A
guest post by Joan Grant of KUWG expressing personal views
Benefits for people in work cost 6 times as much as for people out of work
So, the
Tories won and the election, worse still from out point of view, with
an outright majority. We were told before the election that the
Tories planned to make £12bn of welfare cuts. IDS refused to tell us
what the Tories had in mind. Various ideas were floated and leaked to
the press.
Before
the election, the Tories announced that they would be freezing
benefits for working age people for 2 years. That saves £1bn. They
have now announced plans to reduce the Benefit Cap from £26,000 to
£23,000. This does not apply to any claimants who receive Working
Tax Credits or a disability benefit. This change will save about £100m a year, half a billion over the five years of a Parliament.
Half a billion is not insignificant but it is a drop in the ocean set
against a deficit which was £90bn last year. And our total national
debt is roughly £1.5tn.
Reducing
the cap is likely to lead to more evictions as people can no longer
afford their rent, especially in London and the South East. Policy
advice from civil servants to the Government, states that this
measure will plunge another 40,000 children into poverty.
Tories
continue to hammer away at claimants who are not in work, as they
know that plays well to their base. I believe that the public are not
aware of the relatively small sums of public money that we are
talking about.
Its an
easy mistake to make. You would assume that getting more people into
work would mean that the nation saves money. But you would be wrong.
Tax credits for people in work, cost 6 times as much as job seekers
allowance pad to those out of work.
A graphic
can make the point more starkly than words. Job Seekers Allowance
(for those out of work) costs about £5bn a year (shown in purple).
However, tax credits (for those in work) cost £28bn (light blue).
Tax credits in my humble opinion were one of Labour’s worst ideas.
They subsidise low pay at tax payers expense. Employers large and
small pay workers the minimum wage safe in the knowledge that the
workers’ pay will be topped up by tax credits.
Government
Spending on Means Tested Welfare Benefits in Billions
 |
I am
someone who thinks that we as a nation do need to tackle our debts/
Given how much tax credits cost, one might have thought that they
were a good place to start. I fail to see how it makes any sense,
economic or otherwise for low pay to be subsidised like this.
I wonder
if one of the reasons why people have become disillusioned with
Labour is that it has not done enough to support low paid workers
effectively. Labour’s policy going into the election of wanting a
minimum wage by 2020 was a really damp squib. The minimum wage will
be that amount by 2020 anyway. The minimum wage needs to be £10 in
London and £8 elsewhere as of now. The Living Wage is already
£9.15. Labour seems out of touch with reality on the ground.
Osborne
will be introducing a budget in July, so we will find out then what
further cuts he plans to make. AHe will also be taking away Housing
Benefit from young people. This measure will also cause hardship and
save very little money. All the experts say that it will be hard to
make further cuts, without doing something “radical.” Iain
Duncan Smith apparently wants to overhaul Child Benefit which costs
£12bn but Cameron won't let him.
What we
do know is that pensioners will not be have to make a contribution.
Their benefits remain protected. It is also becoming clear that
Labour will support the reduction of the Benefit Cap. Labour think
they lost the election because they were too left wing. They are now
is now falling over themselves to show that they can take “tough”
decisions. Rachel Reeves is quoted as saying “Labour supports a
benefit cap to ensure people are always better off in work than on
benefits and we will support a reduction in the cap to £23,000 to
ensure this principle is met.” Andy Burnham made similar comments
which were reported in the Mirror on Saturday 30th May.
The SNP which has a clear anti austerity stance, will be opposing
this measure.
This is
likely to be the depressing shape of things to come for the next 18
months or so, until the Tories split over Europe.
Joan Grant
Editor's Note
The one alteration I have made repeatedly for consistency and 'house style' in the submitted blogpiece has been to change the abbreviations for billions and trillions. Joan has used B for billions; I have used bn; and whereas Joan has spelled out the word 'trillions' in full, I have used the abbreviation tn.
£1bn = £1,000,000,000
£1tn = £1,000,000,000,000
Excellent post, Joan Grant. It debunks one of the most toxic lies about unemployed people as "a drain on public spending". A lot of shaming has gone into portraying out of work people as lazy, workshy scroungers.
ReplyDeleteThis stops us from portraying venture capitalists such as: property developers, investors, bankers & corporate bosses as taxshy, wageshy, financially abusive scroungers. It stops us from placing the responsibility for financial wreckages where it belongs: on above mentioned wealth minority's shoulders. A minority spoilt by governmental bailouts as soon as their investment schemes, like the housing bubbles, crash.
Hence I get sceptic when I hear about National debt. Isn't that what justifies the extreme poverty in Haiti as they struggle to pay off an ever increasing debt to white, colonial descendants due to an alleged "loss of earnings" since Haiti became independent? Dude Sweathie could perhaps refresh my memory.
So what exactly is National debt & how is it any different from 3rd World debts? Because the fact is, all countries have debts to other countries. This by itself does not need to be any more of a problem than when ordinary people pay off their mortgage debts.
But I have seen the National debt rhetoric being used to demolish otherwise sound welfare systems in countries like Sweden under the guise of paying off that "dreadful" National debt. In fact whenever we hear any rhetoric that goes: we need to cut the public spending because (insert whatever excuse) - then our bullshit alarms should set off.
I don't know exactly how market economy works. And I doubt many of us do. Which is where the problem lays. Because we don't quite grasp economic dynamics, we become vulnerable to accept lies as facts. Lies told by people whose sole interest is to make themselves as rich as possible at everybody else's expense.
Thanks for blog piece, Joan; and thanks for comment, Plebrise.
DeleteRe Haiti, follow the link while I am still recovering from shingles. Kilburn Unemployed blog references to Haiti.
..."What we do know is that pensioners will not be have to make a contribution. Their benefits remain protected." ...
ReplyDeleteWrong.
See more info at the end of my petition, in my WHY IS THIS IMPORTANT section, at:
https://you.38degrees.org.uk/petitions/state-pension-at-60-now
CURRENT AS WELL AS NEW PENSIONERS NEXT YEAR WILL BE HIT
THERE IS NO PROTECTION
NO LAW GUARANTEES PENSION PAYOUT SINCE 1993
New Pensioners and old will be hit next year.
RAISED RETIREMENT AGE IS A BENEFIT AND STATE PENSION HIT SINCE 2013
Already women lost state pension payout and therefore pensioner benefits for 6 years from 2013, not retiring til at least 2019 onwards. Men's retirement age rose 1 year from 65 to 66.
This also meant no access to the benefit of Pension Credit nor Winter Fuel Allowance.
NEXT YEAR PENSION CREDIT LOST
Next year Pension Credit (savings) is abolished for new pensioners.
Universal Credit's national roll out will mean new pensioners will be denied Pension Credit guarantee credit if either of a couple are below the raised retirement age (this will be mostly the wife).
STATE PENSION PAYOUT LOSS HITS PEOPLE IN WORK
By the raised retirement age women especially are hit, as the state pension is payable even if remain in work and women tend to be poorer than even men, more in the lowest paid, casual, temporary short term and zero hour contracted types of work.
WOMEN OLDER THAN THOSE DENIED STATE PENSION PAYOUT 2013
FIRST HIT BY THE CON THAT IS THE FLAT RATE PENSION
The women denied state pension payout from 2013 til at least 2019 are not the first to be hit by the flat rate pension con, that is not more but less or even nil state pension.
The first will be women and men older than those.
SOME WOMEN LEFT WITHOUT STATE PENSION FOR LIFE
BY LOSS OF HOUSEWIFE / DIVORCEE / WIDOW PENSION
UNDER FLAT RATE LAW
Women without a National Insurance history of their own are able to get a Housewife 60 per cent state pension this year from husband's NI record.
This is abolished next year for new pensioners on and from 6 April, when the flat rate state pension law comes into force.
EVEN THOSE OF A GREAT AGE GET A CUT
Someone turning 80 on and from that date also loses a tiny little Category D pension if they have no or a very low state pension.
FLAT RATE NOT UNIVERSAL NEXT YEAR
ACTUALLY IS A MEANS TO CUT THE BASIC STATE PENSION
The flat rate will not be gained by over half of new pensioners. Lowest forecast seen so far is £8.39 per week after 45 years in work.
The flat rate is LESS than the current basic state pension and pension credit.
Pension credit that is being lost for new pensioners next year, will eventually become harder to get even for the over 75s.
PENSIONERS ARE NOT BETTER OFF
NOR PROTECTED
This is biggest lie of Tories and Labour alike.
The more my petition is widely shared and signed, the more this truth will be exposed.