Image of Hammer and Sickle

New Communist Party of Britain


One of the first acts of the Conservative, Liberal-Democratic coalition (Coalition) government was to attack welfare benefits through the Welfare Reform Act 2012. This act is nothing other than an attack on the working class and to put into law £18 billion of cuts to the social wage.

The Coalition government claims that the purpose of the act is “to simplify the benefits system in order to improve incentives to work” and advanced the proposition that the benefits system is too complex and has perverse incentives that make people decide not to work. It will introduce a Universal Credit which will replace housing benefits, tax credits, and income-related Jobseekers Allowance.

The system of allocating the social wage is in need of simplification so as to make it easier for people to claim the £16 billion of benefits that goes unclaimed every year. But the Coalition government’s idea of simplification is to make it more difficult for people to claim for less.

The act introduces tougher penalties to reduce fraud and error, which seemingly costs the country £1.5 billion annually. The supposed savings of £18 billion is dwarfed by the £25 billion tax breaks given to business or the accounting methods used by the ruling class to avoid paying £120 billion of tax each year.

The act will replace the Disability Living Allowance with the Personal Independence Payment, which is paid by the Department of Work and Pensions to disabled people - both in work and out of work - in recognition of the higher costs of living that disability causes. Almost certainly the payments will be cut in the process; much will be lost in the extra costs of administration and determining criteria of eligibility. Claiming will become more bureaucratic and difficult than it already is. It will also limit the payment of the Employment and Support Allowance (ESA) to a 12-month period.

For many the act will reduce housing benefits, by up to 25 per cent. It has been estimated that 32 per cent of existing Housing Benefit claimants will be affected. Already, eviction orders have risen significantly against tenants who are no longer able to afford their rents. Newham Council in east London has even approached a housing association in Stoke-on-Trent asking them to take 500 families who have been “priced out of London” by the Coalition government’s new cap.

Crisis loans and Community Care Grants will be replaced by council run schemes in April 2013

The risk of the Council Tax Benefit scheme will be passed to local councils along with a cut of 10 per cent in the Government grant. It will be up to local councils to decide how to administer the scheme and whether the 10 per cent cut will be absorbed by the council or whether recipients will be asked to make up the difference.

These changes are clearly part of the ruling class agenda to dismantle state welfare and return us to the Victorian days where paupers - the unemployed, elderly, sick, long-term disabled and unsupported single parents - were forced to claim benefit from their local parish or borough. The criteria for eligibility varied from one locality to another but boroughs were anxious not to be seen as generous because this would attract paupers from outside the area and create an extra burden on the rates. Claimants were often refused benefits if they tried to claim outside the parish or borough where they were born as local authorities tried to shift responsibilities from one to another.

Just three months after the Welfare Reform Act 2012 became law the Coalition government indicated that they will remove all housing benefits from those under the age of 25, put further limits on child benefit and introduce new curbs on what remains.

This will drive young people back into their parents’ homes, possibly leading to overcrowding, especially if the young people themselves are parents. Those who do not have parents or friends to go to are likely to end up on the streets, jeopardising their existing employment and any future job or education prospects.

Strictly speaking housing benefit and tax credits paid to people in work but on low incomes are not welfare benefits. Housing Benefit is paid, via the hapless tenants, to landlords and enables rents to be sustained way above the level a truly free market would create. The Housing Benefit bill to the taxpayer is truly enormous and should be reduced by capping rents, not benefits.

Tax credits paid to those in work allow employers to pay wages well below what a truly free market would permit. They should be abolished by raising wages to enable workers to live a tolerable life without recourse to taxpayer-funded top-ups. These credits subsidise the profits of employers at taxpayers’ expense.

Furthermore housing benefit and tax credits undermine working class unity by creating a situation where low-paid workers actually suffer a cut in total income when they win a pay rise through normal wage bargaining because these “benefits” are then withdrawn.

What the Coalition government never highlights is that Britain has one of the lowest levels of benefits in western Europe, with unemployment benefit of just £67.50 per week for those over 25 and £53.45 for those under 25. If, since 1979, unemployment benefit had increased in line with earnings it would be over £110 per week.

The New Communist Party must confront the ruling class face-on and help strengthen the labour movement so that the cuts to the social wage are reversed. This can be done by the Communists, socialists, trade unions, disability and pensioner organisations working together. Though the immediate demand must be to reverse the cuts and to extend the social wage there must be a political campaign led by the Party that demonstrates that the social wage can only become a permanent feature by workers taking state power.