8 Oct 2012

Will George Osborne’s ‘cuts’ go anywhere?

The implication is clear enough: George Osborne believes benefit claimants should think long and hard before having children – or risk losing some of their state support.

The chancellor told the Conservative conference: “How can we justify a system where people in work have to consider the full financial costs of having another child, whilst those who are out of work don’t?”

Mr Osborne and Work and Pensions Secretary Iain Duncan Smith made the same point in a joint article in today’s Daily Mail: “Is it right that people in work have to consider the full financial costs of having another child whilst those who are out of work don’t?”

As the Daily Mail noted: “No figure is put on the maximum number of children that a jobless family could have before state support ended.” But Treasury sources told the newspaper that jobless benefit claimants could lose child benefit, income support or tax credits.

In his speech, the chancellor also indicated that as part of an additional £10bn of welfare cuts, under-25s could be stopped from claiming housing benefit.

He said: “How can we justify giving flats to young people who have never worked, when working people twice their age are still living with their parents because they can’t afford their first home?”

This argument is also included in the joint article, with Messrs Osborne and Duncan Smith questioning whether it is right that “school leavers should be able to move directly from school to a life on housing benefit without finding a job first”.

The implication is that young people who cannot afford to rent a home should live with their parents.

The two cabinet ministers decided to pen a piece together to demonstrate they are “all in this together”, after reports that they were at odds over welfare cuts.

Reaction

What they said certainly provoked a reaction, with Fiona Weir, chief executive of single parent charity Gingerbread, saying that what they were proposing “risks plunging even more children into poverty”.

Ms Weir said that it was “vital that we separate fact from fiction”: most people received government support because they could not find work and did not earn enough to support their families, she said.

Helen Barnard, from the Joseph Rowntree Foundation, said: “Cutting benefits for groups who receive little public sympathy may make for a good conference speech, but it risks increasing poverty and hardship.”

National Housing Federation Chief Executive David Orr said housing benefit should be assessed on the basis of need, not age.

“Cutting the housing benefit of under-25s will put many young people at risk of homelessness, particularly those who can’t go back to their family home. Some may not even have a home to return to,” he said.

Public opinion

These are powerful criticisms, but public opinion is firmly on the side of cutting the welfare bill. A YouGov survey for Prospect magazine in February found that three-quarters of people thought that the government spent too much on benefits. A majority of supporters of all the major parties agreed with this statement.

Two-thirds of respondents also felt that “scroungers” who lied about their personal circumstances made up a “substantial minority”, “around half”, or a majority of benefit claimants.

In terms of who deserved taxpayer support, there was sympathy for pensioners and disabled people, but other groups did not fare as well.

But it must also be remembered that the chancellor was simply floating ideas in his speech that may never see the light of day or look very different once they have been analysed and debated in detail.

There is little detail at the moment, and the Conservatives’ coalition partners will have to be brought on board before progress is made.

As deputy prime minister and Liberal Democrat leader, Nick Clegg, said in a BBC interview: “Nothing has been agreed within government on the detail of further savings. These are the kind of things we will thrash out within government in the months ahead.”