DCLG minister stands by ‘radical’ benefit reforms

6 Oct 10
Local government minister Bob Neill has defended coalition plans to introduce benefit limits as ‘necessary and fair’.
By Lucy Phillips in Birmingham

7 October 2010

Local government minister Bob Neill has defended coalition plans to introduce benefit limits as ‘necessary and fair’.

Councils are to have a major role in pushing through the controversial benefits cap, which will ensure state support to out-of-work households does not exceed the income of an average working household.

The move, which takes effect in 2013, was announced by Chancellor George Osborne in his keynote address to the Conservative Party conference in Birmingham on October 4.
Osborne said money would go to families who need it ‘but no more money than to families who go out to work’.

He added: ‘That is what the British people mean by fair – and we will be the first government in history to bring it about.’

All new and existing housing benefit claimants will have their total state support assessed by councils, which will reduce payouts accordingly to remain within the cap.

Speaking to Public Finance after Osborne’s speech, Neill said the restriction was a ‘necessary and fair cut’ because of the deficit the government had inherited from Labour.
He also dismissed suggestions that the move would affect councils’ standing in their communities.
‘I don’t think it should make a huge amount of difference at the end of the day, provided it done sensitively and proportionately.’

But the move immediately caused concern among local government commentators.

Tony Travers, director of the Greater London Group at the London School of Economics, told PF that Osborne had given local authorities ‘an awkward part of the social security system’ to manage.
‘It puts them in the running of a hugely controversial change to the benefits system,’ he said. ‘Even if it’s only for a small number of households and concentrated in a small number of places, it’s not going to be a very popular job.’

Andy Sawford, director of the Local Government Information Unit, said most councils were likely to take the new responsibilities ‘in their stride’ but admitted it would ‘not a great place to be’. He added: ‘Clearly people whose money is capped will be fed up about it.’

Sawford also said the move did not represent the kind of localism he wanted to see. ‘It’s not something that gives councils more flexibility or more power, which is what we want around welfare reform, just additional tasks which most will just get on with.’

The government said it would give councils extra resources to fund the arrangements, which will be in place until Work and Pensions Secretary Iain Duncan Smith’s plans for a Universal Credit are rolled out. Full costings for the arrangements will be set out in the October 20 Comprehensive Spending Review.

Karen Buck, Labour MP for Westminster North, an inner-London area with a high concentration of social housing, branded the benefit cap ‘insane’. She claimed the coalition government was already making ‘draconian cuts’ to housing benefit through the cap announced in the June Budget and the recent move was ‘predicated’ on ‘neighbourhoods composed entirely of poor people’. The policy would disproportionately hit larger families and ‘is saying we are not prepared to support people living in a wide range of neighbourhoods’, she said.

Councils in high-cost areas would face new issues of homelessness while those in low-cost areas would be on the receiving end of huge numbers of new families dependent on social housing and other already-strained public services. 

‘Both will be affected by a national decision, which I do not think has been understood and thought through by [the Department for Communities and Local Government]… it’s hard to see how it’s not going to be unpopular at either end.’

Buck added that while councils would have to go through out-of-work household incomes ‘with a fine-tooth comb’ she did not expect it to be administratively difficult. But she said: ‘It’s more that this will be a moral difficulty and will add to new questions about homelessness entitlement.’

Osborne also announced at the conference that Child Benefit would be withdrawn from families with a higher-rate taxpayer. The move, which will affect 1.2 million households and save an estimated £1bn a year, was widely criticised. Some, including Conservative party members, were alarmed that a family with income from a single earner of more than £43,875 would lose all their Child Benefit but a couple where each had an income below this higher tax rate, making them much better off, would be able to keep the benefit. The resulting row prompted speculation that the policy might need to be revised. 

In his speech, the chancellor defended both reforms to the benefits system as ‘tough but fair’.

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