Non-national benefits cap

A good idea, clearly:

The largest proportion of money paid out is for housing, he says. “While all that £500 a week might get you in central London is a one-bedroom apartment, in Rotherham, Yorkshire, it would get you a six-bedroom house,” Mr Byrne says.

He proposes a body that could decide what level of benefits cap is right for each area of the country.

We don\’t really need a body to do this. We\’ve already got the figures for regional value added right down to borough level. And I\’m pretty sure we\’ve got figures on median/mean incomes down to that sort of level. So, just set the cap at watever it is nationally, then adjust by those borough level figures.

But there\’s a much more important point than this to be made. We\’re seeing the first breach in the everything must be nationally the same: we\’re getting the benefits post code lottery if you like. And once that wall is breached then two other highly desirable things become possible.

Having the minimum wage regionally determined and even more important, abolishing the national wage bargaining in the public sector.

Once the principle of a national one size fits all is gone it is gone and there\’s no reason why those other two should not follow. Other than that the usual suspects won\’t like it that is.

12 comments on “Non-national benefits cap

  1. No, no, no – we don’t want regional benefits caps. We want a national one.

    The big problem with variable housing benefit is that it over-rides market signals.

    If housing benefit pays whatever your local rent is, there’s no incentive to move to a cheaper area. And so we end up with artificially high demand in certain areas, only the rich and the long-term unemployed on housing benefit can afford to live there, and so those on average incomes who actually work there are driven out.

    What we need to do is scrap housing benefit, and pay a flat benefit level whatever your housing costs are

    If that means that those who won’t work all move to Huddersfield, or wherever is cheap, so that they’ve got more beer money left after paying the rent, then that’s fine – it frees up housing near the jobs for the people who want to work.

  2. The current arrangement is a form of subsidy from the rich areas of the UK to the poorer ones. It robs us all to blunt natural selection in the competition between our towns and cities. Remove the dead hand, and we’ll get a much stronger drift to urbanisation. Which is all rather exciting!

  3. Richard,

    On top of that, subsidising expensive housing simply acts as a way to mask the real costs of labour. In effect, people in the rest of the country subsidise the prices and wages of low-paid workers in London, rather than Londoners paying market rate.

  4. If the government were fly, it would name the clause that undoes the idea of national benefits the Miliband-Byrne clause. If.

  5. Regions are not that small. They will have rich parts as well as poor parts but the cap can be set at an average for the region. Regions could include the whole of the North East or just county level. Even looking at a small town like Burnley, it has rich areas and poor areas.

  6. >We’ve already got the figures for regional value added right down to borough level.

    Figures go well below Borough level.

  7. We don’t really need a body to do this. We’ve already got the figures for regional value added right down to borough level.

    Well, you still need a body to implement the figures. That’s how bureaucracies, public or private, work. E.g. a company has all its accounts already, but it still needs an accounting department to manage them.

  8. “He proposes a body that could decide what level of benefits cap is right for each area of the country.”

    A national body or a local one? 😀

    Apart from accommodation costs does the cost of living vary all that much?

    This is a job for local government.

  9. Currently housing benefit is regional and the others aren’t. Housing in London is 72% more expensive than the rest of the country, other prices are ‘only’ 5%-25% (it depends on what and how it is measured). So the current system is a good approximation anyway, I’d suggest.

    Personally I think the concept is a bit screwy – how do you adjust for housing in London simply being ‘better’ due to its location.

  10. What Matthew says. Housing benefit is now called “Local Housing Allowance” (LHA), and the amount varies from region to region. If your family size entitles you to a two bedroom dwelling, then in central London you receive £290/wk in LHA; whereas in Blaenau Gwent you only receive £76/wk. These figures apply to so-called “Broad Rental Market Areas”, of which there are 193 in Britain. These were drawn up by the Rent Service, now part of the Valuation Office Agency.

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