Major changes to the welfare system could soon land the government with a serious political headache – and local authorities with a large bill
Britain is revelling in the euphoria of Danny Boyle’s uplifting take on its history. Our Olympians are trying to show that they can provide a golden return on the meagre investment made in sport. And the government is looking for an economic gain from the Games, with the prime minister claiming that £13bn will come from deals struck during the events, as well as from tourism and other factors.
Meanwhile, in the real world – as the capital is abandoned to tourists – there is a behind-the-scenes issue brewing that has the potential to do to the coalition what the poll tax did to Margaret Thatcher.
Welfare reform has been sold as the answer to every hater of so-called ‘scroungers on benefits’. It is the Holy Grail for the ‘middle classes’ who are told they should not be paying for those who do nothing, in return for the ability to live in multi-million pound houses. This is going to solve all their problems and those in work will be better off than those not in work.
It should be remembered that these reforms mean a series of changes that will eventually see the DWP making a single payment that combines a host of current benefits. One of theses changes means that local authorities will take back in-house council tax benefits, but they will not be given the full amount that the benefit costs. Nor will they be given very long to design a new system . Nor, by the way, will certain categories of the current recipients be affected, meanign that the remaining people will take a greater hit.
So you see localism works! I can just hear central government blaming councils when people wonder why their council tax bills have gone up.
Following on from that change, will be the introduction of the Universal Credit. This will include giving council tenants who are currently on housing benefit the money in their pockets, and the right to decide how and to whom they should pay it. For Wigan this means that an extra £50m has now to be collected. Given that the projected savings are £18bn for 2014/15, and a further £25bn is being contemplated, not all of that £50m is going to go into the pockets of our tenants.
One of them, concerned that rents would go up, put it well when he asked us: ‘Can you please tell me who had the dumb idea that giving everyone on housing benefit the same amount of cash will save money? Do you honestly think everyone will pay their rent? If you give a person who is receiving housing benefit and who is also alcohol dependant the extra £200+ a month can you see him forming a queue at the post office to pay his rent? No, he’ll be forming a queue with the rest at Bargain Booze.’
Then, of course there is the DWP factor. It should not be forgotten that the DWP, which made £4.5bn worth of errors in 2011/12, will be administering this. Because of the extent of fraud and error in the benefits system they have had their accounts qualified yet again – for the 24th year running – that is six Olympic games ago. Do they give out wooden spoons?
Ken Lee is director of resources, Wigan and Leigh Housing Company Ltd