Osborne and the fake £104,000 housing benefit claim

Anne McGuire MP has been on her feet in the Common this afternoon raising a point of order about the £104,000 housing benefit pay out that George Osborne referred to in his budget speech.

The Stirling Labour MP points out, as Westminster Council did shortly after the budget, that no such award actually exists but the figure is now common currency and is being bandied about as cover for cutting housing benefit.

The rates Osborne used were and example of what housing benefit on a five bedroom house in Kensington and Chelsea, one of London’s most upmarket boroughs, would be - about £2,000 a week.

“It is what the rate would be,” said a spokeswoman for the Department for Work and Pensions afterwards. “We don’t have any figures on how many people are claiming that rate.”

Yet Osborne uses the figure to justify the squeeze the Housing Benefit budget and to create an impression that there is no alternative to his cuts agenda.

The effect of this cut, and the culmination of other benefit cuts, is given painful clarity in a painful blog blog entry, the budget and me, by Deepy Flawed and Trying.

This extract gives a reality check on what a “progressive” budget will mean for many people in Britain. The writer is a single mother and former social worker re-entering the labour market this year when her daughter goes to school.

I don’t have any more money than I had on Income Support- but I earn it. My eye has always been on the day where I could return to work full time.

Rachel starts school this September, and I got myself a full time job. Yay!

Then the budget happened.

LHA rules have been changed. Instead of contributing to the rent of a house with a rent at the median of local rents, they will only help with the cost of rent up to 30centile of the local rents.

This detail was lost under a great deal of fanfare about housing benefit paying people to live in mansions.

This takes approximately £20 a week out of my current income. With the VAT increase, and whatever happens with prices in the next few months- I don’t know how I will manage. The only way I was managing, was by keeping my eye on September- when I could feel the benefit of a salary.

I had hoped to be slightly better off when I got back to work. The cost of after school clubs, and breakfast clubs, is slightly less than the cost of full time childcare. However, the change in LHA rules- means that the slightly better off that I had assumed would happen- is also gone. I will be worse off than when I was working last time.

I have just put the phone down. The job is no longer there. To prepare for cuts of 25percent across the board, they cannot risk hiring new staff.

Even if I had started- I cannot physically earn enough to take me above the income level of someone on income support.

I am now going to be competing in a labour market flooded with the people who will be laid off as part of these cuts, in a profession with widespread recruitment freezes."