WELFARE BENEFITS AND UP-RATING BILL - PROFOUNDLY UNFAIR AND ECONOMICALLY UNSOUND

8 January 2013

WELFARE BENEFITS AND UP-RATING BILL - PROFOUNDLY UNFAIR AND ECONOMICALLY UNSOUND

A VOTE FOR THE WELFARE BENEFITS AND UP-RATING BILL IS A VOTE FOR IMPOSING ON PEOPLE WITH POVERTY LEVEL INCOMES;

  • DEBT, MENTAL AND PHYSICAL ILL HEALTH.
  • EDUCATIONAL UNDER ACHIEVEMENT ON THEIR CHILDREN

AND INCREASED COSTS TO THE TAXPAYER IN THE NHS AND THE SCHOOLS.

Rent arrears lead to eviction, council tax arrears threaten prison, there are no statutory penalties for going hungry or being cold, so the government’s welfare policies are forcing our poorest fellow citizens go without food and warmth.

INTRODUCTION

The proposal to limit the up-rating of benefits to 1% for three years is itself a down-rating of benefits because of the escalating increases in prices of food fuel and other necessities. It comes on top of the catastrophic down-rating being imposed on the poorest citizens by October 1010 change in housing benefit regulations, the Welfare Reform Act 1012 and the Local Government Finance Act 2012.

It is important to understand the arithmetic of the severe poverty and debt being created by the benefit cuts, caps and taxation. Haringey Borough Council has considered an analysis by their officials of the cumulative impact of 20% of the council tax, the £500 overall benefit cap and the housing benefit cap on Haringey benefit claimants.
Appendix C http://www.minutes.haringey.gov.uk/mgConvert2PDF.aspx?ID=26910.
Haringey is one of the four London Borough’s chosen to pilot the welfare changes.

The Haringey analysis makes the classic error of adding JSA, to the family premium, to the children’s allowance, and to housing benefit and showing the result as the total income that will have to pay 20% of the council tax from April. Housing benefit cannot pay council tax otherwise the rent is not paid and eviction follows. The tax will have to be paid by the benefit income, after rent and council tax, which is needed for food, fuel, clothing, transport and other necessities; for a couple with two children that income is £258 a week, after rent and council tax; the Joseph Rowntree equivalent minimum income standard is £288 a week without the cost of social or cultural participation or a car; an underestimate for London.

THE ARITHMETIC – FAMILIES

That £258 will be taxed by 20% of the council tax when it is already paying the rent not covered by the housing benefit following the October 2010 caps, it will be hit again by the overall benefit cap, even harder for large families. The Haringey analysis covers 13,871 claimants, of which 4747 are in work, of the 26,000 claimants of Haringey who will be hit by the 20% of the council tax.

The total income shown in the analysis for 476 families with two children is an average of £377 a week, for 35 families £454, for 49 families £561 a week and for 9 families £580 a week depending on the size of the rent; but the £258 a week stays the same whatever the size of the rent.

It is that £258 will be reduced by a minimum of £4.51 a week and a maximum of £312.68 depending on the size of the rent and the council tax band.

The minimum is smallest amount of council tax at £4.51 a week.
The maximum adds the maximum council tax at £6.98 a week to the maximum to be paid by claimants due to the housing benefit cap at £110 and to the maximum overall benefit cap of £196 a week.

I know of two families who have already been forced to move from Tottenham to Wales and Wigan.

THE ARITHMETIC – INDIVIDUALS

Letter in the Daily Telegraph – 4/1/12

SIR – The Joseph Rowntree Foundation, the social policy research and development charity, estimates that a single adult needs £91 a week to cover food, fuel, clothing and transport. Job Seeker’s Allowance (JSA) for an unemployed single adult aged 25 to 60 is £71 a week, after rent and council tax, which will be the standard amount of the new Universal Credit.

6837 single adults here in the Borough of Haringey, and thousands of others throughout England and Wales, will have to pay £3.18 to £7.43 a week council tax out of that inadequate £71 a week from April 2013. This increases to an average of £41.43 if you add the rent to be paid (because of the overall benefit cap of £500 a week), and to £51.46 if you also add the rent not paid by the housing benefit cap.

Pointing to the 1 per cent increase in benefits obscures the catastrophic down-rating about to hit the incomes of the poorest citizens of England and Wales.

Rev Paul Nicolson

THAT IS PROFOUNDLY UNFAIR - the tenants are in no way to blame because.

  1. The high rents and high housing benefit are due to the lack of a coherent, affordable housing policy for decades;
  2. Reckless bank lending into a housing market in short supply forced up rents and housing benefit.
  3. House prices and rents are now forced up above the caps by unlimited overseas investment in London property.
  4. Housing benefit was offered to tenants by local authorities, and accepted, in good faith.
  5. Landlords profited from high rents and housing benefit; the tenants are losing.
  6. Tenants are forced into overcrowded, substandard and/or temporary accommodation.

Council tax arrears are inevitable now and will become more frequent when benefits are taxed; arrears will be enforced by the local authorities charging the tenants £70 for a liability order from the magistrates and then by the bailiffs on the door step adding up to another £400.

THE IMPACT ON HEALTH AND EDUCATION - AND COST TO TAXPAYERS

Neither national or local government have taken into account the impact on the health of individuals, families and the education of their children of this catastrophic increase in the poverty of unemployed and employed tenants, when setting the level of statutory minimum incomes or cutting, capping or taxing them locally or nationally.

Neither the Office for Budget Responsibility or The Treasury does not publish the cost to the taxpayers of poverty related ill health in the NHS, educational underachievement in the Schools and to the wider economy. That cost will increase due to the cumulative impact welfare reforms and taxation on poverty level incomes. There are savings to these costs for the tax payers to be made by substantially reducing poverty.

Health and education services free at the point of delivery absorb the extra cost of poverty without calling for the minimum incomes for healthy living which will help reduce that cost.

CRIME AND LOW BIRTH WEIGHT IN HARINGEY.

1. CRIME

In a list of London’s burglary hotspots in 2010 Haringey wards are second, third and fourth worst.

Second, Tottenham Green 21 cases per 1000 residents,
third St Ann’s 20 cases and
fourth Haringay at 19 cases.

The Cantelowes ward in Camden is worst in London with 24. The safest homes in the capital were in the Eastbrook ward of Dagenham at 1.68 break-ins per 1000 residents.

2. LOW BIRTH WEIGHT

The same wards in Haringey had among the highest rates of low birth weight between 2007 and 2009;

Tottenham Green 12.5%, of live births
St Ann’s 9.4%
Haringay 11.62%

The average for Haringey borough is 7.63%, England 7.53% and the OECD in 2008 6.4% with Iceland lowest at 3.8% and Turkey highest at 11%.

Professor Michael Crawford of the Institute of Brain Chemistry and Human Nutrition has said that

“Low birth weight associated with foetal growth restriction is the strongest predictor of poor learning ability, school performance, behavioural disorders and crime”.

CONCLUSION

Poverty in the UK is a major public health issue largely ignored by British local and national governments. Haringey is a microcosm of Boroughs throughout out the UK.

see http://www.z2k.org

TAP ECONOMIC BRIEFING

THE WELFARE UPRATING 'DOUBLE-LOCKOUT FROM PRICES AND EARNINGS.

How it will hinder economic growth

Key points:
Working age benefits, including income replacement benefits and in-work benefits like tax credits are known as automatic stabilisers for the economy.

Income transfers to cash-constrained households (through benefits or tax credits) are known to have the joint strongest fiscal multiplier alongside bringing forward infrastructure investment. This is called fiscal stimulus.

Analysis by the International Labour Organisation shows that countries that used increases to unemployment benefits, or similar measures, as part of their fiscal stimulus packages in 2008/09 had the strongest economic recoveries.

But if cuts to the automatic stabilisers take place when the economy is weak and aggregate demand is low, the effect is fiscal hindrance. This can mean a reduction in economic output larger than the value of the cut.

The IMF have repeatedly warned the UK government against cutting the automatic stabilisers and their new analysis shows that the Coalition’s annual cuts of £24 billion to benefits and tax credits will reduce economic output by up to £40 billion.

Taxpayers Against Poverty therefore find that the proposals for a ‘double-lockout’ for benefit and tax credit recipients from both earnings and prices, which is a real terms cut of 4%, will not just harm individuals, it will harm the UK’s economic recovery and hopes of reducing the deficit.

TAP briefing on economic damage of 1% uprating Bill.
http://www.taxpayersagainstpoverty.org.uk/2013/01/08/180/


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