Osborne’s Spending Review: Cap Benefits, Cut Benefits, Restrict Benefits

Osborne and Cameron laughing during the mini-budget, dec 2012George Osborne set out his spending review on Wednesday, detailing spending plans for 2015/6, and social security is once again in the sights of his scissors. He plans to cap total benefits payments, so if more people need to claim social security, the amount paid to each will go down. He is also planning to increase the amount of time before you are able to claim benefits after losing a job to 7 days. More conditionality on jobseekers will restrict benefits further and create even more traps for sanctions which can mean up to 3 years without jobseeker’s allowance.

Labour offer no alternative, agreeing with all these cuts to benefits and saying they will stick to Osborne’s spending plan, which covers the period after the next general election, meaning that on economic policies there really is no difference at all between the main 3 parties. Any vote hoping for an end to austerity must go to parties to the left of Labour.

The benefit cap will not include pensions, but will include pensioner age benefits such as the winter fuel allowance and housing benefit. The total amount that will be allowable to be paid in one year has not been announced yet. If the government exceeds this amount they have to explain themselves to parliament so there is a get out clause, but assuming they intend to actually stick to the cap the reality is that if more people need to claim benefits then the amount everyone gets paid will be reduced.

Snow in April 2013Think about what this means. Claimants – which includes people in part time and low paid jobs, disabled people, carers, unemployed people, single parents with young children, and pensioners – will not know from one month to the next how much money they will get. Benefits are already falling in real terms and are often a struggle to live on even before you get sanctioned or something breaks or winter lasts forever and it snows in April so you have to spend more money on heating than is believable.

Now you might suddenly find you get less next month. Why? Because more people have become unemployed, or disabled, or retired… totally out of your control, nothing to do with you and through no fault of your own you will have less money this month than last.

This also affects housing benefit. So what happens when rent rises? Your benefit won’t go up, because it’s capped. Suddenly you’ll have to make up the difference or find somewhere cheaper. But if you’re renting int he private sector you’re already restricted to the cheapest 30% of the market, and if you’re under 35 to a shared house only, so there’s not much cheaper to move to. If you’re in social housing you might already be in arrears because of the Bedroom Tax and now find your benefits are cut further.

Father and young child beggingCapping the total amount paid out in social security does not make sense. It is not the kind of spending you can exactly plan. The effect of it is both unfair and cruel. It is extremely difficult to live not knowing what your budget is. And whatever level the cap is set at, it will no doubt represent an immediate cut in benefits, and over time be pushed downwards to cut benefits even more. So expect more debt, more homelessness, more hunger and foodbank users and more suicides.

It should be noted that the NHS is largely budgeted in a similar way, and if the benefit cap happens and is accepted, we should expect a cap on the NHS budget next.

For unemployed people the story gets worse. If you lose your job you will not be able to claim benefits for the first seven days of being unemployed. This is a gift for loan sharks like Wonga. Labour MP Simon Danzcuk reminded us that there is no point in Labour when stating his support for this on twitter, claiming it was fine because you only needed to save a weeks wages. Not too hard to save money when you are on £65k/year plus expenses and subsidised food and whatever other jobs you fancy doing for companies and lobbyists. Try it on a part time job paying minimum wage with housing benefit not quite paying your rent and tax credits and child benefit not covering the cost of your 5 year old child. Hell, just try it as a single person in a full time job on minimum wage. Another out of touch MP.

jcp-signOsborne said that people should be spending their first week of unemployment looking for work not signing on, but then he says that people will be required to go to the job centre every week, so apparently after the first seven days, signing on is exactly what you should be doing more of. Quite how the already overworked job centres will cope, or whether we’ll see some of the failing Work Programme companies brought in the the job centres directly is yet to be decided. What is clear is that increased visits to the job centre will bring more opportunities for sanctions and general harrasment of unemployed people. The Work Programme has people going in more often, sometimes even more than weekly, and this produces worse results than just the standard fortnightly job centre visit. Perhaps we should think about what this tells us, and wonder if less frequent visits to the job centre would be a good thing. It would after all leave more time for actually looking for work or volunteering rather than some time being looked down on by JCP staff.

Some extra conditionality too – anyone whose English is not good enough will be forced to go on an ESOL course, never mind that such courses are oversubscribed already. Oddly the Tories cut funding for ESOL a couple of years ago, but now they seem to think it’s such a great thing that people should be forced to do it. It’s not clear if more funding will be released for ESOL courses, or if the Tories expect people to magic them out of thin air in order to be able to claim benefits.

All in all this is not just bad news for all claimants, it is also unfair and fundamentally wrong way of thinking about how things like social security and the NHS need to be paid for in order for them to be able to do what they do – which is provide insurance in terms of both the essentials of life and medical aid when needed. Think about how private insurance companies operate, and how eager they are to find ways to get out of paying, how expensive it is. Look at the future for the insurance services provided for by tax.

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9 Comments

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9 responses to “Osborne’s Spending Review: Cap Benefits, Cut Benefits, Restrict Benefits

  1. Pingback: Birmingham Trades Council » Osborne’s Spending Review: Cap Benefits, Cut Benefits, Restrict Benefits

  2. Pingback: Osborne’s Spending Review – PCS Midlands Shows Government The Red Card | Birmingham Against The Cuts

  3. kasukabirds

    Reblogged this on kasuka (kass-ka).

  4. Riley Hine

    So what you telling people is that people in both private and Socal houseing that if there under 35 there gona get the shared room rate in a shared house and if more people claim houseing benefit there award will go down I’ve spoken to the Dwp and othe local councils the shared room rate only applies to to private renting not Socal houseing and I would like to know why u saying this when this miss leading information

    • Riley Hine

      This also affects housing benefit. So what happens when rent rises? Your benefit won’t go up, because it’s capped. Suddenly you’ll have to make up the difference or find somewhere cheaper. But you’re already restricted to the cheapest 30% of the market, and if you’re under 35 to a shared house only, so there’s not much cheaper to move to. If you’re in social housing you might already be in arrears because of the Bedroom Tax and now find your benefits are cut further. Can you explain what this mean dose it mean the shared room rate will allow to Socal houseing

      • Our understanding was that the Local Housing Allowance applies to both social and private housing, but that because social housing is so much cheaper than private housing, nobody renting social housing gets caught by the limits. I will correct the article in light of the information you have supplied.

        Be aware that the cap on the annually managed expenditure has not been agreed yet, just planned for after the 2015 election. If it does come in then whether you are in private or social housing, you will find the amount you can get from housing benefit reduced if more people need to claim, as the total amount that can be spent will be limited, therefore with more people claiming every individual must get less.

  5. Riley Hine

    So what ur saying is that people will still get the rent paid the same but if more people need to claim houseing benefit the entitlement will be reduced

    • Logically, if the total amount that can be spent on housing benefit is capped, then if more people claim, each person must get less. I don’t see how else it could possibly work.

      • Riley Hine

        So if I’m in a one bedroom Socal houseing flat I still would get the same about of hb but when this cap comes in and more people need to claim my houseing benefit would be reduced I

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