The right principles but a flawed approach – why the government’s stance towards the proposed benefit cap needs a rethink

The proposed benefit cap of £26,000 a year (or £500 a week) is arguably the most prominent proposal in the government’s Welfare Reform Bill. The cap is intended to ensure anyone on benefits does not earn more than the average gross earnings of working families and it has been well received based on public opinion. Unsurprisingly, the sentiments of some right-wing politicians and media (in suggesting that most people on benefits are merely abusing the system) have gone some way to reinforce that.

There are of course people on benefits who knowingly abuse the welfare system and have made a lifestyle choice not to work. And the more generous the welfare system is, the less likely they are to have an incentive to work. One aim of the government’s proposed benefit cap is to address this by eradicating the perception for some that benefits are an alternative to employment. But the government has failed to acknowledge that these attitudes do not account for everyone on benefits. Indeed, the government’s one-size-fits-all approach is the fundamental failure of the proposed reform.

The reform also doesn’t take account of the respective circumstances of someone on benefits, particularly those that have not been subject to long term unemployment and families with children. On the latter, the Bill was defeated in the House of Lords following an amendment that child benefit be excluded from the cap.

In the current economic climate, many unemployed people have been subject to redundancies in both the private and public sector. Being on benefits for them is not a choice but a necessity due to circumstance. However, the rhetoric of the Bill appears to ignore this and effectively plays the employed against the unemployed in galvanising public support for the reform. The government has also neglected to fully consider the impact of the cap on those recently made unemployed.

Take a family living in modest privately rented accommodation where the main earners have become unemployed. Under the proposals for the benefit cap, their housing benefit may not meet their rent payments and consequently they could be compelled to move to cheaper accommodation and possibly social housing. Yet social housing is subject to waiting lists and local authorities have increasingly sold their housing stock in recent years. Compounded by the legacy of the Right to Buy scheme, social housing stock surely cannot meet the demands of an increasing number of people that may require it. Alas, the government has seemingly disregarded this in formulating its policy.

The government has argued that people should not live in accommodation beyond their means and taken in isolation, they’re right. But a family whose financial situation has deteriorated in a short time, and due to no fault of their own, is not the same as the families the Daily Mail like to report on.

There isn’t an apparent solution to this but the government doesn’t appear to have given it much consideration. Some have accused the government of “social cleansing” in forcing those on benefits to move home, particularly in London where rents are higher than elsewhere in the country. This could lead to further ghettoisation of the “haves” and the “have-nots” – something I doubt some members of the coalition government would be averse to given their own social class and views on society.

The lack of consideration for children in the Bill is a further error on the government’s part.

The government has argued that making child benefit exempt from the benefit cap would encourage some people to have more children to receive more in benefits. Regrettably, for some that is perhaps true. But the children themselves should not suffer for their parents’ poor choices. What the government fails to acknowledge is that it cannot always legislate to address attitudes in some sections of society. Therefore there will always be irresponsible people that choose to procreate without the means to responsibly support a child.

At present, child benefit is a universal benefit and should not be considered in the context of welfare payments. Furthermore, is it right that parents and their children be subject to reduced benefits if they suddenly become unemployed? Surely helping people in their time of need is the crux of the welfare system. Yet the Bill goes against this very principle.

In many respects, the proposed benefit cap may appear well intentioned and it is right that no one is better off on benefits than they would be in employment. Indeed, for many, £500 a week in benefits is frankly too generous. The cap aims to ensure deliberate unemployment is not rewarded or seen as a viable alternative to working. But despite its aims, it’s not been fully thought out and clearly lacks pragmatism.

The benefit cap needs to be compatible with the principles of a fairer and pragmatic system. But if the government cannot achieve this, the proposed reform will not differ from attempts of previous governments that have tried and failed to overhaul the British welfare system.