The announcement that the Conservatives want to lower the “benefit cap” to £23,000 a year is not new – they were trailing it as a policy last September. The most notable thing about the policy is that, although the numbers of people it will affect are very small, it’s being touted as a leading issue for the forthcoming election. By the government’s figures, this is a very marginal issue. It’s a proposal to save £135m a year from a budget of some £93bn. That saving isn’t certain – we know that estimates of the initial impact of the benefit cap were wildly exaggerated and had repeatedly to be revised downward, largely because people in these circumstances tend to move off benefits fairly rapidly anyway.
The very small numbers of people who are likely to be affected are people who have particularly high rents, and if they have high rents it’s generally because (a) they live in expensive areas like London and (b) they took on the rents when they had higher incomes. There’s never been much support for the view that some better-off people might also need some income security in circumstances such as divorce or prolonged illness, but we ought to understand that that is the principle that is being criticised when the benefit cap is ratcheted downwards. The other main thing that the policy does is to keep in the headlines an inflated sense of the level of protection that people get from social security benefits. The UK’s support for people who are unemployed is one of the meanest provisions in the developed world.
The other side of the proposal is that the Conservatives are proposing to create 3 million apprenticeships with the money by 2020. The Telegraph reports: “the first priority of a majority Conservative government will be a further tightening of the welfare cap to £23,000, with the proceeds devoted to the creation of three million apprenticeships. ” £135m a year for a fifth of 3 million doesn’t yield a massive amount for each apprenticeship: it comes to £225 per apprentice. Probably more important is the proposed saving by abolishing housing benefits for 18-21 year-olds, but if that comes up to the £300m that the Conservatives are talking about, it will still offer only about £500 per apprentice. The idea that 3 million places can be created with such a small investment looks like fantasy budgeting.