Housing benefit reform may be too complex for this government but its likely Conservative successors will have no shortage of options if they take power next year.
And proposals launched today by former Tory leader Iain Duncan-Smith’s Centre for Social Justice (CSJ) are even more ambitious. Dynamic Benefits calls for the scrapping of 51 different forms of benefit and tax credit and their replacement with just two.
Universal work credit would go to people out of work or on very low wages and take in benefits like job seeker’s allowance and income support while universal life credit would cover additional living expenses for everyone on low incomes and combine things like housing benefit, council tax benefit and working tax and child tax credits.
In the process, says the CSJ, work incentives would be dramatically improved by reducing the marginal rate of benefit deductions that can be up to 85% at the moment and child poverty would be cut.
And scrapping the current system would reduce what it sees as penalties in the current system faced by people getting married, saving or moving into home ownership - an estimated 1.9m low-earning households with a mortgage would get help with their housing costs.
The report gets an enthusiastic welcome by Tory commentators like Simon Heffer, who says that David Cameron should put IDS in his first Cabinet with a brief to tackle worklessness and the undeserving poor. Housing reformers may also see it as backing for their ideas for a housing tax credit that is paid regardless of tenure.
The big problem is the cost: £3.6bn. Even though some of that would be clawed back through increased tax and the CSJ says that in the long term the plan would save money, it’s hard to see a government intent on cutting public spending swallowing that one. The long-term problem could be that benefit reform always seems to produce more losers than its architects intend.
And the CSJ plan is competing for attention with ones coming from other think-tanks. Localis called for a move to near-market rents for social housing with housing benefit paying up to 85% of housing costs after tax and benefits and the scrapping of capital investment subsidies to pay for it. The Progressive Conservatism project at Demos called for social tenants to be able to capitalise their housing benefit to buy a stake in their home.
The safer bet would have to be on a future Tory government finding housing benefit reform just as difficult as all its predecessors but one thing it will not be able to say is that it lacks ideas.
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Readers' comments (3)
Dave Hollins | 16/09/2009 3:37 pm
Sorry Jules, you're normally spot on but not this time. There is not the slightest chance of George Osborne putting the money up to implement Duncan Smith's ideas, so it's all hot air. The Localis report is much more likely to get a hearing with the Tories, but is also much more dangerous for people on low incomes - market rents, ending security, no capital spending, cutting homelessness entitlements. People need to be aware that while the Duncan Smiths try to present the positive reforming face of Conservatism, the real Thatcherites are hard at work preparing the real policy agenda for a Cameron government, and we should all be very afraid!
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St Alban | 17/09/2009 10:28 am
I'll echo my posts elsewhere. Don't reject this because of it's source. The idea has merit and needs to be considered.
The targeting of benefits, orignally flagged at cutting costs and ensuring only the deserving poor get support, has ended up putting huge obstacles in the way of the deserving poor claiming the benefits that they are entitled to, whilst producing an administrative army of civil servents creating ever complex claim forms and conducting assessments and reassessments before paying. The figure of costing £4 to pay each £1 of benefit has been mentioned, which illustrates targeting as a civil service job creation programme.
IDS is suggesting a retun to universal payments. The progressive left fought hard to preserve this concept from being cut by the Tories and the New Labourites, but lost out to the 'loony' cull. The biggest advantage with universal payment is that you ensure that all of the deserving poor get the support that they require, with a minimal administrative process. The other main advantage is that it allows proper cost planning, so that the annual benefit cost does not come as such a suprise. The arguments of waste, the few less deserving poor who may slip through the net and gain payment, pale into miniscule compared with the saving in pen pusher's pay.
It is a cowardly cop out to not support a positive idea because of it's source. The more widely this flying kite is supported the more tied into to delivering it each of the major parties will become. If the last 30-years has shown us nothing else we must learn the lesson that division allows stupidity to rule.
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Jules Birch | 18/09/2009 8:51 am
And there i was thinking i was carefully remaining neutral, Dave. The point i was trying to make was about the torrent of new ideas coming from the Conservatives. Most of them come with a bill that will probably be too much for George Osborne and even some of the people coming up with them think they may be too bold for a first-term government. Some of them, like a universal housing credit, seem long overdue. Some of them contradict each other. Some of them will be deeply unpalatable to many people in housing (and supported by others). But whether the ideas are coming from localists, free market Tories, a CSJ- style moral agenda or progressive conservatives, after years of 'what matters is what works', politics is back.
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