The welfare reform bill has carried the application of the economic theory of moral hazard to such extremes in its exaggerated claims of welfare dependency that unemployment benefits could be reduced to an amount incapable of keeping body and soul together.

The new universal credit will be made up of a standard allowance (SA), an amount for children, another for housing and one more for particular needs or circumstances. The bill does not attempt to explain how the level of the SA will be decided. There is no link to the escalating prices of food and other essential needs. The Centre for Research in Social Policy has calculated that some time in the next 10 years the weekly cost of a healthy diet will overtake the weekly amount paid in adult unemployment benefits.

The caps on housing benefit and the local housing allowance will create debts that will have to be paid out of the money needed for a healthy diet.

Rev Paul Nicolson

Sir, There are serious weakness in the flawed concept of society which is pouring out of 10 Downing Street. It is very Judgemental. And it contains no mention or practice of economic justice.

Contempt for British society has covered pages of newsprint. Britain is broken; we don’t volunteer enough; there is a dependency culture among the unemployed, and a sick-note culture In the civil service. But the unemployed need encouragement rather than demonisation. Of course, the absolutely poor unemployed depend on the taxpayer to prevent their starving and to pay the rent: with means-tested welfare, such a policy illustrates the meaning of the common good.

Research has shown that people would far rather work than draw the dole; and of course they should be willing to look for work. But unemployment benefits become increasingly valueless as they are cut and the prices of food and other essentials escalate, rendering some people unfit to work, owing to debt and stress.

Low pay and bad management are known to result in labour turnover and increased sickness absence. It was the accountancy company KPMG that wrote the business reasons for the Living Wage for London and then paid it to the company’s cleaners; it is refused by the Government for the civil service.

The treatment of poor tenants recieving housing benefit takes us back to the poll tax. Both parties of government since 1979 are responsible for the catastrophic consequences of the 1980s, deregulation of lending and the abolition of rent controls, which were exploited by irresponsible bankers, who nearly destroyed the economy in 2008. Money flooded into a housing market in short supply, forcing up prices and rent. Housing benefit exploded to more than £21 billion a year.

It was not the fault of the improverished tenants; but they are carrying the pain of enforced eviction from thier homes and rent arrears that they cannot pay from poverty-level Jobseeker’s Allowance, owing to the cuts in the housing benefit; the poll tax also reduced Jobseeker’s Allowance.

The Prime Minister claims that it is wrong for the state to fund unemployed people to live to a higher standard than those who go out to work. This is nonsense when the state has persistently failed to devise any policy for affordable housing since Harold Macmillan was at No.10 in 1957. Local authorities placed homeless people in available accomodation because they, quite rightly, had a legal duty to do so. A secure home is a basic necessity.

It will take a major campaign about Clause 68 of the Welfare Reform Bill, in which htis draconian policy is legislated for, to put this injustice right.

Rev Paul Nicolson.

Tom Clark is right to express concern about the seven flimsy pages issued by the government on 21 December (Poverty made permanent, 5 January). The problem for the coalition is that the Child Poverty Act 2010 requires the government to publish a strategy outlining its plans to work towards specific income targets and demonstrate how it will tackle socioeconomic disadvantage.

The deputy prime minister says poverty plus a pound does not represent fairness and suggests we need to look at people’s experiences of poverty in all its dimensions and not just in narrow statistical terms. So they have conducted an initial survey of the evidence and had discussions with experts about the meaning of “socioeconomic disadvantage”.

This is an attempt to wriggle out of the requirements of the act by redefining “socioeconomic disadvantage” while throwing doubt on the importance of measuring income poverty. No amount of political obfuscation can undo the logic of Micawber’s principle – “Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery” – when 25 cuts are reducing the already inadequate incomes of the poorest citizens while the prices paid for essentials are increasing.

Paul Nicolson
Chairman, Zacchaeus 2000 Trust

The Health in Pregnancy Grant must be one of the most short-lived welfare provisions ever. First mooted in 2007, it was introduced in April 2009 as a one-off payment to help women cope with the additional costs of having a baby, but the coalition Government now wants to abolish it, writes Paul Nicolson.

Labour MP and former head of the Child Poverty Action Group Kate Green has tabled an amendment to the Savings Accounts and Health in Pregnancy Bill that will give the coalition a chance to stop and think about relationship between the cuts and public health. The bill abolishes the £190 Health in Pregnancy Grant that women can apply for at the twenty-fifth week of their pregnancy. The Sure Start Grant for the second child has already gone.

There is a failure in Whitehall thinking about the negative public-health consequenoes of poverty-level welfare, illustrated in a spat between the Department of Work and Pensions (DWP) and the Department of Health before the May election, and that now continues with the coalition’s cuts. In 2009 we sent to DWP Ministers research by the Institute of Brain Chemistry and Human Nutrition, which has international recognition, showing that poor maternal nutrition increases the risks of permanent developmental brain disorder in the foetus, in low birth weight in babies, and mental and physical ill health during a person’s lifetime. Poor cognitive ability and cerebral palsy were highlighted.

We also sent ministers the Joseph Rowntree Foundation’s scientifically researched, and publically supported, minimum-income food standard of £44 a week. We asked the DWP to consider whether the unemployment benefit of a woman aged 18 to 25 of £51.85 a week – it is slightly less per head for a couple – can provide a healthy diet and all other necessities before conception and during pregnancy.

The DWP ministers sent the question to the Department of Health ministers to respond. They replied it would not be appropriate to comment; they forwarded our evidence to the Scientific Advisory Committee on Nutrition, which refused to comment on the poverty-level incomes of unemployed women and has now been abolished!

This matters. Professor Baroness Findlay told the House of Lords during a debate on the Child Poverty Bill in January that “it is becoming apparent that low birth weights, of which Britain has the highest rate in Western Europe, are associated with poor cognitive abilities and serious brain disorders such as cerebral palsy. Low birth weights in the UK have increased from 6.6 per cent in 1973 to 7.2 per cent in 2008 in England and Wales. The highest in England are 11 per cent in Liverpool and 12 per cent in the City of London.

When adult unemployment pay was first introduced in 1911 at seven shillings (today worth just under £20) a week, it was 22 per cent of average earnings in manufacturing; by 2008 it was 10.5 per cent as a result of tying increases to the Retail Prine Index which does not increase as fast as real earnings, or as the price of essential items like food and fuel. The inadequacy of the RPI coupled with the coalition’s switch to the Consumer Price Index will reduce the increases by £1 a week every year reaching £I0 a week in the tenth year.

The health of newborn babies is put in further jeopardy by women’s stress and debt. The Government Office for Science has related mental illness to personal debt and notes that mental illness costs the economy £77billion a year, now updated to £105 billion by the Department of Health. But the moment the housing-benefit caps become law, councils will debit about one million household’s rent accounts with arrears, which private landlords have said they will enforce through to eviction. The Treasury has made no exceptions for pregnancy. All pastors will be aware that divorces, losing a job or a home are emotionally stressful in the same way as bereavernent.

Withdrawing welfare from women in deep poverty and imposing debts, while allowing the inadequate buying power of jobseeker’s allowance to drift endlessly downwards is a toxic mix of policies damaging to public health. It cannot be justified by the often repeated mantras about dependency, or appeals to the moral hazards associated with welfare payments that are set too high.

By Paul Nicolson, Chairman of Zacchaeus 2000 Trust
Published in The Tablet, 13 November 2010 pp12-13