Badenoch's £8billion welfare plan: who is hit and why pensioners are exempt

Kemi Badenoch has set out Conservative plans to cut £8billion from the welfare budget so that defence spending can rise by £10billion and reach 3 per cent of GDP by 2030, the Daily Express reports. Half of the saving would come from changes to housing benefit, which the party says would save £4bn. The rest of the package includes bringing back the two-child benefit cap.

The Tory leader told BBC Radio 4's Today programme that pensioners and existing tenants would be protected from the housing benefit changes. Prime Minister Andy Burnham has rejected the plan. At Prime Minister's Questions he said national security "can't come at the expense of social security" and warned the cuts would leave "hundreds of thousands of children in temporary accommodation".

This is an opposition proposal, not a change in the law. Nothing about anyone's housing benefit or Universal Credit changes because of it. But it shows clearly which households would be in line for less support if the Conservatives got the chance to carry it out.

How the Tories say they would take £4bn from housing benefit

According to the BBC, the Conservatives say at least £2.2bn would come from freezing social sector rents by ending the annual increases linked to inflation. Another £1.8bn would come from lowering Local Housing Allowance rates for new tenancies. Local Housing Allowance is the local limit, based on private rents in the area, that decides how much housing benefit a private renter can get. For existing tenancies, rates would be frozen until they gradually fall in line, the BBC reported.

The Mirror reports that the plan involves cutting Local Housing Allowance to the 10th percentile. Rachael Williamson of the Chartered Institute of Housing warned this "risks taking us back to a situation where support bears little relation to the real cost of renting". She said any short-term savings could soon be outweighed by higher costs for councils, the NHS and other public services.

Mrs Badenoch defended the idea on BBC Breakfast. "If people need local housing allowance they will need to move somewhere cheaper," she said, adding that people should not expect "other taxpayers" to pay for them to live wherever they want. Shelter's campaigns director Mairi Macrae called that "unrealistic" because housing benefit rates are set locally. Karen Buck, chairwoman of Generation Rent and a former Labour MP, warned of homelessness, crippling temporary accommodation costs for councils and severe hardship for renters.

Who would get less help and who is protected

Mrs Badenoch told the BBC her plan "doesn't cover pensioners" and "doesn't affect existing tenants". She said: "We're not removing people from homes." However, the BBC's account of the party's plans says Local Housing Allowance rates for existing tenancies would be frozen until they gradually fall in line. So people already renting would keep their claims, but their support would stop rising even if their rent goes up.

The people most exposed would be private renters on a low income or out of work who start a new tenancy, especially in expensive areas, because the lower rates would apply to them. Social housing rents would stop rising with inflation, which the party says is where the biggest single saving comes from. Housing benefit is paid to people who are unemployed or on a low income to help with rent, and the BBC says the number eligible has risen by more than one million since 2020 because private rents have soared.

Larger families would also be hit by the return of the two-child benefit cap, which limited Universal Credit or tax credits to the first two children in a family. The BBC says Labour scrapped it in April. The Mirror reports that former Chancellor Rachel Reeves put the cost of scrapping it at around £3billion-a-year by 2029-30, and said it would mean an estimated 450,000 fewer children in poverty. None of the reports give a pound figure for how much a typical household would lose.

Key numbers

• £8billion: the total welfare cuts in the Conservative defence package, according to the Daily Express.
• £10billion: the extra yearly defence spending the Tories have promised.
• £4bn: the amount the party says it would cut from the housing benefit bill.
• £39bn: the forecast cost of housing benefit this year, according to the Department for Work and Pensions.
• £109billion: where spending on sickness and disability benefits is heading by the end of the decade, the Express reports.
• £407bn: the welfare bill expected by 2030/31, up from £333bn, according to the Office for Budget Responsibility.
• 450,000: the estimated number of children lifted out of poverty by scrapping the two-child cap, according to Rachel Reeves.

What happens next: a spring spending review

Because the Conservatives are in opposition, these are pledges only, and nothing changes to benefits now. Mr Burnham has said a target date for spending 3% of GDP on defence will be set out in the spending review in the spring, the BBC reports. The Mirror says he has also committed the government to Nato's goal of 3.5% by 2035.

Downing Street said the Prime Minister still wants the welfare bill brought down, but not through "crude cuts that simply push people into crisis". Mr Burnham says he will do it "the Labour way", by building more council homes, helping young people into work and offering more mental health support. The Express reports that his Chancellor, John Healey, has warned that 3 per cent is the minimum needed to keep Britain safe, so the row over how to pay for it is far from settled.

What you can do now

If you rent and get help with housing costs, check which Local Housing Allowance rate applies to you. Your local council can tell you, because rates vary by council area. Keep a copy of your tenancy agreement and award letters, since the Tory plan treats existing tenancies differently from new ones.

It is also worth running your details through an independent benefits calculator to make sure you are getting everything you are entitled to now. If you are worried about keeping up with rent, contact your council's housing team or a charity such as Shelter early, before arrears build up. Pensioners, including those on housing benefit, would be exempt from the housing changes, Mrs Badenoch said.

Your questions answered

Will pensioners lose housing benefit under this plan?

Mrs Badenoch told the BBC the housing benefit plan "doesn't cover pensioners". The reports do not say whether pensioners would be affected by any other part of the £8billion package, and the party has not published that detail.

Is the two-child benefit cap coming back?

Only if the Conservatives win power and go ahead with it. Labour scrapped the cap, which the BBC says happened in April. Mrs Badenoch said people who choose not to have more children because they cannot afford it should not pay for others to do so.

Why are benefits being linked to defence?

Mrs Badenoch says the welfare bill is "getting out of control" and that the country spends more on welfare than on defence and education combined. Mr Burnham says national security cannot come at the expense of social security, and argues that cutting housing benefit would raise homelessness and cost more in the end.