16 thoughts on “Are large benefit increases wise in a recession?”

  1. Posted 12/03/2009 at 10:55 | Permalink

    This policy also has an impact on social housing rents, which have to rise by 1% above the September RPI figure. Social landlords are therefore forced to put their rents up by 6.5% in April, with all the consequences this has for work incentives and the cost of Housing Benefit. This is happening at a time when private sector rents in some parts of the country are falling.

  2. Posted 12/03/2009 at 10:55 | Permalink

    This policy also has an impact on social housing rents, which have to rise by 1% above the September RPI figure. Social landlords are therefore forced to put their rents up by 6.5% in April, with all the consequences this has for work incentives and the cost of Housing Benefit. This is happening at a time when private sector rents in some parts of the country are falling.

  3. Posted 12/03/2009 at 11:16 | Permalink

    And the problem of social housing rent is all rigidly locked into the system because so-called social landlords obtain their long-term building finance on the assumption that their rents are closely tied to RPI, do they not?

  4. Posted 12/03/2009 at 11:16 | Permalink

    And the problem of social housing rent is all rigidly locked into the system because so-called social landlords obtain their long-term building finance on the assumption that their rents are closely tied to RPI, do they not?

  5. Posted 12/03/2009 at 15:52 | Permalink

    One of the reasons politicians are so concerned to avoid deflation is that they know how difficult it would be to cut worker’s nominal wage rates. But if nominal wage rates stay the same, during a deflation ‘real’ wage rates would be rising, with horrendous implications for unemployment.

  6. Posted 12/03/2009 at 15:52 | Permalink

    One of the reasons politicians are so concerned to avoid deflation is that they know how difficult it would be to cut worker’s nominal wage rates. But if nominal wage rates stay the same, during a deflation ‘real’ wage rates would be rising, with horrendous implications for unemployment.

  7. Posted 12/03/2009 at 16:21 | Permalink

    Philip, you’re right, and revenue subsidy also depends on rent levels. Social landlords have virtually no flexibility.

    Returning to Richard’s point on benefit levels, I think it is very troubling that we are now being told by government that higher benefit levels are inherently good because they form part of a financial stimulus. The problem, of course, is that this spending all too easily becomes permanent.

  8. Posted 12/03/2009 at 16:21 | Permalink

    Philip, you’re right, and revenue subsidy also depends on rent levels. Social landlords have virtually no flexibility.

    Returning to Richard’s point on benefit levels, I think it is very troubling that we are now being told by government that higher benefit levels are inherently good because they form part of a financial stimulus. The problem, of course, is that this spending all too easily becomes permanent.

  9. Posted 13/03/2009 at 10:46 | Permalink

    I’ve just read in ‘Inside Housing’ that the government will fund half the proposed rent increase. The main response by local authorities is to complain at the cost of sending out revised rent increase letters and whether the government will pay. Its not just the tenants who are dependent!

  10. Posted 13/03/2009 at 10:46 | Permalink

    I’ve just read in ‘Inside Housing’ that the government will fund half the proposed rent increase. The main response by local authorities is to complain at the cost of sending out revised rent increase letters and whether the government will pay. Its not just the tenants who are dependent!

  11. Posted 01/04/2009 at 11:46 | Permalink

    “Are large benefit increases wise in a recession?” It rather depends who you are. If you are a politician they are positively sage-like. You can present yourself as the generous benefactor, helping out the poorest, while additional expenditure is deferred until the future, after which you have already won your election, or lost it and left the mess to your opponent to clear up.

    Meanwhile those whose jobs or businesses are destroyed are The Forgotten Men, for it is far harder to plot the causal link between their suffering and government spending than it is to point to a beneficiary on an extra £5 a week.

  12. Posted 01/04/2009 at 11:46 | Permalink

    “Are large benefit increases wise in a recession?” It rather depends who you are. If you are a politician they are positively sage-like. You can present yourself as the generous benefactor, helping out the poorest, while additional expenditure is deferred until the future, after which you have already won your election, or lost it and left the mess to your opponent to clear up.

    Meanwhile those whose jobs or businesses are destroyed are The Forgotten Men, for it is far harder to plot the causal link between their suffering and government spending than it is to point to a beneficiary on an extra £5 a week.

  13. Posted 10/04/2009 at 17:32 | Permalink

    well im sick of this we have worked for 33 years never been unemployed til xmas,now we are literally starving to death,we eat one meal a day,as we still have loans etc to pay and out of our 90 quid a week,we are left with less than 10 for food essentials etc,we cant get any help,we dont want to be dole bludgers,we are depressed and suicidal,so how dare you say we shouldnt get increase,its only 6 quid a week and that wont help us at all,the c.a.b cant see us for months,we cant get loans or interest stopped till then,its easy when it doesnt involve u to say these things,think of us in u.k who are hungry and scared.

  14. Posted 10/04/2009 at 17:32 | Permalink

    well im sick of this we have worked for 33 years never been unemployed til xmas,now we are literally starving to death,we eat one meal a day,as we still have loans etc to pay and out of our 90 quid a week,we are left with less than 10 for food essentials etc,we cant get any help,we dont want to be dole bludgers,we are depressed and suicidal,so how dare you say we shouldnt get increase,its only 6 quid a week and that wont help us at all,the c.a.b cant see us for months,we cant get loans or interest stopped till then,its easy when it doesnt involve u to say these things,think of us in u.k who are hungry and scared.

  15. Posted 10/04/2009 at 21:58 | Permalink

    Ann – sorry to hear about the problems you are experiencing. Though it may sound harsh, benefit increases will only lead to even more people facing the misery of life on the dole. Taxes and government borrowing will have to rise to pay for extra benefit payments. It’s also worth remembering that a series of government policies have made life more difficult for people on low incomes. Environmental regulations have increased electricity and water bills; the EU’s Common Agricultural Policy has raised food prices. On a more practical level, there are alternative debt advisory services apart from CAB in most towns – it might be worth looking them up.

  16. Posted 10/04/2009 at 21:58 | Permalink

    Ann – sorry to hear about the problems you are experiencing. Though it may sound harsh, benefit increases will only lead to even more people facing the misery of life on the dole. Taxes and government borrowing will have to rise to pay for extra benefit payments. It’s also worth remembering that a series of government policies have made life more difficult for people on low incomes. Environmental regulations have increased electricity and water bills; the EU’s Common Agricultural Policy has raised food prices. On a more practical level, there are alternative debt advisory services apart from CAB in most towns – it might be worth looking them up.

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