Labour campaigns against benefit cuts: Warning of reduced spending on housing and sickness. Colin Brown reports and unemployment

CUTS IN the welfare state will be targeted in a Labour autumn offensive on the Government, launched tomorrow by Gordon Brown, the Labour spokesman on the economy.

Mr Brown said last night that proposed cuts in housing benefit, disclosed yesterday in the Independent, would be 'another attack on the pensioners'. Using the slogan 'You can't trust the Tories', Labour leaders will attempt to capitalise on opinion poll findings that the public feel betrayed under John Major's leadership.

Mr Brown will warn of cuts in other parts of the welfare state, including sickness benefit, for which companies could be asked to pay more of the burden, and unemployment benefit, which ministers want to cut from 12 months to 6 months.

The housing charity Shelter last night warned the Government that it risked increasing the cost of homelessness with cuts in the pounds 7bn budget for housing benefit.

Ministers are considering cutting the numbers eligible for housing benefit by halving the limit for savings from pounds 16,000 to pounds 8,000 in line with income support; lowering the earnings limit, where claimants lose benefit (known as 'the taper'); and penalising local authorities, which administer the system, for failing to tackle fraud and abuses.

Shelter criticised the confusion over benefit payments, and called for a thorough review of the system, but opposed sharpening the tapers.

'We are creating poverty ghettos of people who cannot afford to go to work because the housing taper is too sharp. Making it sharper is absurd,' a spokeswoman for Shelter said.

The Department of Social Security said the main reason for the rise in the cost of housing benefit was the rise in unemployment caused by the recession. But the Select Committee on the Environment found that housing benefit may inhibit claimants from leaving the dole when the recession ends.

'The present housing benefit taper of 65 per cent contributes to a maximum effective rate of tax of up to 97p in each pound of extra income and provides a consequent disincentive to work. The effect is commonly known as the poverty trap or earnings trap, sometimes as the benefit trap,' the committee said.

The poverty trap has been deepened by the switch of government resources from capital spending through housing association grants (HAG) to personal subsidies through benefits, such as housing benefit.

David Willetts, the Tory MP for Havant and former head of the Centre for Policy Studies, said: 'We have got into a position where we are giving help to low income tenants at two different stages, first as a subsidy to the Housing Corporation and housing associations, and secondly as a subsidy to the tenant through housing benefit. There is a case for drawing back on one of these two.'

However, John Major knows the difficulty of doing so. He was the Chief Secretary to the Treasury in charge of public spending when Margaret (now Baroness) Thatcher was forced to retreat over an attempt to restrict eligibility to those with savings of pounds 2,000 or less. It was raised to pounds 8,000 at a cost of pounds 100m and John Moore, then Secretary of State for Social Security, was later sacked.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: 3rd Line Virtualisation, Windows & Server Engineer

£40000 - £47000 per annum: Recruitment Genius: A 3rd Line Virtualisation / Sto...

Recruitment Genius: Refrigeration and Air Conditioning Service Engineer

£26000 - £35000 per annum: Recruitment Genius: A successful national service f...

Recruitment Genius: Business Development Executive / Sales - OTE £25,000

£15000 - £25000 per annum: Recruitment Genius: This is an opportunity to join ...

Recruitment Genius: Sales Administrator - Fixed Term Contract

£17500 - £20000 per annum: Recruitment Genius: We currently require an experie...

Day In a Page

Syria civil war: Meet the military commander who says his soldiers will not rest until every inch of their war torn country is free of Islamist 'terrorists'

‘We won’t stop until Syria is back to normal’

Near the front lines with Islamist-controlled towns where Assad’s troops were besieged just last month, Robert Fisk meets a commander confidently preparing his soldiers for battle
The inside story of how Bill Clinton built a $2bn global foundation may undermine Hillary's chances

The inside story of how Bill Clinton built a $2bn global foundation...

... and how it may undermine Hillary's chances in 2016
12 best olive oils

Extra-virgin, cold-press, early-harvest, ultra-premium: 12 best olive oils

Choosing an olive oil is a surprising minefield. Save yourself the hassle with our handy guide
Rafa Benitez Real Madrid unveiling: New manager full of emotion at Bernabeu homecoming

Benitez full of emotion at Bernabeu homecoming

There were tears in the former Liverpool manager’s eyes as he was unveiled as Real Madrid coach. But the Spaniard knows he must make tough decisions if he is to succeed
Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?