As noted by The Canary last week, the new, lower national benefit cap comes into effect from 7 November. Over 100,000 households have received notification from the Department of Work and Pensions (DWP) that their benefits will plummet. On average, they will lose £60 a week, with the worst affected losing as much as £150.
Originally introduced by David Cameron’s Coalition government in 2012, the £26,000-a-year benefits cap was claimed to be a “basic issue of fairness”. £26,000 represented the average income of a working household and it was deemed unjust that a family on benefits could claim more. By capping their benefits, they would be encouraged to escape the ‘dependency culture’ and find work.
Despite the fact that this ignored any extenuating circumstances, such as size of family, disabilities or different living costs in different parts of the country, the right-wing media welcomed and promoted it. As a result, it was then perceived to be popular among the electorate.
Yet from the beginning, it was criticised and opposed. Even influential right-wing thinktank the Institute of Economic Affairs noted that the policy would have a negative impact on the lives of thousands of children. In a 2012 report, it wrote:
It is easy to say that people should not have children if they cannot afford them. Applying a benefits cap retrospectively, to children who already exist, makes no sense as a policy of deterrence.
The report went on to discuss a hypothetical family in South London as an example:
After rent, council tax, and utilities, someone with 4 children living in Tolworth, the cheapest part of Kingston, will have to live on 62p per day. That has to cover everything: food, school uniform, loo paper, the lot…
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The new cap
Buoyed by the popularity of the 2012 legislation, the new cap (£23,000 in London and £20,000 outside) was then proposed by former chancellor George Osborne in summer 2015. Going against her rhetoric of “a country that works for everyone”, Theresa May’s government has now pushed it through.
This will cause thousands of families with children to suffer rent arrears, hunger and potential homelessness. Some 300,000 children are estimated to be affected.
Does it work?
According to the Institute for Fiscal Studies, a politically independent thinktank, the original cap reduced benefit spending by £65m, but did not have the desired effect. Only 5% of those affected found a job as a result. Of the new cuts, they stated:
the majority of those affected will not respond by moving into work.
A further study, run by Oxford City Council in conjunction with the DWP, concluded:
Conventional wisdom suggests taking money off benefit claimants (eg by sanctions or cutting benefit rates) acts as a financial incentive to get a job. Our analysis says the opposite is true… as childcare and debt are established barriers to work, it is perhaps unsurprising that customers with higher benefit losses are less rather than more likely to get into or back into work.
In other words, the policy is self-defeating. So why is Theresa May’s government pursuing it, in the face of official condemnation? It can only be assumed that, like her predecessors, she is ideologically committed to austerity. Her “society that works for everyone” is a lie.
In doing this, she will put thousands at risk. She will create a lost generation. Austerity Britain’s kids. Doomed to exist in a vicious cycle of poverty.
– Read more Canary articles about austerity here.
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