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The benefits cap that does not fit

One the face of it, the benefits cap that came into effect yesterday hardly seems worth the political cost.

Placing a ceiling on all benefits of £26,000 a year will only save the Government £110 million this year and a bit more than that it future years. It will affect around 40,000 families in Britain, more than half of them in the south-east of England.

In a welfare benefits bill of £95 billion for working-age claimants, this is surely a nugatory saving. It amounts to little more than 0.01% of the budget. So why is the Work and Pensions Secretary Iain Duncan Smith so keen to push this arbitrary reform?

The answer lies in the universal benefit that is supposed to replace the existing cat's cradle of tax credits and benefits that was set up during the Labour years. Universal Credit is intended to save big money and will affect eight million people.

That is if it works. Pilots of the computerised scheme which have been running since April have not been without their faults. The Coalition is keen to establish a firm base of public support for its attack on benefits before this substantial reform kicks in later this year.

The point about the benefits cap is that it is popular. In opinion polls, more than 70% of voters back it. The cap feeds into the commonly held view that benefits are out of control in Britain and that "skivers", as Chancellor George Osborne calls them, are living a life of comfort and ease at the expense of hard-working "strivers" who pay the taxes that finance the welfare state.

It seems offensive to many people, not least in Scotland where wages are significantly lower than in the south-east of England, that any claimants should be receiving more than the average wage of £500 a week.

But of course only a very few do, less than 3000 and mostly this is because of special circumstances. Arbitrary caps are rarely fair and some large families will be hit hard.

But the main point is that we are not talking here about money that goes into the pockets of claimants but into the pockets of private landlords in the form of housing benefits because of the exorbitant cost of rented accommodation in Britain.

In fact, unemployment benefits in Britain are around the lowest in Europe.

The main benefit for the working age unemployed is Jobseeker's Allowance which is set at a miserable £71.70 a week for over 25-year-olds.

In countries such as Germany and Denmark, unemployed people receive up to half their previous wages when they become unemployed.

It is time to stop victimising those who, through no fault of their own, have lost their jobs in this longest economic downturn since the 1930s.

Owners of rental property are the ones who are really benefiting. So let us address the problem at source and tackle Britain's housing crisis.

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Finance

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