverty.

    Bottom line. Socialism doesn’t work. Unless you are in power.

  13. Richard says:

    Some comments:

    How likely is it that a landlord will accept a tenant who is unemployed? Judging from the number of “No DSS” signs on estate agents’ doors, very unlikely. I wonder how many people currently renting houses above the cap will be able to find cheaper houses where the landlord is happy to take on an unemployed person.

    The £400 a week cap only applies to people who need a 4 bedroom house, i.e. families.Allowances are £250 for a one-bedroom property, £290 for two, £340 for three, and £400 for a four-bedroom property.

    Housing benefit is not just paid to unemployed people. The Labour Party need to make clear that thousands of low-paid workers – the people whom the Labour Party is meant to be fighting for- recieve housing benefit as well.

    More focus needs to be on the obscene decisions to move 25 to 35 year olds down to a share room rate (meaning few under 35 will risk renting a flat) and the 10% HB cut after one year, punishing people for not being able to find a job during a recession.

  14. Stephen says:

    Peter is right that paying over the odds for housing benefits should not happen and is likely to be resented by much of the population. But where he is wrong, or at best silent, is in what he believes should be done about it. The target of all the proposals by the Government is the recipients of housing benefit, and very little is being done to target those who are the main benficiaries i.e. the landlords. The honest fact is that in most cases landlords are able to charge considerably more to those receiving housing benefits – and those paying out the benefit have been naive enough to allow this to happen. Yes, the Labour government is at fault in that it didn’t do enough to increase the housing stock and it was naive in not realising how increasing public expenditure would have an impact on the pricing of the goods it was purchasing ( look at what has happened with nursery, NHS, capital project and consultancy costs if you want myriad other examples) – but that can hardly be put down to those claiming housing benefit can it?

    There is nothing wrong whatsoever with the State providing assistance to the needy so that they can afford decent housing in a location near to their work and family, and I for one would not support any party that gave up on such an objective. Could I suggest that perhaps a little more focus on the supply side and how housing markets actually operate might be called for before we start the old game of scapegoating claimants. It might be a more difficult message to get across – but it is the right message nevertheless.

  15. Chas says:

    “Labour needs to recognise that until we re-establish a reputation for economic competence, we are unlikely to get a fair hearing.”

    Labour’s former “reputation for economic competence” was founded on a tissue of lies and spin which have now been comprehensively revealed for what they are. Labour never has, and never will, possess economic competence because it is a socialist party and socialism is the political philosophy of the economically illiterate. All Labour governments leave office with the economy in tatters and every single Labour government has left office with unemployment higher than when it started.

    Labour’s lecturing the coalition government on the economy is frankly risible. Brown’s idea of economic growth was to tax, borrow and spend, and his idea of job creation was to flood the country with cheap immigrants and to expand the public sector by a million people. The appalling costs of this utter idiocy are now being faced by the government and the people. Until the memory of the whole pack of crooks, liars, cheats, incompetents and chancers which comprised the Labour years in power has utterly faded in the public mind, they stand no chance of being re-elected.

  16. james says:

    I’m not sure I understand the logic here, Peter.

    “He knows that the public blames Labour for the deficit and for overseeing a massive rise in welfare dependency. It doesn’t matter if it isn’t true. It doesn’t matter that he is only focussing on one aspect of the proposed changes. These are the messages that he is sending and what much of the public believes.”

    Cameron knows all this because people like him own the press and aren’t going to print attacks on greedy bankers or Tory PMs who put their mates on the public payroll. In which case, our “credibility” means just surrendering, because we’re never going to have the media power to get our arguments across. And our messages – the only solutions I can think of in terms of dealing with HB are building more social housing and introducing rent controls – are never going to be economically credible to the ruling class.

  17. Mike Homfray says:

    Rent controls are the answer to reducing housing benefit, along with compulsory confiscation of all empty property without compensation

  18. Susan mcCarvey says:

    Whatever way you look it at it, it is a joke. I am age between 25 & 35, have pretty much worked most of my life earning less than £20,000 a year. Now with all the goverment cut backs, I have just been made redundant currently renting a flat.

    So not only have i lost my job, but I am now being told I have to down size & move out where I currently stay because I may not receive housing benefit even though its because of these government cuts why I have lost my job in the first place. I may have got this all wrong but something just does not seem to add up.

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