Friday, 22 May 2015

The problem of rent

From: Inside edge

The second of my blogs on five key housing issues for 2012 looks at the debate about the Beveridge report taking place in seeming ignorance of what it actually said.

The 70th anniversary is not till December but politicians are already claiming it as justification for their welfare reforms. Shadow work and pensions secretary Liam Byrne was first out of the traps for Labour with a briefing to the Mail on Sunday which reported that that Labour leader Ed Miliband intends to get tough on ‘scroungers’ and that Byrne thinks Beveridge would ‘turn in his grave’ at the thought of billions in benefits going to ‘lifelong spongers’.  

The piece quoted a source close to Byrne as saying: ‘When Beveridge wrote his report, the main idea was that you only got paid by the state if you paid in first. He would never have agreed with anyone choosing to spend a lifetime on benefits. Idleness was one of his “giant evils”. The benefits system has expanded in a way that Beveridge would never have foreseen, such as the new evil of benefits dependency. He would be turning in his grave if he knew we spend £20 billion a year on housing benefits.’

On Tuesday, Byrne wrote a piece for The Guardian that makes the same point from a different angle. ‘Beveridge’s system was built on the idea of full employment,’ he said. ‘For him, “idleness” was an evil every bit as insidious as disease or squalor. So he would have been horrified at the long-term unemployment breaking out all over Britain, with over a million young people without work, and appalled at the spiralling cost of benefits. He would scarcely have believed housing benefit alone is costing the UK over £20 billion a year. That is simply too high.’

Byrne did not mention the words ‘scroungers’ or ‘spongers’ and attacked government plans to scrap disability benefits that people have paid in for. ‘But beyond this, “something for something” means reward for those who are desperately trying to do the right thing, saving for the future and trying to build a stable, secure home. Right now, these families are offered too little reward and incentive – in social housing and long-term savings – for the kind of behaviour that is the bedrock of a decent society.’

On its front page, The Guardian reported that he was arguing that ‘the ballooning of the system has provided support that is unearned, and mislaid the original ideal of providing help to those that contribute’ and that the three key flaws in the current welfare state are ‘the spiralling housing benefit budget, benefits for long-term unemployment, and the lack of proper incentives to reward responsible long-term savers’.

All of this has not surprisingly provoked a strong reaction on the Left - one that Byrne might actually welcome as reinforcing his message to the mainstream. For a flavour of the reaction in the blogosphere, go herehere and here and for more comment in The Guardian go here

My own reaction - especially when it came to the point about housing benefit - was that Beveridge said nothing of the sort and it sent me back to the history books to check.

To give him his due, Byrne does point out that Beveridge detested the term ‘welfare state’ (he preferred ‘social security state’) but his interpretation seems otherwise wide of the mark. 

Here’s what Beveridge actually said about rents: ‘The attempt to fix rates of insurance benefit and pension on a scientific basis with regard to subsistence needs has brought to notice a serious difficulty in doing so in the conditions of modern Britain. This is the problem of rent. In this as in other respects, the framing of a satisfactory scheme of social security depends on the solution of other problems of economic and social organisation.’

The ‘problem of rent’ was the way that there were so many variations between regions that it was impossible to design a flat-rate benefit to accommodate them all.

Beveridge published his report in the context of private sector rent control and subsidised council housing. By ‘the solution of other problems of economic and social organisation’ he meant not just full employment - which he assumed as one of the conditions for the success of his report alongside a national health service and family allowances - but a post-war programme of council house building too.

He was a Liberal but not a wet one (he favoured training camps for ‘malingerers’). He took a narrow brief about making a survey of ‘existing national schemes of social insurance schemes of social insurance and allied services, including workmen’s compensation, and to make recommendations’ and turned it into a radical plan for slaying the five giants of want, disease, ignorance, squalor and idleness.

In the process, incidentally, and helped by the fact that it was published in December 1942 within weeks of the victory at El Alamein that marked the turning point of the war, it sold 630,000 copies and 92 per cent of the population were aware of his recommendations. 

So Beveridge would indeed be turning in his grave if he knew we were spending £20 billion a year on housing benefits - but not on the grounds that this was reinforcing ‘idleness’ and scrounging but that it was demonstrating crass stupidity and waste by successive governments of both parties and ignorance by those attempting to claim his mantle.

The reasons why the bill is £20 billion are that housing benefit has been made to take the strain of inadequate social housing investment and rising social and private rents over the last 35 years, because the claimant count has risen over the last three because of the recession and because millions of people are on pensions and wages too low to be able to afford to pay their rent without assistance.

Far from reinforcing idleness, housing benefit is actually essential to helping people into work. Cuts to it will increase want rather than reduce idleness.

There were problems with the Beveridge plan and the way it was implemented and lots more strains that emerged as the structure of society changed in subsequent decades but pretending that you can deal with ‘the problem of rent’ by wishing it away or blaming it on fecklessness was not one of them.

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