Benefits claimants in the North could see their payments slashed as the Government considers the introduction of regional benefits based on local wage levels.
This comes as part of a raft of proposals raised by the Prime Minister yesterday to significantly overhaul the current welfare system’s “culture of entitlement”. In a controversial speech delivered in Kent yesterday, David Cameron had been expected to detail ideas for a postcode-based system of benefits along with other benefits plans including the withdrawal of housing benefits for under 25s and a £20,000 per year cap on housing support for families with children over the age of three.
However, despite an earlier announcement made by Cameron’s official spokesman, the regional benefits proposal never actually made it into the PM’s speech, sparking rumours that Liberal Democrats put a stop to the unveiling of the proposal at the final hour.
The Number 10 spokesman who briefed journalists before the speech said of the Tory suggestion that was later cut: “It is about local labour markets and ensuring that it is not better to be on benefits.
“Clearly, wage rates vary around the country and what someone receives in benefits compared to what they could potentially get by going into a job has an impact on the incentives they face. That is the logic for looking at this question.”
The consideration of a regionally variable benefit rate would cut job seeker’s and disability payments for all claimants outside of the wealthier South East region. This is likely to affect over 260,000 benefits claimants in the North East alone. This echoes the recent suggestions of the Treasury to introduce different rates of pay to public sector workers dependent upon where they live.
However, these proposals have faced strong opposition from MPs of lower-wage areas including the Hull North MP Diana Johnson who said: “There seems to be a recurring theme from this Government of hostility and a lack of understanding for people, especially the least well-off, in the North.”
The Northern TUC who represents and campaigns for the views of trade unions in the region also expressed their concern for the vulnerable people of the North who rely upon benefits as an essential safety net. Regional secretary, Kevin Rowan said: “The prospect of real terms cuts to social security for those in the North East only adds insult to injury. We are not second class citizens and will not be treated as such.”
According to Mr Cameron, none of the proposals put forward regarding the benefits overhaul were concrete policy plans but just provocations for a national debate. Considering the Liberal Democrats’ distancing from these proposals, it is thought that Cameron’s plans are more likely to become part of a Conservative general election manifesto rather than part of the coalition agenda.
As part of his speech yesterday, the Prime Minister insisted that the current benefits system has created “a mass of perverse incentives, mind-numbing complexity and real unfairness”.
He continued: “We have in some ways created a welfare gap in this country between those living long-term in the welfare system and those outside it. This has sent out some incredibly damaging signals. That it pays not to work. That you are owed something for nothing”.