Winner of the New Statesman SPERI Prize in Political Economy 2016

Tuesday 8 November 2016

The benefit cap: more media driving policy

Yesterday I talked about how the media, and the right wing tabloid press in particular, plays a major role in determining not only government policy on immigration and the EU, but also determining the policy of the Labour opposition (on austerity, immigration and the EU). Yesterday also saw the introduction of a reduced benefit cap in the UK, which is another issue where both government and opposition policy has its origins in the tabloid press.

The benefit cap imposes a maximum figure you can receive in benefits (where benefits include child benefit). The previous cap hit around 20,000 households, mainly those with large numbers of children or paying very high London rents. (This and subsequent figures come from here.) The new lower cap will hit nearly 90,000, and its impact will be felt throughout the country. Those already capped will lose a further £3,000 per year (in London) or £6,000 per year (elsewhere). The government expects those households newly affected by the cap to lose an average of £2,000 a year.

The origin of this cap come from countless stories like this in the tabloid newspapers. Such stories, which are hardly ever contextualised in terms of how typical they might be, understandably annoy many people. As a result, the policy of a benefit cap has proved very popular. The government formalised motivation for the original cap with the idea that no one on benefits should receive more than they could by working. But as Declan Gaffney explained in this superb post:
“people are not generally better off on benefits than working: that’s the effect of having a minimum wage to which levels of in-work support (tax credits and housing benefit) are calibrated. As long as someone is working 16 hours a week at the legal minimum hourly wage, they are better off in work. So the principle that the public approves – the one they are in fact approving when they give their support to the cap- is already built into the social security system. But as the public is not generally familiar with the workings of the system (why should they be?), they are not necessarily aware of this.”

However the cap was quantified by comparing all the income of those out of work with just some of the income of those in work.
“So child benefit, child tax credit and housing benefit are included on one side of the comparison (out of work) and excluded on the other (working). You can demonstrate anything if you’re prepared to rig the comparison in this way, and that is precisely what the government has been doing.”

It is difficult to imagine any other motivation beside garnering popularity or appeasing the press for why the government introduced the benefit cap. The original cap raised relatively small amounts, but had a large negative impact on already poor children. The evidence suggests that only a very small percentage of those hit by the cap were encouraged to find work or move. But such was the popularity of the cap, that both the LibDems and Labour accepted it ‘in principle’. Gaffney’s post contains this very revealing quote from the LibDem Lord Kirkwood
“I want to make it clear that I am implacably opposed to a household benefit cap in principle. People's eyes glaze over when I try to explain my main reasons. I tried it in Grand Committee and by the end people looked at me as though I was possessed..... What I should really like to do with Clause 94 is vote against the whole thing. However, my noble friend Lord German and one or two others took me into a dark room, sat me down and said, "That wouldn't be sensible because the great British public know the square root of next to nothing at all about the detail of the technicalities". He has persuaded me that I should mitigate Clause 94, and I am prepared to do that.”

The benefit cap is also an example of where an opposition tactic of ‘accepting in principle’ but tinkering at the edges just becomes failed appeasement. Gaffney ends by saying: “there are costs attached to this strategy, in terms of the quality of political debate and more generally in the endorsement it gives to a big untruth about the social security system and those who are relying on it.” His post was written about the initial cap in 2012, and yesterday’s intensification of the policy suggests he was absolutely right. (Contrast with the bedroom tax, which Labour did oppose.) [1]

In 1966, Ken Loach made the television play Cathy Come Home about homelessness. In a small way it shocked the nation, by making many people aware of something that was otherwise unreported. Today what we have on television is Benefit Street. Ken Loach recently made the film I, Daniel Blake about the victims of the government’s benefit system which has helped create the huge expansion of food banks. But if the film was shown on TV today, I doubt whether it would have the same impact as Cathy Come Home. The idea that most benefit claimants are in some sense fake remains embedded in the public consciousness, and the belief is supported by the same media that initially helped create it. It is another politicised truth: a falsehood that politicians and the political media pretend is true.

 [1] The danger of conceding the principle can also be illustrated by austerity. Once you accept that the deficit is a problem that requires an immediate solution, there are no limits on how much austerity you have, as public credit will always go to those to try and solve the deficit problem quickly.


  1. I see that the BBC is liberally celebrating 80 years of television.

    It is surprising therefore to find that the BBC is not liberally celebrating the 90th anniversary of its permanent charter.

    The Wikipedia page on the history of the BBC says it well:

    "While the BBC tends to characterise its coverage of the general strike by emphasising the positive impression created by its balanced coverage of the views of government and strikers, Jean Seaton, Professor of Media History and the Official BBC Historian has characterised the episode as the invention of "modern propaganda in its British form". Reith argued that trust gained by 'authentic impartial news' could then be used. Impartial news was not necessarily an end in itself.

    The BBC did well out of the crisis, which cemented a national audience for its broadcasting, and it was followed by the Government's acceptance of the recommendation made by the Crawford Committee (1925–6) that the British Broadcasting Company be replaced by a non-commercial, Crown-chartered organisation: the British Broadcasting Corporation."

    £1 to $4.86 was the 1925 decision by the Tory government on City advice which set the general strike of 1926 off.

    The BBC: same today as its always been.

  2. You're absolutely right about that - but one thing missing maybe is how cleverly the Benefit Cap (quite deliberately) influences the debate, as well as being popular in itself. It focuses public attention on cases of single parents with extremely large families - who almost always can be implied to have done *something* culpable in their lives, and to boot are disproportionately foreign-born, especially Somalian - and this focus helps the government to justify wider benefit cuts.

    If the papers are full of debate around the benefit cap, it focuses attention on the 'right sort' of claimants politically.

    On top of that, around the time of the benefit cap introduction, I lost count of the number of times people have told me in outraged tones that "benefits are £26,000 these days, they should be much lower", under the impression *everyone* gets £26,000.

    The Troubled Families initiative did something similar - it had no practical effect whatsoever (and I suspect was never intended to) but it did focus public attention at that time on "families from hell" and ensure that when policies to cut services and benefits were mooted these were the people voters had in mind.

  3. The quote from Kirkwood is especially revealing, on context of Twitter today about leadership, and wider debate about referenda.

    Do we expect our elected representatives to do our bidding, or to exert their collective wisdom to provide leadership?

    Increasingly, it spoears, large parts of population have so lost trust in'experts' that they are prepared to believe lyin' demagogues in politics and the media.
    It's going to be a long road back to civilisation as we thought we knew it.

  4. In the US, if I am not mistaken, they talk about the mystical "Welfare Queen." It is a supposedly common create that manages to rig the deck in their favor, draining welfare programs of their funding in order to finance their own laziness. The myth sometimes goes that those people manage to nearly live as well as upper middle class citizens by tricking everyone around them.

    I don't know why it is such a popular story because it is so fundamentally silly. People with the least amount of resources, the least prestigious acquaintances and the smallest amount of knowledge somehow manage to fool everyone... And when you start digging into it, so many people go back to this idea that some individuals are lazy and will do everything they can to avoid working (including working out careful plans, apparently).

    Because of a mistake made by a secretary, when my father injured himself, he nearly lost all support and his house. The morons judging his case couldn't figure out the secretary sent half his last 12 months of income despite over 20 years of official documents suggesting something was wrong... And that's how assistance works -- in Canada, no less. He eventually got his way, a year later after suing them with the help his former union, but no one will ever pay for the stress or even for the interest or credit score issues related to late payments on some bills.

    There is no magic to welfare. People appointed there are sometimes more inclined to believe you lie, than disposed to actually help you. I do not doubt that some people manage to fraud those programs, but, believe you me: this is no picnic, even when you actually need help.

  5. On a point of strict accuracy: is it true that 'as long as someone is working 16 hours a week at the legal minimum hourly wage, they are better off in work'.

    Benefit varies with housing costs; not sure that is not inconceivable that an unemployed household living in an expensive house could be worse off in work with one member working minimum 16 hours given the HB taper (soon to be a component of UH with taper withdrawal rate increased)applied to housing costs to those in employment. Point was picked up, in part, by IFS briefing note, noting that caps are applied on private sector rents and that Local authorities could compensate by means of discretionary housing payments, presumably in order to save expensive temporary accommodation costs if the assisted household (with dependant children) became homeless instead.

    Does not detract from general point, well put.

    That said,

  6. A lot of this comes down to what your understanding of a Welfare State should be. Do you see it as a Beveridge style safety net, a minimum standard of welfare nobody should fall below? Or do you see it is as a prolonged support mechanism to mitigate or equalize negative outcomes from lifestyle choices?

    Me, I don't want to stop people from having eight kids if that is what they want, and I accept that it is right that I pay into a system I take from, but I don't want to pay extra taxes and work extra years to make up the shortfall for those who choose to have eight kids etc... I can accept that work may be precarious, I can accept that sometimes unplanned pregnancies happen, I don't want people to live in absolute poverty (I'm skeptical about "relative" poverty as it includes things that would have been luxuries in my own childhood). I don't want children to suffer because their parents are feckless and indolent. But I don't want those children to see being feckless and indolent as a rewarding outcome. I want people to have somewhere safe to live, but that doesn't mean giving long-term subsidisy so they can live in a preferred location where they're unable to support themselves.

    For me it's a balancing act between that safety net and people being allowed to make their own choices and accept the consequences. The welfare state is a Ponzi scheme and as the population ages we will need to make these fundamental decisions about what its purpose is.


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