Monday, September 06, 2010

Lib Dem MP: why cutting benefits is not regressive

Lib Dem MP John Hemming, with the latest attempts to explain why the Budget was not regressive:

"There are changes which are intended to get shifts in behaviour. These should not affect the disposable income of the households and should not be treated as either progressive or regressive. These also do not apply to all households that live on benefits. "

"Arguing, however, that people should downsize is not in itself regressive...People who fund their own housing move down market when short of funds."

Hemming's argument here is that cutting housing benefit for people on low incomes is "intended to get shifts in behaviour", and that "people should downsize when short of funds". Therefore, he argues that cuts to housing benefit should not be defined as regressive because people can downsize to cheaper properties, and the cuts are intended to change their behaviour by forcing them to get a job.

I thought the people who are in denial about the consequences of the Budget had scraped the barrel with Nick Clegg's arguments that the IFS hadn't taken into account future policies which the government might choose to introduce, or that the Budget was progressive because cutting corporation tax would create loads of new jobs. But the idea that cutting benefits doesn't count as regressive if it is intended to change people's behaviour, and anyway cutting housing benefit is not regressive because poor people can always move to cheaper housing, is a new low.

Here's Patrick Murray, who was a Lib Dem councillor in charge of housing, and who has had personal experience of being homeless, explaining the real consequences of the policies which Hemming is defending:

“The complex arrangements governing the calculation of housing benefit have been changed, leaving many people with less benefit to pay the rent in the private sector homes that councils have placed them in, in an effort to cut expensive temporary accomodation. Many will become homeless as a result.

What happens then? Well, they come back through the council’s doors, and are put in even more expensive temporary accommodation, immediately negating any potential savings from this move…

…The result of the current Coalition policies will be more over-crowding, more misery, and more people sleeping on our streets. And that should not sit easy on the conscience of any Liberal Democrat.”

5 Comments:

At 1:29 pm , Blogger MatGB said...

Which is more regressive.

Asking people in an expensive house they can't afford due to a change in circumstances to downsize to something more affordable, and paying for part of that, or forcing people living below the poverty line but not eligible for housing benefits (like, say, me) to subsidise the far more expensive houses of other people?

I'm not keen on the changes to housing benefits, but at the same time, I'm not happy to know that it's possible to claim more in housing benefits than my family earns and pays taxes on.

Seriously Dan, a £400 per week cap on HB is regressive? Our combined takehome pay is less than that, that has to cover the entire cost of our housing.

Taxing the poor to subsidise the accomodation of the formerly not-so-poor isn't progressive, surely?

 
At 1:30 pm , Blogger MatGB said...

Ah, sorry, I tell a lie.

We are eligible for LHA. We can fill in masses of intrusive forms, and be eligible for the princely sum of £8 per week.

But apart from that...

 
At 3:03 pm , Blogger donpaskini said...

Hi Mat,

There's the £400 per week cap, but also the decision to cut 10% of HB from people who have been out of work for a year, and shifting from fifth to third decile when determining LHA rates - both of which will affect far larger groups of people.

I'm sure we'd agree on some or all of the key policies which are needed to sort out the housing crisis - build more houses, rent controls, regulate landlords, cut taxes for low paid workers, replace council tax with land value taxes etc. Even converting housing benefit/LHA into a housing tax credit would help low paid workers and cut admin costs.

But just on this:

"Which is more regressive.

Asking people in an expensive house they can't afford due to a change in circumstances to downsize to something more affordable, and paying for part of that, or forcing people living below the poverty line but not eligible for housing benefits (like, say, me) to subsidise the far more expensive houses of other people?"

The total cost in taxes which you and your family have to contribute towards the cost of housing benefits for people who will be affected by these changes is approximately £1 per year. The consequence of these changes will be that more children have to grow up in badly overcrowded conditions, and more families are made homeless.

The result of these changes, as Patrick said, is that rather than our taxes getting spent on making sure people have somewhere decent to live, instead more of our taxes will end up getting spent on housing homeless families in even more expensive temporary accommodation, and on dealing with the consequences of overcrowding - from poor educational attainment to ill health.

 
At 9:40 am , Anonymous frances said...

Hi there Dan - long time no see - Dugsie sends warm regards.
Thought you might be interested in our work at CarerWatch. In particular having read a post by you on Citizens Income and the need to move towards more unconditional benefits - we thought you might be interested in the campaign we are running to try and defend the most severely sick from 'conditionality' under ESA and the Welfare Reforms. We would love some help with crafting the campaign message which gets very convoluted.

This is the evidence we gave to Harrington Scrutiny Committee on ESA. Gives all the links if you or anyone else woudl like to come and to come and help us. The severely sick are feeling demonised and very frightened and helpless at the moment.

 
At 1:32 am , Anonymous Anonymous said...

well here we are with Son of Thatcher on our way back to card board city uk. Plus lots of cripilles to tip out on the street as well once we confiscate thair Benefits and Housing.

And we have tory dupes buying into the devide and rule game once again.

Here is a good campaign theme for you to simplify "complex issues"

Same old lying tory scum. We all are in it together mate all us fat lying tory fat cats.

 

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