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South West families to lose cash in benefit cap

By Western Morning News  |  Posted: February 17, 2012

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About 500 Devon and Cornwall households claim more than £26,000-a-year in benefits and will be hit by a controversial cap on state hand-outs, Government figures reveal.

The move to limit welfare payments, a flagship Government reform to be introduced next year, will see affected families stripped of up to £100-a-week in state help.

Ministers argue Britain's welfare bill has spiralled out-of-control and an overhaul is essential to make work more attractive than dependence on benefits.

The £26,000 cap, equivalent to £500-a-week, is symbolic as it represents the average national wage, although it is higher than typical pay in the Westcountry.

Critics argue the reform will mean vulnerable families are thrown out of their homes. Department for Work and Pensions figures have revealed for the first time that of 67,000 families that will be hit by the cap, around 500 are in Devon and Cornwall.

George Eustice, Conservative MP for Camborne and Redruth, said the generous hand-outs were "completely wrong", but Adrian Sanders, Liberal Democrat MP for Torbay, contends children, rather than parents, are the victims of the reform.

Cornwall has 300 families claiming above £26,000. But because the figures are "rounded to the nearest 100", this could mean anything from 251 to 349. Both Plymouth and Torbay local authority areas have each recorded 100 families above the threshold – or between 51 and 149.

The highest household welfare bills are fuelled by housing benefit, and are likely to be drawn by families with a large number of children.

The cap will be felt most in London and the South East, where private sector rents are the highest in the country.

The figures for the Westcountry surprised MPs.

Mr Eustice said: "It is completely wrong that people can receive more in benefits than many families in Cornwall who are working can earn. To take home £26,000 in benefits is the equivalent of someone earning £35,000 a year.

"We need to reform the benefits system so there are incentives to work and, with an exemption for families looking after severely disabled children, the benefit cap is a key part of doing that."

But Mr Sanders said the problem was driven by families being forced to rent homes from private landlords – who he says are pocketing huge sums – because of a chronic shortage of council and social housing.

He said: "We should cap rents, not benefit. Whether you have one child or five, if you lose your job and have to claim welfare you should not be penalised because you have more children than someone else. And it's not the parents who are hurt, it's the children. If the cap forces a family out of the area, it's the children's schooling that is disrupted."

Councillor Nicky Williams, Labour's welfare spokeswoman at Plymouth City Council, said some families would be forced to move house and would struggle to find anywhere cheaper to live.

"It's families with a lot of children who are not working, who are going to be hit by this," Ms Williams said. "The question is whether there is any accommodation available at a lower cost. If you are in social housing it's unlikely that you will be affected."

Last year, three Church of England bishops in the Westcountry joined a rebellion against the welfare changes.

The Right Reverend Bishops Tim Thornton of Truro, Michael Langrish of Exeter, and Peter Price of Bath and Wells, signed an open letter to "speak for children" over the cap.

The controversial Welfare Reform Bill, limping through Parliament, will introduce a new, simplified universal credit to replace a complex range of payments.

Figures are not available for the six districts in Devon as data for areas with fewer than 100 households claiming above £26,000 are not disclosed.

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  • SlobberDan  |  February 22 2012, 9:40AM

    26K means you only have 13K to spend on alcohol and 13K to spend on drugs, how can Torquay residents manage on that. It doesn't leave much left to spend on the kids.

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  • 2ladybugs  |  February 21 2012, 11:02PM

    This £26K was brought in mainly to tackle problems with people on benefit in cities such as London. Families are renting houses in some of the most exclusive areas in London with rents to match. These properties are being filled with not only the original benefit claimants but also extended families. A lot of these families are immigrants! £26k is not only sufficient but well over the necessary amount to live on in this part of the country. If families can't manage then I suggest that lessons are given on budgeting.

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  • SmartyC  |  February 21 2012, 10:39PM

    What is greedy about maximising return on investment? ("Greedy" landlords). When you shop around for the cheapest credit card, when you ask for a raise or look for a better paid job, when you try and buy the cheapest TV or look for the best interest rates for your savings or get the best deal you can on a car, you are doing exactly the same. Making your money work as well as you can make it. Common sense, not greed.

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  • vockered  |  February 21 2012, 7:08PM

    "About 500 Devon and Cornwall households claim more than £26,000-a-year in benefits and will be hit by a controversial cap on state hand-outs, Government figures reveal. The £26,000 cap, equivalent to £500-a-week, is symbolic as it represents the average national wage, although it is higher than typical pay in the Westcountry. FANTASTIC NEWS, the best news we have ever had from this pathetic government, let the spongers work for a change!

    Rate   9
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  • josdave  |  February 20 2012, 1:53PM

    I accept that part of the problem is greedy landlords hiking up the rents for benefit claimants and that the cost of living varies from one area to another but I cannot see how a cap of £26,000 a year will create hardship to anyone. If it means those who milk the system losing out that has to be a good thing. Those in genuine need will be able to manage well within that cap.

    Rate   13
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  • torchwood2010  |  February 20 2012, 1:20PM

    Building social housing would cut the housing benefit bill three times faster than a cap Housing investment is an important part of our economy, yet the coalition has lacked the imagination to apply the principles of industrial policy and active government to the problem of a high housing benefit bill. For example, why aren't we looking at Singapore's housing policy? There, land is at such a premium that the government builds low-cost housing that is managed by housing co-ops. Perhaps Singapore sees its housing investment as part of its industrial policy: housing costs are a major determinant of wage levels so a low cost housing strategy would make a major contribution to improved productivity. Here in the UK, housing investment has collapsed since the credit crunch, enough to evaluate the case for active government investment in housing. To do that, we need to evaluate the effect of housing investment on growth and tax receipts. Assuming that each unit costs £100,000 of investment to build, and that the cost of land is gifted from the local authority, we simply need to know how investment in housing increases economic growth. The Office of Budget Responsibility states that the output multiplier of investment is one-for-one: for every £1 of housing investment it boosts the economy's output by £1. This boost in economic output then feeds through into an increase in tax receipts: we've calculated that in our present stagnating economy, a £1 increase in output increases receipts by 65 pence. So, for each unit the government invests in, economic output would increase by £100,000. This increased output would improve tax receipts as the improved growth spread throughout the economy, and for a government investment of £100,000, the per-unit increase in tax receipts for an investment will be £65,000. Therefore, while the government spends £100,000 it receives an extra £65,000 in tax receipts, so netting these two out, the cost to the government of building these units would be £35,000. This might give us pause: across the 67,000 families on whom the benefit cap falls, this would represent a bill of £2.3 billion. But that would be to neglect that the social rent savings in the future. Putting people into low cost socially rented represents an enormous fall in housing benefit. The housing benefit cap is £400 per week but social rents are much lower, perhaps as much as £300 per week lower. So putting families into government built low cost housing would save an additional £15,600 per year. This would cover the per-unit cost of building of £35,000 after two and a quarter years. After that, the government continues to save £15,600 per year per family on housing benefit payments. Scaling this up over ten years and across the 67,000 families, the build strategy would save the exchequer a further £8.1 billion. This is an enormous saving, three times more that the £2.75 billion the government plans to save. It is also additional to that saving: The money saved from the housing benefit cap is not lost by putting people into social housing. These huge savings are before we take into account the broader economic productivity benefit of solving high-cost-housing problem, but it's clear why Singapore builds low cost co-operative housing to tackle its high cost of land problem. It should now be obvious that it's applicable here. Until we realise how an active government's industrial policy compels us to provide low-cost housing, our economy will continue to stagnate, while Singapore's continues to grow.

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  • torchwood2010  |  February 20 2012, 1:19PM
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  • Doitdreckley  |  February 20 2012, 11:15AM

    So how many families are we talking about? 500 in Cornwall and Devon will not save that much money. This is more about a witch hunt against the vulnerable, dividing and ruling working class opinion.

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  • SlobberDan  |  February 19 2012, 6:02PM

    ...and who's in charge of the benefits system, a group of expenses fiddling crooks, MPs. Fill your boots layabouts.

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  • beachIand  |  February 19 2012, 12:44PM

    The most intelligent thing to do is to get as much benefit without working for it as you possibly can in life. It is what all successful and wealthy people do. Anyone with their own accountant or financial advisor is promoting of doing the least possible for the most gain, everyone does it including our politicians over all political parties. And it is also how companies earning millions can arrange things so they almost pay no tax on their income. It's not wrong it's not illegal or breaking any rules. Some people are maddeningly workaholics that expect people to toil to exist and if they don't they are inhuman nasty scroungers. People should be applauded for getting the most out of what's available. If the various rules are looked at and something is unfair then it can be worked on, but never blame the groups or individuals that are making use of it or finding loopholes..they are doing the right thing, best maximum gain. If you are suggesting people are illegally claiming JSA that is a different matter and not related to any benefit cap, it's a matter of law. But with the rules being quite flexible for JSA at the moment, if people would rather be on JSA for the longest time possible they can legally get away with, then let them be. They are still in a programme that has expectations of them, and as I say if that programme needs the rules reworking for fairness then that can be done.

    Rate   5
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