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Earlier this week, Welfare Reform Minister Lord Freud delivered an address to the Reforming Housing Benefit Conference. It will be interesting to know if he explored the issue of people having to move to other areas where housing is cheaper. It extends to the heart of the government’s welfare reforms so he should have.

In a recent blog I may have given the wrong impression. Someone complained to me that I was defending the Newham policy by arguing that social networks and social capital are not always good things and that disrupting them can have positive outcomes for society and the individual. The blog was advocating more research and more nuanced policy thinking not a defence of Newham Council, or for that matter the government.

But it’s got me thinking about another possible project. The Department for Communities and Local Government and Department for Work and Pensions should consider funding work looking at the potential economic and social costs of the housing benefit cap in light of the recent debate surrounding Newham, if this has not been done already or is not already underway.

Intuitively, my sense is that the economic and social costs of potentially thousands of people and families relocating to places where housing is cheaper could be significant, undermining rather than helping the government to cut public spending. At least five or six angles come to mind straight away, but let’s take the first one that came to my mind. We know that unpaid social care provided by friends and relatives saves the economy billions. Research undertaken by the University of Leeds for Carers UK in 2007, for example, estimates that the saving of this to the UK is £87 billion every year. To put this into perspective, that was more than the government's total spend on the NHS in the 2006-07 financial year.

If the housing benefit cap means large numbers of people having to move away, one consequence could be to weaken or break up these important support networks thus making the big social care problem we have in the UK even worse than it already is. The knock on effect nationally would be to increase pressure on already over-stretched and over-squeezed public and voluntary sectors. But the impact would be felt most acutely locally, in poorer parts of the country where living standards have been (and will continue to be) worst hit and where people are already, arguably, overly reliant on the state and where local services are most under-pressure overall.

Needless to say, this would be a rather odd way of reducing the size of the state and public spending which are explicit aims of the government. Which leads me to wonder: is the cap on housing benefit another example of the government not thinking through its policies? This might be harsh, in which case I’m happy to listen to alternative perspectives.

On the subject of social care, I had the pleasure of reading an interesting blog by my colleague, Ben Dellot, earlier in the week, which is worth a read. And for a rather good report on personalisation in social care see the latest report from the 2020 Public Services Hub at the RSA.


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