At the Citizens Advice Bureau centre where I work in Peterborough, we sent a young couple out into the freezing evening just before Christmas, to sleep on a park bench. They weren’t local and, though the young woman was in the early stages of pregnancy, were not in ‘priority need’, so the Council has no responsibility for housing them. We rang round the homelessness shelters but all were full and daily turning people away. We gave them a food voucher and told them where to find a hot meal next day.

I had a desperate young woman on the phone the day before, threatened with eviction from her privately rented single bedroom flat. I could do nothing. She was solvent until she lost her job following an industrial injury; what she gains from the industrial injury benefit paid on top of her contribution-based Jobseekers Allowance (JSA) she loses from housing and council tax benefits. There’s a big gap between her rent and her income, worsened by her eligibility only for the single room rate of housing benefit and by repayments on a crisis loan. She’s job-hunting but still far from fit, and the job market’s tough. Sooner or later – sooner, if she’s to avoid serious debt as well as eviction – she will have to give up her long-worked-for flat.

A newly trained adviser, slightly shocked, recently told me she was discovering her prejudices: a man threatened with eviction, in and out of temporary jobs and asking about benefits, had two degrees.

Quite probably all of these will be joining the search for a decent room in a shared house. What they all need is work, reasonably well-paid, reasonably secure and reasonably adapted to their capabilities. But many others are looking for that, too.

I’ll soon be remembering in wonder that an under-35 year-old, un- or under-employed, once could dream of a one-bedroom flat. It’s hardly ‘news’ that there’s a housing crisis; the warnings have been out there for years. Stagnating incomes – including cuts in April 2011 in the calculation of local housing allowance for private rents – plus rising housing costs, add up to 51,640 homeless households in temporary accommodation at the end of June 2012, with over 400,000 households in overcrowded conditions; Shelter adds that the situation is worst for young people. The sums don’t add up for all too many, of any age, on low to middle incomes.

Just take a look at the figures.

Sarah and Natalie

In Cambridge where I live, the local housing allowance (ie maximum housing benefit payment for a private let) on a one-bedroom flat is £520 monthly (£120 weekly). When I looked today, the cheapest one-bed flat for rent on RightMove in a three-mile radius of the city centre was £575 monthly (£132.69 weekly).

Take Natalie (not her real name), she’s 19 years old. At the minimum wage (£4.98), if she’s lucky enough to find a 30 hour job, her weekly income will be £99.60, and as she’s under 35 her housing benefit will be capped at £75 weekly – that’s a local calculation. (If she were older, she’d be a bit better off: the minimum wage is £6.19 for 21 year-olds and over, while a childless 35 year-old can claim enough benefit for a one-room flat , that’s £120pw in Cambridge for example.)

Now she’ll have to find the money food, fuel, clothes fit for her job, travel to work, a bit to put aside for when the fridge breaks down (in her dreams!). Truth is, she’s very lucky if she finds a 30-hour job, and outrageously lucky if it’s got any security. Not for want of trying, Natalie’s going to be in and out of work, off and on benefits.

Lack of hope eats lives. I think of one gutsy, determined woman I’ve met locally, a single mother of four. Let’s call her Sarah. Father’s scarpered. She’s in her early 30s, able and intelligent. While her youngest was under five she was claiming income support and attending college, proudly showing me her certificates for maths, English and IT. She’s just started the next stage of study – but her youngest has hit five. Once a child is five parents have to find work or claim Job Seekers Allowance. JSA was promptly disallowed (along with her housing benefit) because her course was borderline fulltime, and she had to show that she was genuinely likely to find work for more than 16 hours a week. In fact, JCPlus demanded that she look for 24 hours a week.

She too was threatened with eviction. The safe option was giving up her course, securing her JSA and housing benefit. She said to me, ‘I can’t. It’s my life.’ Without qualifications, she faced a lifetime of nil-hours, nil-skill jobs. She stuck it out and won the appeal. She and her kids were terrifyingly close to what would have been accounted intentional homelessness. I hope that she finally gets a job some way commensurate with her abilities. It’s hard to be sanguine, though: Black, struggling with childcare and public transport, minimal qualifications, no useful contacts. Bad prognosis. Better starting point would be Eton.

Her story reminded me (again) how hard these ‘shirkers on benefits’ work. Not only that young woman; also the friend on whom she relies for unpaid childcare while she’s at college, the JCPlus, the Work Programme; at job interviews and at work if she gets a job. The friend (another single mum) will take care of the children until 11 at night, enabling their mother to take a job till 10pm. It was clearly reciprocal: she and her friend support each other. This is the way benefit ‘scroungers’ survive.

But what an insane system, effectively preventing aspirational young people from aspiring. In theory, the Work Programme is there to up-skill claimants, but its caseworkers locally have around 200 on their caseloads, their task being to get them into jobs, any jobs, as fast as possible. Payment by results. Our taxes also fund apprenticeships. I particularly like this ad for a government-funded apprenticeship (£2.65ph). ‘VACANCY DESCRIPTION: Serving customers with fresh fish, drinks, pizza’s etc; Excellent customer facing skills required; Cash Handling’. Investment in our young people, their abilities and hopes?

One reason why the figures don’t add up is the cost of housing. This in turn is caused by a housing shortage in Britain. A year ago, the Joseph Rowntree Foundation reported that the UK was lagging badly behind in its house-building programme in view of continuing household growth, without taking into account the backlog of undersupply. This month the IPPR reports that “England will be three quarters of a million homes short of what we need by 2025…. Homeownership is declining as young households struggle to afford a deposit for a mortgage. Social housing is increasingly residualised. Young people are staying in shared housing or with parents for longer. The proportion of households living in housing classed as unaffordable or overcrowded is on the rise….”

Shortage breeds rising prices. House prices were further inflated by the ultimately disastrous credit boom which ended in 2008, by the sheer amount of money washing around amongst the rich and super-rich, and by tax breaks on mortgages and second homes. Through no fault of their own, tenants cannot afford their rents. ‘Benefit scroungers’ apparently draw housing benefit for homes in cushy parts of London: is it their fault that the prices of their homes have been grotesquely inflated by property speculators? Government claimed that capping housing benefit would force private rents down; as predicted by Shelter and many others, this has not been so. Demand is too high. So the State foots the bill through housing benefit, subsidising the gains of property owners and landlords. And as a result of the deficit, a macro-economic disaster for which these same tenants are not responsible, the State is now withdrawing support.

Can’t they get full-time work, and save up for their own place?

The headlines recently have spoken of falling unemployment; “Overall,” the Guardian told us on 16th May 2012, “today's employment statistics are good news. They confirm the resilience of the UK labour market in the face of a very weak economy.”

More detail is enlightening. The Office for National Statistics (ONS) bulletin for that month added that “The number of part-time workers increased by 118,000 on the quarter to reach 7.99 million (the highest figure since comparable records began in 1992) but the number of full-time workers fell by 13,000 to reach 21.24 million. The number of people… who were working part-time because they could not find a full-time job increased by 73,000 on the quarter to reach 1.42 million, the highest figure since comparable records began in 1992….”. In November, one in ten workers wanted more hours. “The changes to economic conditions [in 2008-2012] include a fall in real earnings (earnings corrected for inflation) and a rise in unemployment. Both of these may have resulted in increased pressure on personal budgets and therefore increased desire for hours.” The increased ‘desire’ for hours was boosted by the rise, since April 2012, in the hours that couples with children have to work to claim working tax credits.

Jobs available locally for low-skilled workers are generally minimum wage (£6.19 for 21 or over; £4.98 for 18-20s; £3.68 for under 18s; £2.65 for apprentices), ‘flexible’ nil-hours or few-hours contracts. People tell me of waiting day after day for the call from the agency or employer, calling them to work. Take a look at the Asda website: “Want to bump up your income with some weekend work? Then Weekend Flex is for you. This is a part time option which means working at least 8 hours a week, which always includes weekend hours. These can be any time from 10pm Friday night through to 6am Monday morning. You just need to be willing to 'flex up' your hours during our busiest periods if we need you during the week or for even more time at the weekend.”

People take these jobs. If they’re claiming JSA they have to, or their benefit is ‘sanctioned’, stopping for at least four weeks (for sanction levels, see here). They need to continue signing on so they have some income when no or little work emerges. But that means continuing to satisfy Job Centre Plus (JCPlus) that they’re actively seeking full-time work, and declaring any income earned. For many, this means that both JSA and consequently Housing/Council Tax benefits start and stop, potentially disastrously. For the organised, it means regularly returning the relevant form along with pay slips. I’ve just been talking with a highly articulate, able couple who have been doing just that with her part-time earnings. Nevertheless, his JSA payments (though not obligations) have suddenly stopped and they face an alleged overpayment of several hundred pounds.

Benefit, debt and housing advisers like me daily meet these squeezed workers and would-be-workers. Any of us can meet ‘them’, because they’re our neighbours – or ourselves. The reformed benefit system, Universal Credit (UC), will make it possible and obligatory for working-age claimants to take ‘micro-jobs’ of an hour or more a week on the minimum wage; in theory, ‘real-time’ monthly information from all employers to HM Revenue & Customs will enable people to churn in and out of work, their UC payments keeping track of fluctuating incomes. In practice, on the evidence of past big computer projects and in view of many employers’ continuing ignorance of what is coming, partial information looks likely to bring mind-bending benefit and stoppages.

Then who benefits?

Iain Duncan Smith is outraged that benefits have recently outpaced wage rises: ‘skivers’ beating ‘strivers’. Statistics depend on how and when they’ve been calculated. There was a bulge in benefit expenditure from 2008 to 2010 in real terms and as a proportion of GDP; proportionately, that continued into 2011-12 though in real terms it was slashed: a cost of recession and austerity. Up to 2008, in terms of GDP, we saw nothing in benefit expenditure that we hadn’t seen through the 1980s. Figures come from the Institute of Fiscal Studies.

In one thing I’d agree with IDS, though not how he’s presented it: wage levels in the low and middle-earning sectors – the vast majority of earners – are an outrage. The social security bill isn’t a skivers and strivers problem, it’s a costs and wages problem. From 2005, the low-paid workers have suffered most: poverty has been rising faster amongst in-work childless adults than out-of-work ones ( see the Poverty Site); Gordon Brown’s derided child tax credits have helped to lift significant numbers of families with children out of poverty. It’s not that people have done ‘better’, meaning ‘well’, on benefits; it’s that pay levels have been falling behind inflation.

This isn’t accidental; it’s a fruit of economic policy over 40 years. Social security costs are the shadow side of the Conservative and Labour love-fest that privileges finance over manufacturing, share value and profits over wages. Between the late 1970s and 2008, real gross earnings for the 10% highest earners doubled. Those of middle-earners – a rapidly diminishing group – rose by 56%, those of the lowest-paid tenth by 27%. [Figures from The Cost of Inequality, Stewart Lansley, 2012.]

Through benefits and tax credits the State is subsidising not individuals but employers and, behind them, the financial interests who divert profits from wages to (hyper-short-term) shareholders. Meanwhile the minimum wage falls far short of a living wage (estimated at £31.50pw for a single childless person by the Joseph Rowntree Foundation, with caveats about local variations in costs).

Nor, often, do those employers contribute much towards the economy which thus subsidises them. The scale of UK tax evasion and avoidance – the line between the two being largely opaque – by multi-national enterprises is on a scale impossible accurately to quantify. “Murphy (2008) [director of Tax Research LLP and founder of the Tax Justice Network] calculates that annual avoidance in the UK stands at about £25bn. In addition, he has, in unpublished work using data from HM Revenue and Customs, estimated that tax evasion may cost the UK Exchequer at least £72bn a year. He concludes that gross annual avoidance in the UK is about… 6% of GDP.” [Tax Havens: how globalization really works, by Palan, Murphy& Chavagneux, 2010].

Primark (part of Associated British Foods (ASB), in turn owned by Wittington Investments) has opened large stores in Cambridge and neighbouring Peterborough: good news for poor shoppers and for local jobs. Their website doesn’t reveal what jobs are on offer, where or at what rates; you first have to put in a job application, involving a complicated quiz (mental arithmetic, spelling, employee attitudes) and then your personal details. Anecdotally, though, the jobs are overwhelmingly part-time shift-work at the minimum wage. Primark has faced (and contested) well-researched accusations of abusing workers’ rights in and beyond the UK, including Cambodia; as part of ABF, Primark was also the focus of protests by UK Uncut concerning its involvement in a 2008 loan deal between Primark and other parts of the partnership to take advantage of the difference between the UK’s 30% tax rate and the 5.3% rate in Luxembourg. The cost to the UK tax take is estimated at about £9.7m annually. A smidgeon in comparison with Murphy’s estimates of overall tax-dodging costs to the economy; but it puts in context the relationship between the ‘scrounging’ benefit claimants who fill Primark’s workforce and the beneficial employer who comes bearing jobs.

What does the future hold?

At the start of the year, we can ask what the future looks like for the next generation of would-be workers and homeowners. We can read of the economic impact of under-investment in skilled workers: witness a June 2012 report by IPPR for the University and College Union. “The trend towards increased demand for higher qualifications is prevalent across the economy…,” says UCU. “Yet, as the report shows, the UK currently invests just 1.7% of public expenditure on tertiary education, compared to 2.3% in France, 2.8% in Germany, 3.2% in the USA and the OECD average of 3.0%...”.

The report puts its findings in a global “context of wider labour market trends which have resulted in an expansion in high-wage, analytical, non-routine jobs and manual, lower-wage jobs at the expense of routine, middle-wage jobs, creating a more polarised labour market... [If] the trend of the last decade continues, by 2020 around 35 percent of the UK’s workforce will be in high-skilled jobs requiring at least an undergraduate degree..” [‘Further Higher: Tertiary education and growth in the UK’s new economy.’ IPPR/UCU]. Its primary focus, justifiably, is on the UK’s failure to educate and train a sufficient workforce in real technical and ‘soft’ skills.

But the report also raises major issues around social justice and, pragmatically, the potential for social conflict. How are workers at the lower end of the market – no less essential than those at the top – to be treated? Under current policies, they are job-fodder when in work and parasites when forced out of it. Wilkinson and Pickett’s findings in The Spirit Level (The Equality Trust, 2009), suggesting that ‘more equal societies almost always do better’, have been heavily criticised but are supported by serious economists. They are part of a strong school of thought arguing that there is nothing economically inevitable or necessary about current polarising policies.

I’ve worked now for four or five years as a benefit adviser. Throughout those years, I’ve been troubled by the endlessly insecure life of people at the bottom of the heap, those working and those disabled or unemployed. Reading Guy Standing’s The Precariat: the new dangerous class (Bloomsbury 2011) was one of those Aha! moments, articulating my thoughts.

But my earlier concern and fears were nothing to what they are now. I do not know how people are going to live in 2013 and beyond. I do not see how people locked into increasing poverty, trapped in a life of unending insecurity with no prospect of escape, can passively suffer their fate; nor why they should. Union strength seems as moribund as faith in the willingness or ability of backbench MPs to represent constituents over against their party machines. I do not know what the future holds.

The problem does not lie in the benefit bill. It lies in the structure of our economy: in the preference given to the short-term investment interests of the City over the long-term needs of productive industry and worthwhile jobs; in the distortions of the housing market and shortage of affordable housing; in the under-investment in people and disregard for the rights and interests of the silent majority.

Morally and socio-economically, we cannot afford the divisive rhetoric that dominates the Commons. Today’s political leaders, elected by today’s adults, control the futures of our young people. On the current trajectory, a growing number of them will be trapped in a lifetime of permanent insecurity, unable to accumulate capital in terms of skills or money. In a competitive world, this country cannot afford such a waste of human talent and energy.

It’s easy to vilify skivers and make young people homeless; in the short-term, it’s politically effective. But it’s destructive. We urgently need clearer thinking and longer-term strategies.