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From The Socialist newspaper, 2 June 2010

Millionaire cabinet plans cuts in benefits

The exposure of millionaire treasury minister David Laws as an expenses cheat is steeped in even deeper hypocrisy than is at first apparent. The now ex-minister thought nothing of fraudulently claiming for housing expenses while supporting his government's plans to slash help with housing costs for the poor. But if a housing benefit claimant's relative is also the landlord, housing benefit may not be paid as the tenancy may be seen as 'contrived' in order to secure benefits.

A benefits adviser, London

Proposals to cut housing benefits are just one aspect of an initial 2 billion cuts package to benefits, which is likely to grow to over 12 billion. Thatcher's Tory government deregulated the private rented sector, allowing landlords to charge exorbitant rents. The restrictions on housing benefit were supposed to be a check on such abuse.

Incredibly, the government argued that landlords would act 'responsibly', and not charge high rents to poor tenants. The reality has been that poorer tenants have to find the extra money to pay rent by making sacrifices elsewhere or by being restricted to inferior housing. Now there are plans for further restrictions, increasing the danger of poorer families being housed in sub-standard, low rental ghettoes.

Most vulnerable hit

Many disabled people rely heavily on disability living allowance (DLA), which helps to cover the costs associated with disability. Unlike many other benefits, DLA is not counted as income when means-tested benefits are assessed. But now the government is considering making DLA itself dependant on other income and savings. This will inevitably mean that many on low incomes will no longer receive this benefit.

In addition, the government wants to make DLA taxable, potentially making those who are currently on nil tax liable to begin paying tax. This would seem to contradict the principle behind the coalition's proposal to set the income tax threshold at 10,000, supposedly aimed at allowing an individual to keep more of their salary as net income.

The Liberal Democrats have claimed that this threshold proposal will mean a tax cut of 700 for most people. But for those in low-paid jobs, who receive housing or council tax benefit, one effect of the proposal will be less benefit. The individual's slightly higher net income will be taken into account when assessing benefits, meaning that they have to pay more rent and council tax.

A number of initiatives will be taken to remove people from benefits altogether. All claimants on employment support allowance, formerly known as 'incapacity benefit' will be medically reassessed. If regarded as fit they will be moved on to jobseeker's allowance.

Jobseeker's allowance will be cut for anyone who refuses to take up 'reasonable' job offers, in some cases for up to three years. This will be used as a stick with which to push the unemployed, regardless of skills and training, into low-paid, low-skilled, insecure jobs.

Families face cuts

Many parents, both single and those in a couple, would agree that the introduction of tax credits was one of the few positive reforms of the New Labour government. Presently the small family element of child tax credits does not start to be withdrawn until family income reaches 50,000 a year. The Tories had planned to impose a cut which would mean families earning more than 40,000 would lose some of their money and those on over 48,000 would no longer be eligible.

In a clear illustration of how the Lib Dems are not the 'soft' side of the coalition, they are proposing that one child families who earn 35,000 are excluded altogether and that 25,000 is set as the rate at which reductions take place in the rate of the benefit.

There is also the prospect of means testing and taxing child benefit and carers' allowances. On top of all these attacks, the likely increases in VAT will hit poorer families particularly hard. So much for supporting families!

Suffering for all ages

Nor will the elderly be spared. It is a disgrace that in one of the richest countries in the world, there are 30,000 deaths, mainly of pensioners, each winter due to fuel poverty. Meanwhile the utility companies continue to make large profits. Cold weather payments and winter fuel payments are inadequate and should be raised linked to an immediate 50% increase in the state retirement pension, alongside nationalisation of the privatised utilities.

Instead, the coalition proposes to speed up the timetable for raising the state retirement age and to make it 'easier' for people to continue to work into old age. The coalition's answer to the scandal of pensioner poverty is that we are worked into the grave. The reality for many, unfortunately, is that this is the case already.

Privatisation

The social fund is a system of grants and loans which replaced the system of 'single payments' in 1986, which in turn had replaced the system of 'exceptional needs payments'. Grants from this system assist people leaving care, prevent people being taken into care and help families under exceptional pressure.

Consultation has begun to reform the fund by proposing to give claimants the items they claim for rather than a grant, taking away much of the element of choice. Claimants will not be able to appeal against the item they have been awarded. It is proposed that the government no longer provides the grants, but that instead they are provided by 'third party providers'.

There is a large element of discretion in social fund decisions which causes enough problems when the fund is administered by the Department of Work and Pensions. Transferring this discretion to charities and possibly religious groups or indeed any decentralisation to numerous other bodies will lead to inconsistency and the possibility of groups and organisations applying their own values to decisions. A real danger is that the social fund is 'budget-limited' and decisions are, in reality, influenced by how much money is in the budget rather than whether or not an entitlement exists.

Many of the new coalition government's proposed cuts have their origins in consultation exercises, proposals and pilots begun by the previous Labour government. Anti-cuts alliances of socialists, trade unionists and community campaigners in every area will need to be at the forefront of, not only defending jobs, pay and public services, but also the welfare state itself.

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