Britain's new 'Bedroom Tax' is not what you'd think

British Prime Minister David Cameron delivers his speech on the economy during a visit to precision grinding engineers Cinetic Landis Ltd on March 7, 2013 in Keighley, England. During his visit to West Yorkshire the prime minister emphasised that he will hold firm on the economy and that any change in the governments route to economic recovery would plunge the U.K. 'back into the abyss.'

Linda Edwards lives on welfare -- with her disabled son -- in a housing project in southeast London. She is about to fall victim to a radical reform of the British benefit system. Because she has one more room that she needs, Linda faces a stark choice: lose $1,000 worth of benefits a year -- or move to a smaller property.

“I mean, I’m 54. Why should I have to do that? Why should I have to move out?" she  asks, rejecting any suggestion that she is sponging off welfare. “I’m caring for my son, so as far as I’m concerned, I’m doing a job.”

Hundreds of thousands of Brits like her face losing handouts as a raft of new measures designed to contain the escalating cost of welfare begins to bite. Prime Minister David Cameron says the measures are necessary to save public money and to give British people more incentive to work.

But Liam Byrne of the opposition Labour Party says Cameron is penalizing the most vulnerable and dismantling a venerable British institution: the Welfare State.

“The system that supports those of our neighbors who are in need is being taken apart,” says Byrne. “What he’s now implementing is a brutal society where those that are poorest have the most taken from them.”

The government argues that the welfare system is ripe for reform; there is widespread abuse. When it introduced a tough new test for disability benefit, almost a million people dropped their claims rather than submit to it. Some had been citing “blisters “ and “acne” as reasons for their inability to work. More than 46,000 claimed incapacity benefit because of “behavioral disorders due to the use of alcohol.”

The Minister for Work and Pensions Iain Duncan-Smith vigorously defends his reforms: “What we’re doing is getting some fairness in the system,” he says. “We’re getting  the bills under control and reforming a system that leaves people trapped on benefit, out of work. That has to change. We’re changing it now.”

Welfare and state pensions will soon account for $320 billion a year in Britain -- a third of all public spending. The government claims that even with the reforms it won’t reduce that overall bill, just stop it spiraling out of control.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

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