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Benefits Britain: What should a right-minded member of society think?
The Independent on Sunday ran a big piece of the Welfare Reform Bill this weekend, looking at a number of the proposed changes as well as rating their “fairness”
Nearly a quarter of a million children will see their family lose money under the new benefits cap, with parents forced to cut back on everyday costs or move house, the Government has admitted for the first time. A £26,000 cap on housing benefit and other allowances, to be introduced next year, will affect 220,000 children in 67,000 households across Britain, with the average family losing as much as £83 a week.
The measure is the coalition’s latest attempt to control Britain’s benefits bill. By the end of March, it will break the £200bn barrier for the first time: double the health budget and four times the amount spent on education or defence.
Benefits Britain: What should a right-minded member of society think?
This was in response to another article in the paper by Iain Duncan Smith, which sets out why he feels that the reforms are necessary.
Alongside this, we have the biggest back-to-work programme seen in a generation, the work programme, where private and voluntary organisations are paid to get someone into work and keep them there. Together with our reforms, this sends the signal that a life on benefits must not be more attractive than working.
That is why we are introducing the benefits cap. The public do not believe that claimants should receive higher incomes than families in work – in some cases more than double the average household income.
There has been a lot of scaremongering about the proposed cap. Let me be clear: £26,000 a year is the equivalent of a salary of £35,000, and it is a simply wrong that people who don’t work can get substantially more money from the state than many working people earn.
How many of us know hard-working families who have to commute some distance to work because they either cannot afford to live nearby or chose to live where property is less expensive?
No longer can the taxpayer continue to write blank cheques to pay for benefit claimants to live in properties they can only dream of.
Iain Duncan Smith: Fairness for the taxpayer – and for the claimant
Does anyone know where the £200 billion figure is coming from? The media and government seem to throw figures about with little reference to what they actually represent. Is it the sum of all benefits including Tax Credits? Or has it come off the back of a fag packet?
I found these figures from this helpful Guardian graphic on public spending in 2010/11
* Benefits spend £152.4bn
* Tax credits spend £28.1bn
This comes out out to ~£180bn, so I’m not sure where the extra £20,000,000,000 comes from (unless they’ve lumped in other administration costs and passported benefits perhaps?).
Further, and rather obviously, the £200bn figure conflates in and out of work payments, as well as universal payments, so the implication that this is all the fault of the feckless unemployed is rather farfetched.
Particularly when one notes that approximately half of the benefits spend is on state pension payments.
That seems more like it Paul. What is so astonishing is that media seem to accept fictional figures without original proper research. As we are only too aware, social security is paid for by the taxpayer and the taxpayer is surely owed transpancy by the government.
It is barmy to pay some people such massive amounts in benefits.
BUT, instead of punishing the small minority of claimants who receive such amounts, the case needs to be articulated for dealing with the economic drivers behind the problem:
1. Rents and other housing costs which have soared away above inflation and which have been inflated by de-regulation with billions of HB going into the pockets of landlords. Government proposals for RSL rents to better reflect market levels will make the problem worse.
2. The failure to provide direct publcily funded childcare rather than subsiding the cost through complex arrangements like WTC - logic suggests that such subsidies have caused these cost to raise disproportionatly. Seriously, anyone designing a public childcare system from scratch would not do it this way.
3. Setting the National Minimum Wage too low. Employers can pay such rates safe in the knowledge that the state will subsise them.
4. The complexity and traps inherent in benefit rules which prevent people from upskilling or retraining when they are out of work.
5. The privatisation of public transport which has led to successive increases above the cost of inflation.
6. Heinz 57 variety of complex earnings disregards, all set far too low which disincentivise people from working a few hours a week. The worst is the £5 basic disregard - unchanged from 1988.
etc, etc.
Also, stop picking on claimants. Why not introduce conditionality and capping for wealthier people who get public financial support? Those getting tax relief on pension contributions at 40%, NI contributions at 2% for those earning more than £817pw (£42,484pa), agricultural and other subsidies being paid to wealthy land owners, tax-free profits for owners of woodland, shareholders in publicly owned banks, etc, etc.
[ Edited: 14 Feb 2012 at 11:23 am by neilbateman ]I think this is the tragedy of the current approach. The system needs sophisticated thinking and redesign. What we get instead is a demlotion hammer approach, which pays scant regard to wider issues such as housing, real training, and the true state of the labour market.
Neil’s point about the minumum wage and WTC indirect subsidies to employers is never (as far as I can see) debated in the popular media, yet this one point alone is worthy of exploration.
Neil’s point about the minumum wage and WTC indirect subsidies to employers is never (as far as I can see) debated in the popular media, yet this one point alone is worthy of exploration.
In fact there is NO system without perverse incentives.
Your good lefties are shocked by employers/landlords exploiting them.
Your good tories are shocked by claimants exploiting them.
Funny how we all see to take advantage when we see one…..
The problem with WTC being discussed in the media is that there are many out there who fundamentally disagree with tax credits in the first place and want them scrapped. These people at the same time though insist on there being an incentive to work. Can’t have it both ways and scrapping WTC would just add to the housing benefit bill anyway, which would cause further uproar.
Damned if you do, damned if you dont.
Well, we’ve already got the changes to hours requirements for Working Tax Credit, when the threshold is raised from 16 to 24 hours in April, which was on the BBC News channels yesterday.
Figures obtained by Labour’s Treasury spokeswoman Cathy Jamieson show 212,000 households - with a total of 470,000 children between them - could lose the £3,870-a-year credit because of the change.