Debate Points – Welfare

Preamble:

The Government & the media have promulgated more than their fair share of myths over the years regarding welfare and benefits. The media, because they’re uncaring right-wing bastards who need sensationalist, gossip worthy news to keep them in print and further their own political agenda. The government, to justify their cuts to welfare spending, whilst all the while pursuing tax cuts for the wealthiest, public spending cuts which hit the poorest disproportionately and austerity which is causing economic depression. In doing so they have created division and sought to demonise large swathes of society for their own political ends, whilst ignoring the reality of the situation we as a country, a society and a people face.

I hope to bust some welfare myths with a little old things called ‘fact’ and make the case that, right here and now, the Uk’s economy and therefore wider good would be served by increasing the welfare budget.

Debate Points:

Myth: The Majority of Benefits go to fraudulent claims / Welfare fraud is common / Disability benefit claims are mostly fraudulent / Loads of people are claiming benefits falsely…

Answer: The public very often overestimate the scale of welfare fraud. To quote Turn2Us: “1 in 5 people believe a majority of claims are false, while 14% believe a majority of claims are fraudulent.”

The Reality is that around 1% of claims are deemed, by the government’s OWN numbers, to be fraudulent, with the percentage cost to the welfare budget in same vicinity.

http://statistics.dwp.gov.uk/asd/asd2/fem/nsfr-final-160611.pdf

http://www.turn2us.org.uk/about_us/media_centre/news_archive/benefits_stigma.aspx

Meanwhile the government’s numbers for 2011/12, show just 0.7 per cent of benefit expenditure was overpaid due to fraud, including a 2.8 per cent fraud rate for jobseeker’s allowance and 0.3 per cent for incapacity benefits.

Now, you may claim the government are underestimating the number, but remember, this is a government that have to their best ability been trying to egg up the cost of undeserving welfare claimants. And they have attempted on multiple occasions to big up the cost of welfare, and dubious welfare claims, to the public.

Myth: Welfare Fraud, and Errors in the way we administer welfare cost the country greatly.

“In 2010 £16 billion in benefits and tax credits were unclaimed. Only £5 billion was lost through the combined effects of error and fraud.”

http://www.pcs.org.uk/en/campaigns/welfare-reform/index.cfm

Underpayment of benefits is just a big an issue as overpayment. Indeed, in financial value and impact to people’s lives alone, it is a greater one. Many people are put off claiming benefits at all, for fear of being labelled a scrounger.

And to put things in perspective; for all the column inches on welfare fraud, benefit scroungers and the rest, the fraction and overall cost of welfare fraud is tiny in the grand scheme of government expenditure. And it is miniscule, next to the issue of tax evasion and avoidance, which costs the country somewhere between £100150 billion a year.

Fraud is bad, yes. Let’s tackle the tax fraud (and thus eliminate the budget deficit in one fell swoop) then we can start to worry about the welfare fraud angle…

Myth: We spend too much on benefits for the out of work.

Answer: Unemployment benefit costs £8-9 billion a year, about a tenth of the overall cost of welfare not including pensions. Someone on JSA will get £71 a week (unless they’re young in which case it’s £50 odd). That £71 a week is it, and has to cover bills as well (though you do get council tax benefit) – housing benefit does not cover those.

The Joseph Rowntree Foundation estimates that a single person needs to earn £193 a week to reach a minimum standard of living. That is the: ‘minimal acceptable standard of living’ and is determined by what members of the public  think is needed to have a standard of living that is above survival but well below luxury. They add council tax benefit to JSA and conclude that a single person, out of work is £108 a week short (or £5616 a year) short of that level.

Further, they determine that a family of four – two parents, two children – needs £455 a week. If neither parent works, then the family will receive £281 a week (including council tax benefit) and thus be £174 a week (or £9048 a year) below that standard.

One thing is clear from the above; benefits are not overly generous. If anyone believes that, comparative to employment, living off benefits is an enticing option, they should campaign for an increase to the minimum wage, rather than attack the already insufficient standard of living over a million and a half people are subjected to by failings in the free-market economy.

As for the total bill; well, we spend £43 billion a year on defence, about £8.5 billion on unemployment benefit. We lose up to, or maybe more than £100 billion in tax fraud. I ask you, is £8.5 billion, at a time when the unemployed are faced with a job to jobseeker ratio of 1 to 5, unduly high when even that figure doesn’t provide people with a decent standard of living?

When unemployment benefit was first introduced it matched the state pension. Now it’s significantly less than that, falling, and viewed with disdain by large portions of the public. What a sad state of affairs.

Myth: The welfare budget is increasing at an unsustainable rate / welfare spending increased under Labour and is now at an unsustainable high

Answer: Under Labour, welfare spending as a percentage of GDP fell. It has only started to rise by any significance in the last few years as a result of the recession. Which is to be expected; unemployed increases – thus increasing the welfare bill – and GDP has shrunk, meaning the percentage we spend on welfare relative to our GDP has increased.

But to take a couple of years during which the economy was in recession and extrapolate that out as an unsustainable norm is ludicrous. Once the economy returns to growth (or should that be; assuming the government let’s the economy return to growth…) unemployment will fall, GDP rise (and with it revenues) and the welfare bill will shrink, both in real number terms and in terms of its percentage to our GDP.

Even so, our spending on welfare as a percent of GDP is still lower now than at any point in the 1970s or 1980s and is actually beginning to level out and fall…

Myth: There are large numbers of families where intergenerational joblessness is a real problem

So daft I’m just going to quote the Guardian:

“In 2009 Iain Duncan Smith, now cabinet minister in charge of welfare, said: “Life expectancy on some estates, where often three generations of the same family have never worked, is lower than the Gaza Strip”.

Looking at all of those households where there were just two generations living in the same household, the report says that academics have found less than half of a percent had two generations that had never worked – 15,000 households across the UK.

Numbers can bolster weak arguments but it seems a clear case of “Lies, damned lies, and statistics”.

Myth: The welfare net is becoming a long-term option for many people

Answer: In the majority of cases not an optional one. This myth supposes and implies a couple of things: that people who are unemployed for a long time are doing so out of choice (you often see terms like ‘living off benefits lifestyle’), that it is becoming an increasingly prevalent problem, and that the only way to prevent it is by ‘getting tough’ with claimants.

On the first point; it usually isn’t. If it were a choice, then you’d expect to see long-term unemployment rates rise and fall independently of the overall unemployment rate. Rather, they mirror each other. What this would seem to tell us then, is that long-term unemployment is just like the regular kind, and that the reason someone is out of a job for a year, is the same as for someone being out of a job for a month; they can’t find one.

Secondly, this isn’t an increasing problem in terms of a growing trend, rather it has increased in recent years at the same rate overall unemployment has because of the recession. Pre-recession it was stable and, as previously said, mirrored overall unemployment rates.

Thirdly; If we agree that it mirrors regular unemployment, and we know that unemployment is most closely linked to the number of jobs available, why would we assume anything other than the number of jobs available would have any impact whatsoever on the levels of long-term unemployment?

I can draw in the other myth of ‘Higher benefits = more unemployment’ here, by pointing out that under Labour, benefits increased faster than under the coalition, yet unemployment fell. Meanwhile, since the recession, unemployment benefits have gone up less, yet unemployment increased. The reason is (and I know constantly pointing this out is repetitive, but it’s the only way right-wingers learn) related to the number of jobs available.

If you want to lower long-term unemployment, do the same as you would to lower unemployment in general; create jobs. Anything else is political rabble-rousing and rhetoric. ‘Getting tough on welfare’ is just as ludicrous as getting tough on your kitchen tap’s dripping.

Myth: Child benefit means we have loads of large families living it up off the state

Answer: Again, such a funny one I refer word for word to the Guardian:

“Stories referring to large families had more than doubled in frequency since 2003, accounting for some 7.4% of articles.

The facts are that families with more than five children account for 1% of out-of-work benefit claims. Very large households with ten or more children are a staple of tabloid shock stories: there are, according to DWP, 180 such claimant households in Britain.”

Some interesting facts we know about larger families as well, include; higher rates of child poverty, that they’re declining in number, that (in 2006 at least) The UK child poverty rate for large families was among the highest in the OECD and that The UK tax and benefit system favours small families rather than large families. In other countries, when tax and benefit systems vary with the number of children, higher benefits are paid to larger families.

http://www.jrf.org.uk/publications/child-poverty-large-families

This is BEFORE the government’s proposed benefits cap, which would harm larger families.

I would then ask anyone who truly believes the above myth to square their belief with the higher rates of poverty, and ask why we should be punishing such families more? Yes, I agree with the point of view that a family should be able to afford a child before having it, but equally I don’t believe in punishing those children for your moralising position, or indeed any of the other families who do not meet your cliché, but would still be hit regardless.

Myth: Welfare spending hurts the economy, by lowering productivity / creating higher unemployment / causing higher taxes etc

Answer: Welfare spending can actually be good for the economy.

As far as methods for government stimulating economic growth go, putting money in the hands of poor people is one of the best out there. Why? Poor people spend their cash. And importantly; they spend it locally. This gives two benefits:

1) The money goes straight into the economy. There’s no off-shore bank accounts, holidays in the sun, or spending on foreign companies for specialised and luxury items. Give the money to the poor and it goes into the local economy, generating growth here in the Uk.

2) It acts as stimulus in the worst hit places. Given that the most deprived areas, most in need of stimulus are also where the highest number of unemployed people are liable to be, this puts money not only into the Uk economy, but into local economies that need it most. Struggling small businesses get the cash in the worst off economic areas. This can lead to such businesses recovering, employing more people and helping to lead to areas worst hit by economy ruin recover faster.

Spending on welfare also has knock-on benefits to the economy and to the nation’s budget. Higher welfare payments lower poverty & crime, whilst decrease poor health through better diet. One of the major issues we’re facing right now in the Uk is children going to school hungry, whilst food banks are saying they’ve never had so many people needing help.

Poorly fed kids will do worse at school, get worse qualifications and worse jobs – if they find employment at all. Welfare therefore becomes a tool for social mobility, improving education attainment and again; the economy.

Iceland is an economy emerging from the global recession thanks in some small part to their increased welfare spending.

Myth: Courtesy of Kelvin Mackenzie: ‘15% are deserving of welfare payments’

Firstly, to be actually able to refute that percentage, we have to know the ‘of what’ he is referring to when he says ‘15%’. The full sentence in which that ‘15%’ is referenced to, whilst being interviewed for BBC radio 4 is as follows:

“The Welfare State means for me, that 100% of people pay for it, about 40% receive it, of which about 15% are deserving of it.”

So, is that 15% of all people in receipt of welfare, or 15% of the total population; which as a percentage of 40% would give us a figure of 37.5% of all people receiving welfare? I’ll assume the 37.5% figure as it’s the larger.

Now, the problem with assessing Kelvin’s claim is what we decide counts as ‘deserving’. Further, we need to determine whether an individual is ‘deserving’ of some, all or no benefits. One might determine someone is deserving of, say, housing benefit – people need a roof over their head – but not of JSA or child benefit or whatever…

Therefore, let’s work out the percentages based on the total welfare bill. Not only does this avoid having to make specific judgements about individuals and the problem above, it also let’s us see how much the ‘deserving’ or ‘undeserving’ actually cost as well as let us make policy changes in response, rather than moral judgements…

So, to steal a chart from another site, this is how welfare spending broke down in 2009-2010. Percentages have stayed roughly the same, which is what we’re after here.

So straight away, pensions loom large… Even discounting pensions, though, arriving at a figure over 37.5% is not difficult*, unless you exclude disabled, child and housing benefits…

(*Discounting pensions and other pensioner benefits and the overall bill is 110bn. 37.5 % of 110bn is 41.25bn.)

Labeling the disabled as undeserving may not be to everyone’s agreement… whilst sticking the same label on policies designed to alleviate child poverty and provide some kind of equality of opportunity also seems short-sighted. I think we can all agree on the money towards those in work? And hopefully also on housing benefit it at least the vast majority of cases as the vast majority of housing benefit claimants are employed.

End of the day, the money seems to go where I think all welfare money should; to the old, the young, the sick and disabled and to the safety net which prevents people from becoming homeless or starving to death just ‘cos…

Myth: The benefits system is broken

Answer: Well… actually…

Yes, it probably is… but not how most right-wingers would suggest.

At the moment, one of the worst and costliest aspects of welfare is housing benefit. Since 1991, the number of people living in privately rented accommodation has risen whilst social housing has fallen dramatically. The result is the government paying the private sector literally billions of pounds a year, and being at the whim of rising rent prices. Right wingers often evoke the term ‘It’s not what Berveridge intended’ to support their very flimsy excuses for slashing welfare to those worst off (as if one of the country’s greatest social reformers would prefer the disabled and children of poor families cast onto the streets instead), they are usually wrong in such assertions, but what we can say is the Beveridge almost certainly didn’t envisage the right to buy notion of the Thatcher administration.

As a result of it, we do have a higher welfare bill though. (Cheers free-marketeers for raising our taxes…) And so a scheme of building more social and affordable housing has become a necessity and a useful opportunity for some stimulus spending in these depression era times.

How else is welfare broken? Well, the right musn’t shoulder all the blame. The left’s obsession with means testing to ensure the very worst off get the most help also means that the more you earn, the less you’re supported – even when you’re still in a very precarious position financially speaking. People working part-time and low paid hours know that the more they work, the faster the carpet get’s dragged out from under them. In good economic times, one can see the logic, maybe, but when times are tough, work can be inconsistent. Having to surrender part of your benefit for the week because you worked a few hours that week (resulting in being no better off than if you hadn’t worked at all) can be a bitter body blow to someone. I worked at a factory where a woman who’d been out of work for 20 odd years (raising her daughter) and who suffered from severe social anxiety had finally plucked up the courage to work a couple of shifts a week at her daughter’s workplace on the night shift when she knew it would be quiet. For someone who’d been out of work so long, and who suffered from the anxiety she did it was clear this was a fantastic effort on her part, one which should be encouraged and rewarded…

So image the bitter disappointment to her when she found out her benefit for the week had been stopped and her overall financial position improved to the tune of pennies for her efforts. Given the choice of stay at home, or go to work for someone with her fear of social interaction, the easiest option by far was to stay at home, and the courage she displayed a demonstration to all of what someone could achieve if they tried. To be no better off for those efforts though, can instil in people’s minds that benefits are, not just the easier, but the better option financially.

The solution to this problem is two-fold. Firstly, work has to be made to pay. The minimum wage in this country is already well established to be below the living wage. The take home pay of someone on the minimum wage working 40 hours a week is barely above the JRF acceptable living standard amount, and with times as they are, more and more people find themselves working part-time hours, making hitting that mark even more difficult.

The second problem is with how fast benefits are withdrawn from those on low/no incomes once they begin earning. Keeping the benefits fixed until the person is higher up the income spectrum would encourage work which may otherwise be turned down, reduce the number of people who don’t declare their earnings for fear of losing benefits and generally help those who need it.

So; more houses, better wages and more, not less, money on welfare. That’s how you fix it.

Either way, we do have to have proper discourse on welfare policy. Whether that discourse starts from a premise of factual, evidence-based policy making or from scaremongering, divisive demonisation is, however, up to those in positions of power and influence. May God have mercy on us all.

Cheers

Useful Links:

ukpublicspending.co.uk

Demonisation of the Poor is taking place – Sarah Teather

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About iwastoldtheredbegin

Politics of the Left Wing and Liberal variety, plus gin!
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3 Responses to Debate Points – Welfare

  1. Pingback: Politics – Welfare & Division Tactics | iwastoldtheredbegin

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