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Calculating how the benefit cap cuts – Tim Leunig

January 23, 2012

Today I published an analysis of the government’s £26,000 benefits cap for people out of work. It makes for grim reading.

After basic expenses – rent, council tax and utilities – it turns out that the government expects people to live on 62p per day. That is physically impossible. I have been asked where my figures came from, so here is the breakdown.

£392.31 for rent (the allowable rent for Tolworth, typical of a cheaper property)
£39.06 for council tax (Kingston Council, Band E)
£28.18 for gas and electricity (DECC English average + 20 percent for large family, in 2011 £s)
£7.21 for water (OfWAT UK average + 20 percent for large family)
£6.00 for telephone/broadband – the cheapest BT anytime package

Starting from £500 means that you have £26.23 per week left over for the family, which is 62p per person per day to the nearest penny.

We can argue over these exact figures. Clearly the family could choose to be cold, or to shower infrequently to save money. But against that, private rented housing is typically less well insulated, the family are at home every day, so energy bills may be larger still. I have not included a mobile phone, or any calls to mobile phones, or to 08 numbers not included in the basic package.

In any case, even after rent and council tax, the family has only £1.64 per person per day to live on. No alternative figures will make any difference: this is simply not a living income for a family with four children in private rented accommodation in a cheap part of outer London.

Tim Leunig is chief economist at CentreForum.

6 Comments leave one →
  1. hobson permalink
    January 23, 2012 8:43 pm

    Here you go, a nice looking home for £271 a week, giving your family an extra £120 a week to live on.

    (The rent is given per month, so I have multiplied that by 12 and then divided it by 52).

    Yes, it’s only a three bedroom house and I’m guessing the kids can live two to a bedroom. I’m sure they’ll cope.

    By the way, look at this lovely property your Oldham family can afford for only £184 a week – detached with four bedrooms!

    Don’t know what you are worried about them for. A lovely property for just £9,600 a year.

    Perhaps everyone in London – whether working or not – would be wealthier and happier if the Government stopped pouring taxpayers’ money down the throats of London landlords (I mean everyone except the landlords of course).

  2. January 24, 2012 1:49 pm

    The figure of 62p is a spurious argument! Divide £26,000 by 365 days and you get £71.23 divide by 2 adults plus 4 kids and you get £11.87 a day each… it would be nice to live on that and not have to go to work but i go to work and now earn, yes EARN not just take or be given £27,000 losing tax it probably works out at about £23,000? I say good on the government for a benefits cap and fully support it despite having been a job seeker on a whole £67.50 per week (less than that family could get per day!) this summer as that was all i was entitled too. Why should I pay for that family’s choice to have 4 children… If I had been given free money maybe I might’ve had a child but I decided i couldn’t afford to when I was younger and single – now maybe I’ve lost my chance through age despite now being married and that we could offer a stable and loving environment to bring up a child…

  3. someone permalink
    January 29, 2012 3:10 pm

    Some people’s ignorance is just hard to believe… good work, Tim, keep going!

  4. Tim Leunig permalink
    February 1, 2012 11:11 am

    mpage3 – if you have that family size, and that income, and live in the same place, you will get about £22k in benefits, net of taxes, in addition to your salary.

  5. BevR permalink
    February 14, 2012 10:24 am

    What about the disabled, they don’t choose to be disabled and would swap places with able bodied healthy individuals at the drop of a hat. They do need the heat on longer to stay warm, they need to do laundry more, need care and assistance, special foods the list goes on. I’ve worked, paid taxes and personally never thought twice about my taxes taking care of the disabled this group should NOT be thrown in the mix, disabled people do need more support and I don’t understand how anyone could think any different. Just where do you stand as far as the disabled are concerned, seen no good come out of Nicky and his followers yet?


  1. The benefit cap: what is it and is it fair? | Nick Thornsby's Blog

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