The Sunday Times

October 31st, 2010

The palatial injustice that shelters in housing benefit

Fair is the new political buzzword. The Labour party and the liberal Left thought for decades that they had a monopoly on fairness, but the Conservatives and the coalition government have laid aggressive new claim to it, and with some justice. For there is no doubt at all that fairness lies at the heart of their new plan to cap housing benefit, however harsh it may seem. The existing welfare system is deeply unfair and ought to be changed, on moral grounds as much as economic ones.

As David Cameron said in the Commons last week: “The point everyone in this House has got to consider: are we happy to go on paying housing benefit of £30,000, £40,000, £50,000? Our constituents working hard to give benefits so people can live in homes they couldn’t even dream of? I don’t think that’s fair.”

Of course it isn’t fair. For now, at least, the prime minister is holding his ground, despite the predictable splutterings of fury, including a disloyal outburst from Boris Johnson, who burst forth about “Kosovo-style social cleansing of London”. Ignoring this low blow, Cameron in Brussels riposted: “Paying over £20,000 a year for the housing benefit of some families is too high. I do not think taxpayers will understand why we are being so extravagant.

“People pay their taxes knowing that we should be helping to house people, that we should be protecting the vulnerable, we must be helping the needy … 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, £40,000. They don’t see that as fair and neither do I.”

Nor, incidentally, does the Labour party, according to its election manifesto.

Clearly, needy and vulnerable people must get help with housing, but taxpayers cannot be expected to house them in the most expensive districts, like central London. Nobody has any universal human right to live in Westminster or Fulham or the leafiest parts of Bristol or Manchester.

People who aren’t entitled to benefit — currently that’s people whose total incomes are over £16,000 a year, or who have savings of over £16,000 — don’t have any such right, and they do what anybody reasonable would do. They accept they cannot live in Chelsea and find somewhere in greater London, where rents are lower. They might prefer to live within a Bath Oliver’s throw of Harrods, but they are realists; they know, too, that plenty of people from rural areas who aren’t entitled to housing benefit cannot afford to live in the lovely village where they grew up, but have to move elsewhere.

Almost all the young adults I know in London, some of them in their early thirties, accept that they must rent a room in a shared house, with a shared living area, and go to the outer reaches of the city to find one, or move out of London. Why should all this be any different for people who are entitled to housing benefit? By what right should they have better, more expensive accommodation than hard-working people? Of course, some people on housing benefit are working, but far from all of them.

According to government figures, of the 21,000 people across the UK who will be directly affected by the proposed new caps on how much families can claim, including 17,000 in London, the majority are out of work. Labour MPs have pointed out that working households claiming housing benefit make up 14% of the total housing benefit caseload. This undermines their own insistence that this is not a discussion about the unemployed — to some extent it is.

There may be many very good reasons why people are not working, just as we know there are many bad ones. But we know there is abuse of welfare. Three out of four people applying for the new version of incapacity benefit either failed the new medical test or didn’t even bother to turn up for it. Last week brought news of widespread social housing scams too: at least 50,000 council properties have been illegally sublet by tenants, sometimes at huge profit.

Of course, it is entirely wrong to suggest that people without work are necessarily undeserving in any way. But it is also wrong to insist that they get more expensive housing than people who are working, and helping to pay for their schools, hospitals and unemployment benefit as well.

Labour politicians have made a political error in protesting against these caps. For a hard-working, low-paid family to live near unemployed people who are living free in better, expensive housing, in a city where there are lots of jobs, while perhaps earning a tax-free bundle in the black economy, it must be almost unbearable. The surprise is that people aren’t angrier than they are. There will be a lot of support for the new housing benefit caps.

Besides, though the caps will cause hardship and dislocation, they are not in themselves unreasonable. Restricting the housing benefit to £250 a week (£13,000 a year) for a one-bedroom property and to £400 a week (£20,800 a year) for a four-bedroom place is not enough to drive people right out of London, still less out of cheaper cities. It’s enough to rent somewhere in lots of places, as any check of average rentals will prove, many of them not far from the centre.

Some people will be obliged to move and that will be painful and disruptive, but it might also bring improvements. Schools outside the inner cities are often better and the cost of living is less. With any luck, this policy will bring down the vast rental inflation positively brought about by Labour’s policies, which encouraged profiteering among private landlords. And it will reduce the ludicrous cost on the public purse of housing subsidy which, in the last decade under Labour, has risen from £14 billion to an impossible £21 billion.

To describe this necessary policy as Kosovo-style social cleansing is shameful and an insult to those who have suffered real horrors. Boris Johnson has brought political manoeuvring to a new low.

It is understandable that people will be anxious. And it’s true some of the poorer and more unfortunate Londoners (as elsewhere) will be moved out of the city centre. There certainly should careful consideration of exemptions and special cases. But there’s nothing essentially unfair about it, in terms of the real world in which most people live. It’s only in the womb-to-tomb mindset of welfarism that such unfair entitlements have sprung up and taken root. What people need to understand is the odd fact that the welfare system can be extremely unfair.