26 June 2012 - Source
David Cameron wants to end housing benefits for claimants aged 16 to 24 in a bid to save £2bn a year. Photograph Reuters.
In perhaps the most ambitious set of specific proposals for reducing the welfare state since 1945, David Cameron on Monday set out plans for as many as 17 separate welfare reform measures.
He stressed that these were ideas rather than fixed proposals, and many would not be implemented until after 2015. But he said some could be implemented before the next election if he gained the support of his Liberal Democrat coalition partners.
He also stressed the possibility that these proposals could be applied across the board, rather than following the usual practice, which is to apply big benefits reforms to new claimants first.
Nick Pearce, director of the left-of-centre thinktank the IPPR, described the package as:
"a melange of populist initiatives, without any overarching strategy or argument either about the future pressures on the welfare state, and the priorities it should embody, or about the balance between the principles, such as need or contribution, underpinning it."
These moves have been driven by the need to find up to £10bn in extra spending cuts from 2015-16 if deficit reduction is to be kept on course.
The proposals come on top of the many restrictions to welfare passed in the Welfare Act and the changes to the benefit system to be introduced as part of universal credit – these kick in from 2013 onwards.
The new measures
1 Removing access to housing benefit for anyone aged 16-24, a move that would save £2bn a year and affect 210,000 social housing tenants. Exemptions would apply to victims of domestic violence and presumably couples with children.
2 Banning anyone earning above £60,000 from access to a council house tenancy, affecting 12,000 to 34,000 households. Alternatively, restrict access to council housing to anyone earning more than £100,000, affecting 1,000 to 6,000 council tenants. Cameron justifies the move saying: "When you have people on £70,000 a year living for £90 or so a week in London's most expensive postcodes, you have to ask whether this is the best use of public resources."
3 Breaking the link between benefits and inflation, and considering linking benefits to average earnings. Cameron argues benefits were increased by 5.2% last year, in line with inflation, yet this was almost twice as much as the average wage increase. If working-age benefits had been uprated in line with earnings, the increase would have been only uprated by 2.5%, instead of 5.2%, saving £5 billion.
Pearce comments "Over the last four years earnings growth has been lower than inflation every year, such that the cumulative growth of the former was 8.4%, against 15.2% for the latter. To cash that out, JobSeeker's Allowance would now be £66.81 per week if it had been uprated by earnings, rather than £71.00."
4 Time-limiting benefits by reducing their levels if someone is out of work for longer periods. Cameron says: "It is extraordinary that there are 1.4 million people in this country who have been out of work for at least nine of the past 10 years."
5 Imposing a new specific cap on housing benefit so that it is worth no more at current prices than £20,000 a year, 25% higher than the average rent in London and sufficient to require an £80,000-a-year salary to pay, roughly the salary of those in the top 5% of earners.
6 Restricting income support and possibly child benefit to single mothers if they have three or more children. Cameron argues there are more than 150,000 people who have been claiming income support for more than a year who have three or more children and 57,000 who have four or more children. He told his audience at Bluewater shopping centre in Kent: "We have been encouraging working-age people to have children and not work, when we should be enabling working-age people to work and have children." Restricting child benefit to three children would save £300m a year.
7 Requiring benefit claimants to gain basic literacy and numeracy skills, and to prepare CVs in return for receiving jobseeker's allowance.
8 Requiring anyone on jobseeker's allowance to undertake full-time community work such as tidying up a local park. Cameron said: "In Australia, robust, rigorous activity such as 'work for the dole' is standard after just six months."
9 Requiring anyone on employment support allowance to improve their medical condition in return for benefits, for example, taking free physiotherapy if suffering from a bad back.
10 Requiring 580,000 lone parents on out-of-work income support with children as young as three to prepare for work by attending job centres, write a CV or learn new skills. The current age limit is five. At present, lone parents are only required to attend a jobcentre every three months.
11 Changing advice to local councils on their council house waiting list allocation policy to make it clearer they can prioritise local connections and those in work. Grant Shapps, the housing minister, will set out details in new communities department guidance.
12 Allowing higher-level benefits for those who have contributed tax and national insurance for many years. Cameron said: "Today we treat the man who's never worked in the same way as the guy who's worked 20 years in the local car plant, lost his job and now needs the safety net."
13Banning school leavers from going straight on to benefit.
14 Preventing the payment of non-contributory benefits to those people who don't live in the country.
15 Paying more welfare benefits in kind, such as free school meals, as opposed to cash.
16 Reducing benefit penalties on a family if an adult living at home finds work. The penalties had been increased by the Conservatives. At present, a non-dependant deduction removes up to £74 a week housing benefit.
17 Introducing regional benefit levels linked to the cost of living. This proposal was included in an earlier draft of the speech and was briefed initially by the PM's spokesman but was removed from the text at a late stage, presumably because it could be unpopular in some marginal Tory seats. The government is also reducing localisation of housing benefit by introducing universal credit covering housing benefit.