Brown faces another backbench revolt
David Blackburn 9:05am
Despite protesting to the contrary, it turns out the government have been cutting all along. The Times reports that, buried in the small print of the budget, there is a commitment to abolish the £780 per year surplus housing benefit allowance, which encourages families to pay their rent and trade quality of accommodation for cash. These changes come into force on April 1, probably a month before the election.
Labour backbenchers condemn the saving, worth £160 million per year, and plan to table amendments. Frank Field, who draws a comparison between this cut and the 10p rate revolt, tells the Times:
“At one stroke, they get rid of a reform aimed at getting flexibility into a fairly inflexible market by giving people incentives to shop around. The timing for this could have been decided in Conservative headquarters.”
Necessary though cuts are, this proposal seems ill-advised. The surplus is one of the few benefits that encourages market competition, enterprise and offers a route out of poverty by rewarding families who sacrifice comfort to increase their disposable income. It will also leave the poorest in society facing a 20 per cent cut in income, according to the Times. And, £160 million is scarcely a drop in the ocean, especially when primary care trusts could still save £5b now. The 10p fiasco did Brown untold damage in the country and among Labour MPs, but at that time Brown’s authority in cabinet was markedly better than it is now – it was his handpicked cabinet for a start. At the moment, suggesting that the PM is the first among equals is to suspend disbelief. Last week’s Mail on Sunday featured quotations of Alistair Darling briefing against “that man’s” inability to recognise the need to drop the “Tory cuts versus Labour spending” conceit. It will be intriguing to see if the cabinet allows the Prime Minister to enact a cut that blocks an exit out of long-term poverty and further damages Labour’s electoral chances among its core vote.
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Publius
August 28th, 2009 9:13am Report this comment"Necessary though cuts are, this proposal seems ill-advised"
I suspect, Mr Blackburn, we'll hear this line a lot over the coming years.
EC
August 28th, 2009 9:28am Report this commentThe second coming is nigh!
cuffleyburgers
August 28th, 2009 10:07am Report this comment"Not only wrong, but a mistake".
Talleyrand's words seem to apply to pretty well everything this government does.
Well I guess that's what having no moral compass does for you, when combined with ineptness, tribalism and compulsive dishonesty.
BrianSJ
August 28th, 2009 10:33am Report this commentThe Barry Sheerman resignations are due to start next week? Stupidity on this scale might just make it happen.
Rainer Unsinn
August 28th, 2009 2:51pm Report this commentWell, they both have something in common, then, don't they? - the backbenchers are revolting and so is Gormless Clown
David Lindsay
August 28th, 2009 3:17pm Report this commentFifteen quid.
Fifteen bleedin’ quid.
I ask you!
£780 per year, multiplied by three hundred thousand, is two hundred and thirty million pounds. A lot to you or me. But peanuts in the great scheme of these things.
£15 per week may be peanuts to you or me. But it is a lot in some people’s great scheme of things.
Philip Walker
August 28th, 2009 5:36pm Report this commentThe problem with the scheme as it stands is it doesn't save the government any money. Changing the scheme back again wouldn't save any money either.
What they need to do is split the difference: I'd suggest splitting it equally. Then the taxpayer gets half the benefit of the lower rent, and the recipient gets the other half. The poorest would lose about half of what they currently get, which still sits a little uneasily, but it's not as bad as losing the whole lot.
R.McGeddon
August 28th, 2009 11:49pm Report this commentThese are emphatically NOT spending cuts. They are Gordon Brown sub-zero increases.
john miller
August 29th, 2009 7:53am Report this commentYou never have been able to tell whether Labour are utter fools or whether sometimes they get wrapped up in incredibly complex in-fighting.
On the face of it, this move was absolutely cretinous.
But, if Brown is going to resign soon due to ill health, what better for the new man to come in, reverse this decision and show everyone what a man of the people he is. Enter stage left, A Johnson.
JR
August 29th, 2009 10:51am Report this commentPhilip. Interesting idea.
This scheme is possibly the best recent Government example of trying to apply economic principles (as it conceives them) to create a new market mechanism to produce efficiences. That is of course possibly a bad thing but it was strongly supported by the Conservatives as well. It now looks like Labour are abandoning a centeral feature of the market they created.
I'd say a few things:
1. It was strongly suspected in a lot of areas private rents (as offered to HB/LHA recipients) would be increased by landlords - this in turn would create a feedback cycle potentially raising the LHA rate over time. The counterbalance was to try and have big enough geographical areas (for a given LHA rate) to try and use the private non-HB demand to keep prices down. However where is large scale ghettoisation of benefit receipt this is a nightmare.
2. Subject to the above the right answer was not at all obvious as to how much money to let recipients keep if they found a lower rent. The pilots allowed them to keep all of any excess - that was obviously wrong but £15 per week (for families on generally low incomes) seemed to be sufficient to drive them to find lower rents or make active choices.
3. London was always likely to screw the system. That's why it got LHA last. A key factor was that for large families the housing stock is so small it created a weird sort of monopsony I suppose. The limited number of landlords willing to house HB tenant families of that size in London hugely increased rents with the Government as the sole buyer compelled to pay their prices (until recent changes).
4. I haven't looked at the stats recently but if 1 and 2 combined this move is actually taking away a benefit increase (for some recipients) that occured 2-3 years ago. But I doubt that's a line the Government will want to use.
So all in all the Government has tried to introduce a market to stimulte reductions in cost and increase responsibility among recipients. And you might argue it has failed. And the cheery news is that a lot of the Conservative reforms are based on similar principles to this.
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