Housing Benefit as Business Subsidy

Cross posted at Liberal Conspiracy. YAY ME!

Last Thursday night I had the unenviable experience of watching “The Future State of Welfare Reform”, with John Humphrys.

If you haven’t seen it, do yourself a favour: don’t. Watch Tory propaganda instead; the two are barely indistinguishable.

I want to use a small point made during the programme to make my own point on a topic I know too well: housing benefit, and the Tory plan to push poor people out of London.

Humphrys and his production crew managed to find one of those “Daily Male” benefit cases that tick all the boxes. An Ecuadorian family, all of them with brown skin, living in a big-ish flat in Islington, apparently unable to utter a single word of English.

The father and sole earner of the family was a cleaner. His wages wouldn’t have been enough to pay the rent for such a “palace”, so, as a person on “low income”, he is entitled to housing benefit to help him bridge the gap between what his employers feel like paying him and what he actually needs to live.

Mr Humphrys asked the man “whether he feels the state should subsidise his flat”. Or something like that.

Mr Humphrys, being, of course, well educated and doing a job that is reserved for those who are as well educated as him or more, got it wrong. Very wrong indeed.

The state isn’t subsidising Mr Housing Benefit Recipient; the state is actually subsidising Mr Cleaning Company Who Employs Mr Housing Benefit Recipient because he cannot cough up the wages that his employee would need to live on.

This point is hardly ever made by the Left, and I can’t understand why. This is an unashamed transfer of public funds into private landlord’s and private companies pocket’s.

It is up to employers to pay enough for employees to live, that is what wages are all about. If employers don’t feel generous enough, then employees need to go somewhere else. Low wages, no employees. At least that’s what would happen in a functioning “free market”. Instead, the state steps in and gives Mr Housing Benefit Recipient enough money to pay his rent.

Notice that neither him nor his family get to “enjoy” this wealth, for having a roof above their heads is non negotiable; it is a pre requisite for any worker to go and do their jobs.

The ones who do enjoy “extra” wealth are the private companies who get away with paying, essentially, below subsistence wages, safe in the comfort that the state will step in and fill in the gap so that their workers can make do.

If private companies were to pay living wages, it would make their profits sink. See? Housing benefit neatly translates into private profit.

This is the reason why the Welfare State doesn’t “work”. Benefits are supposed to be there to provide workers with a safety net; they were never meant to compensate for low wages simply because employers cannot be bothered to pay more.

But don’t expect Humphrys to tell you that. I suspect he’s too educated.