by Matthew Whittley

We have grown familiar with Tory backbencher’s frustration at the reality of coalition government that prevents them from delivering the yet deeper cuts to social security that a Conservative manifesto would likely call for. So much so that it’s easy to forget just how radical this government has been on welfare. The austerity driven assault on the poor has started to gather pace, with the first raft of welfare reforms already implemented.

This month, the vital link between benefits and inflation will be broken. With inflation remaining at close to 3%, the 1% cap on the uprating of benefits will make it even harder for those families already struggling to keep pace with the rising cost of living. Furthermore, the ending of full council tax rebate is forcing two million low-income households to contribute hundreds of pounds to their council tax – a tax that, until now, they have been considered too poor to pay.

This appears to have gone largely under the radar. One cut that has attracted substantial media attention is the introduction of under-occupancy charges for 660,000 social housing tenants – what’s been dubbed the ‘bedroom tax’. Those with a spare bedroom are having to deal with cuts to their housing benefit of, on average, £56 a month. As well as reducing the housing benefit bill, the government argues that this policy has been designed to make the best use of housing stock. Unfortunately, there aren’t anywhere near enough small properties to move people into.

This is especially the case in the North. Teeside based housing association Coast and Country Housing, for example, has 1,800 tenants classed as under-occupying, but they have only two one-bed properties available to let. People are being sanctioned for not moving into smaller houses that don’t exist.

The bedroom tax is not only punitive and unfair; it’s indicative of the economic illiteracy this government has become renowned for. In addition to sucking demand out of our most deprived communities, many affected tenants will, because of the shortage of social homes, end up moving to the private rented sector where rents are higher. The housing benefit bill is likely to increase, not fall, as a result of the bedroom tax.

One doesn’t have to look hard to find statistics to illustrate the incoherence and unfairness of these cuts. Perhaps more effective in connecting with the wider public are the plethora of emotive individual cases that have come to light of people impacted by the bedroom tax. Welfare reform may enjoy popular support in principle, but much of that support is likely to be withdrawn when becomes clear that it’s not scroungers that are being hit but the vulnerable – those with disabilities and the working poor who continue to suffer rapidly declining living standards.

There is an air of inevitability about welfare reform. Listen to the coalition and you could be forgiven for thinking that the impending pain is unavoidable. We must remember, however, that austerity is a policy choice, not some naturally occurring phenomenon. There are alternatives to balancing the books on the backs of the poorest. What is required, as the Institute for Fiscal Studies has called for, is a shift in the burden of taxation from income to wealth and assets to help ensure the most affluent pay their fair share.

Labour’s direction of travel is encouraging. Ed Miliband’s plan to fund a reinstatement of the 10p tax band with a “mansion tax” –  a 1% levy on properties worth over £2 million, half of which are second homes, is a promising start to the task of putting flesh on the bones of the one nation theme: an economy that works for the millions, not just millionaires. Progressives concerned about the increase in poverty that will occur when austerity really begins to bite should be calling for more same.

In January, Caroline Lucas, former leader of the Green party, introduced a Land Value Tax Private Members’ Bill. This suggests taxing the unearned wealth pocketed by those who have benefited from rising property prices at the expense of others unable to afford to get on the housing ladder. When David Cameron talks of a “something for nothing culture” this is what should spring to mind, not people scraping by on benefits.

We also need watch closely to see if George Osbourne’s recent talk of closing down loopholes on tax avoidance is followed by meaningful action and that he isn’t just riding the wave of public opinion.  It’s morally repugnant that at a time when food banks are becoming a permanent fixture within our most disadvantaged communities, tax accountants continue to, in the words of Margaret Hodge, chair of the Public Accounts Committee, “run rings” around HMRC. The PAC estimates tax avoidance by wealthy individuals and corporations to be costing the taxpayer at least £5bn a year, although the actual figure is likely to be far higher. This is the advantage of taxing wealth and assets – capital may be mobile but it’s hard for even the most dogged tax avoider to move their mansion to Switzerland.

Public attitudes towards these issues have altered in the last couple of years. Although most weren’t quite as “intensely relaxed” as Peter Mandelson about those at the top getting “filthy rich” during the boom, the growing gap between the rich and the rest didn’t really register on the political agenda because voters thought they would continue to take their fair share of an ever-increasing pie. In the current climate, however, it offends a basic sense of fairness that while the safety net is being slashed for the poorest and the middle are now looking down instead of up, the rich continue as if the financial crisis never happened. If the government is serious about tackling the deficit, it’s incumbent upon it to ensure that the wealthiest are making their contribution; deficit reduction shouldn’t be a task left to ordinary folk.

Matthew Whittley works in the housing sector in a Midlands-based housing association, analysing the impact of coalition policies

Tags: austerity, bedroom tax, Caroline Lucas MP, land value tax, Matthew Whittley

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