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The consequences of capping benefits

The fact that poorer people are less likely to vote than the better-off allows political parties to operate a race to the bottom in terms of deciding what is spent on social security , says Andy Rickell. But capping benefits is likely to have a disproportionate impact on dis

If those in net receipt of benefits voted en masse at general elections, the political options would be different - which suggests one potential campaigning approach for those who are unhappy about where the debate has got to.


Putting that aside, the strengths of proposing a cap would be around government getting smarter about how the budget is spent. Certainly, it would be good to see greedy landlords, who over-inflate rents that are paid by housing benefit, brought to book. But an additional approach might be for government to support more social housing construction to bring market rents down, which is not directly a  social security budget issue. And getting people into well-paid work is obviously by far the fairest and most sustainable way to bring out of work benefits down and should be a government goal.


But this budget, meaning the benefits paid out to individuals in cash, are, like direct payments in social care, among the most empowering way of supporting those in need. So reducing them worsens both material poverty and poverty of choice. By limiting this budget, society is setting a limit on how much the “rich” have responsibility for the “poor”. If the “rich” get richer, this capping proposal reduces the likelihood of the “poor” benefiting directly through taxation, and will increase the likelihood of society getting more unfair.


The “rich” can then disengage from the debate over the distribution of the social security  budget because their liability is capped, and potentially its political priority would fall as the “rich” are freed to make other calls on government resources. The recipients of benefits  would be left to out-beggar each other, fighting other groups of recipients to get a better deal for themselves from the fixed pot. Should disabled people have to fight lone parents with young children ? Should older people have to fight younger people in need ?


And what about demographics which suggest both the possibility of greater need for disability benefits associated with an ageing population, and greater demand for out of work benefits for young people as working lives are extended - denying those young people access to the labour market ?


Such a proposal may have unexpected consequences. There would be a case for removing universal benefits altogether so that the limited pot is better targeted. Is that the intention ? As someone who used to be a tax inspector, I can see a case for making all benefits taxable so that targeting is improved in a relatively fair way. Perhaps that’s the next obvious stage on from the concept of universal credit (which I support).

But the negative tone of the debate continues to label us “disabled scroungers”.

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