Treasury officials have asked the Department for Work and Pensions (DWP) to find even deeper cuts to welfare spending, according to reports.
BBC Newsnight’s Political Editor, Allegra Stratton, has reported that treasury officials have asked Iain Duncan Smith to find £15bn of welfare cuts, rather than the £12bn originally promised in the Tory manifesto.
A treasury source allegedly told Stratton that both child tax credits and working tax credit could be in the firing line for £8bn in cuts.
This article was written by Tom Clark, for The Guardian on Tuesday 4th November 2014
The occupational pensions of MPs, ministers and the prime minister could be classified as welfare spending in the tax transparency statements that George Osborne has promised every taxpayer.
Her Majesty’s Revenue and Customs is writing to millions of tax-paying households with detailed figures on how the government spends their income tax and National Insurance contributions. Welfare is recorded collectively as the single largest expenditure, consuming nearly one pound in every four.
This presentation has been criticised as a politically motivated departure from Treasury officials’ original plan to break down social security into the components paid to different parts of the population, such as elderly, disabled and unemployed people.
By revealing that payments specifically earmarked for the unemployed, for example, represented only 3% of the total, this approach may have set back Osborne’s case for a fresh £12bn in benefit cuts.
Now experts are drawing attention not only to the lack of differentiation in the welfare chunk of spending but also to the inclusion of substantial elements of spending that would not normally be considered welfare at all, notably personal social services and public sector pensions. Even ministerial pensions are likely to be covered.
The Treasury said: “The headings in our tax summaries are based on internationally recognised (UN) definitions.” But in a briefing note published on Tuesday, the Institute for Fiscal Studies detailed how the welfare total included £28.5bn on “personal social services”.
“This is a number that in many analyses one would want to report separately from other welfare spending,” the IFS said. “Unlike other elements of ‘social protection’ it is not a cash transfer payment and in many ways has more in common with spending on health than spending on social security benefits.
“Another £20bn of the spending counted under welfare is pensions to older people other than state pensions. That includes spending on public sector pensions – to retired nurses, soldiers and so on. This is not spending that would normally be classed as welfare.”
Declan Gaffney, a social security researcher, said the inclusion of public sector pensions was bizarre.
“The Treasury needs to clarify exactly how it arrived at these figures, and publish the workings – spelling out exactly whose pensions it included. Does it, for example, include MPs and the prime minister himself?”
Gaffney has used IFS tables to calculate a more conventional figure for total welfare less state pension expenditure, and concludes that the government’s choice of definition inflates the published welfare spending total by around 40%.
The Treasury did not respond to a question about whether the pensions of MPs, ministers and the prime minister would be classified as welfare.
A spokesman for PCS, the civil service union, said:
“Tens of thousands of civil servants work hard to deliver social security support and they know how important and necessary it is. For their pensions to be hijacked as part of the government’s latest political attack on our welfare state is absolutely disgusting and it exposes just how far ministers will go to poison the well of public opinion.”
Source – Welfare Weekly, 04 Nov 2014
A future Conservative government would reduce the benefit cap from £26,000 to £23,000 and force young unemployed people to work for their benefits, chancellor George Osborne has revealed.
He told the Mail on Sunday that lowering the controversial benefit cap would help fund three million new apprenticeships. Previous Tory attempts to lower the cap have been blocked by the Liberal Democrats.
The Tories believe such a move would be popular among voters calling for yet more cuts to welfare spending. But it will alarm charities and poverty campaigners, who argue that benefit claimants are being unfairly targeted for cuts and marginalised in British society.
“Our mission is not just to save the pounds here and there, we’re trying to change the welfare system so it doesn’t trap people in poverty and a culture of dependency. It is a tragedy for them and a waste for the country.
“We are saying you will receive an allowance but if you can’t find work after six months, you will have to work for the dole. They are difficult decisions but the right ones.”
Osborne also said that 18-21 year-olds would be prevented from claiming housing benefit.
“It is not acceptable for young people under the age of 21 to go straight from school and into a home paid for through housing benefit – benefit funded by other people who are working”, he said.
Mr Osborne claimed that before the introduction of the benefit cap “some families were receiving £100,000 a year in housing benefit”. An analysis by the respected fact-checking website FullFact in November 2012 found that only 70 households, out of a total of 4.5 million, were receiving over £1,000 per week in housing benefit a week in September 2010.
“Even this is likely to overstate the number claiming £100,000 per year however”, said FullFact, “as a family would need to claim over £1,900 per week to hit this total. Previous FoI responses from the Department have suggested around five families benefited by this amount.”
They added: “While the evidence suggests that there are a small number of Housing Benefit claims of more than £100,000 per year – perhaps around five – these cases are very much the exception rather than the rule.
“Focusing exclusively on these outliers without first putting them into context, where over 80% of claims are below £100 per week, could distort the debate around this important topic.”
Rachel Reeves, Labour’s shadow work and pensions secretary said:
“David Cameron’s Government is set to overspend by a staggering £13 billion on social security. And the number of working people claiming Housing Benefit is set to double by 2018/19 costing every UK household £488.
“Spending has risen because the Government has failed to tackle the increasing number of low wage jobs and their welfare policies, from Universal Credit to Personal Independence Payments, are in chaos.
“We must bring down social security spending and doing that requires a new approach to tackle the root causes of these costs directly. That’s why a Labour Government would make work pay by increasing the minimum wage, stop young people cycling in and out of welfare before they’re established in jobs and build more homes to tackle rising housing benefit spending.
“Alongside our plans to introduce a compulsory jobs guarantee to get the long term unemployed off benefits and into work, these measures will help control social security spending for the long term. All the Tories offer is announcements to hide the truth of rising welfare spending.”
> compulsory jobs guarantee = workfare. Different arseholes, but the same old shit.
Update: Since publishing this article it has been brought to our attention that a future Tory government would also scrap Jobseeker’s Allowance (JSA) for 18-21 year-olds. It would be replaced with a “youth allowance”, paid at the same level as JSA. In order to continue receiving payments after six months of being unemployed young people would be required to “work for their dole” on “community projects”. The idea of a youth allowance has already been proposed by the Labour Party.
Source – Welfare News Service, 28 Sept 2014
A public meeting has been called to debate benefits and welfare spending.
The debate is the second to be staged by Durham Democracy Forum, a new group set up to discuss the big political issues of the day.
The meeting will be held in Durham Town Hall on Thursday, May 1, at 6pm.
The panel will include:
– Chris Goulden, a member of the Social Security Advisory Committee which advises the Department for Work and Pensions;
– Ryan Bourne, head of public policy at the conservative Institute for Economic Affairs think tank;
– Paul Simpson, from Durham People’s Assembly.
Matters to be addressed include whether there should be any welfare cuts, if so, where they should fall and the bedroom tax.
All are welcome and entry is free. For further details; http://durhamdemocracyforum.org.uk/
Source – Northern Echo 18 April 2014
With Labour voting for the government’s bill to cap welfare spending, the debate on the welfare state has taken a decisively wrong turn. The issue is not the cap itself, its level, or even its design. The problem lies in the very way in which the welfare state is understood.
Even if one accepts the need for the cap, there are many problems with the way in which it is designed. Many people have rightly pointed out that the capping scheme is not as “recession proof” as it is portrayed. One defence of the bill offered by the government – and accepted by Labour as the key justification for its support – is that it exempts “cyclical” spending, such as unemployment benefit (now given the Orwellian name jobseekers’ allowance). But there are other elements of welfare spending that increase in economic downturns that won’t be exempt. For example, recessions may increase the need for disability benefit because more people are incapacitated due to the psychological and physical impact of unemployment, poor diet, and lack of heating.
Important though these criticisms are, the biggest issue is the very way in which the “problem” of the British welfare state has been defined and understood. The cap is based on the view that the UK needs “to prevent welfare costs spiralling out of control”, given the wasteful nature of such spending. This is not backed up by the evidence.
The British, having supposedly invented the modern welfare state (a debatable proposition), have the mistaken notion that they have an exceptionally generous welfare state, as evidenced by the widespread worries about “welfare scrounging” and “welfare tourism”.
However, measured by public social spending (eg income support, pensions, health) as a proportion of GDP, Britain’s is not much bigger than the OECD average; 24.1% against 22.1% as of 2009. And the OECD includes among its 34 members a dozen or so relatively poor economies – Mexico, Chile, Turkey, Estonia and Slovakia, for example – where the welfare state is much smaller for various reasons (eg younger population, weaker parties of the left).
Even when it comes to income support for the working-age population – the element targeted by the new bill – the UK is not a particularly generous place. In 2007 it spent 4.5% of GDP for the purpose. This was only slightly above the OECD average (3.9%) and way below other rich European economies: the figures were 7.2% for Belgium, 7% for Denmark, 6% for Finland and 5.6% for Sweden.
And it is not even as if the need for social spending goes away if you reduce the welfare state. For many British supporters of a smaller welfare state the role model is the US, which has a very small welfare state (considering its level of income), accounting for only 19.2% of GDP as of 2009. However, it has a huge level of private spending on social expenditure, especially medical insurance and private pensions, which is equivalent to 10.2% of GDP. This means that, at 29.4%, the US has total social spending that is almost as high as that of Finland, which spends 30.7% of GDP on it (29.4% public and 1.3% private). Moreover, if the cost is “spiralling out of control” anywhere, it is in the largely private US healthcare system, thanks to over-treatment of patients, rising insurance premiums and soaring legal costs.
Most importantly, the view that social spending is wasteful needs to be seriously challenged. The frequently used argument against the welfare state is that it reduces economic growth by making the poor workshy and the rich reduce their wealth creation, given the tax burden involved.
However, there is no general correlation between the size of the welfare state and the growth performance of an economy. To cite a rather striking example, despite having a welfare state that is 50% bigger than that of the US (29.4% of GDP as against 19.2% of GDP in the US, in 2009), Finland has grown much faster. Between 1960 and 2010 Finland’s average annual per capita income growth rate was 2.7%, against 2% for the US. This means that during this period US income rose 2.7 times while Finland’s rose by 3.8 times.
The point is that the welfare state – if well designed and coordinated with labour market policies to re-train people and get them back into work – can encourage people to be more accepting of change, thereby promoting growth. Firms in countries such as Finland and Sweden can introduce new technologies faster than their US competitors because, knowing that unemployment need not mean penury and long-term joblessness, their workers do not resist these changes strongly.
Most American workforces are not organised and thus incapable of resisting technological changes that create unemployment – but the minority that are organised, such as the automobile workers, resist them tooth and nail because they know that if they lose their jobs, they will not even be able to afford to go to hospital, and will find it extremely difficult to get back into the labour market at the same level.
The British debate on the welfare state needs to be recast. The false premise that the country has a particularly generous welfare state whose cost is spiralling out of control needs to be abandoned. The structural factors driving up welfare costs, such as ageing, should be accepted – rather than denied and so putting undue pressure on other elements of social services.
Above all, the debate should be redirected into reforming the welfare state in a way that promotes structural change and economic growth.
Source – Welfare News Service 28 March 2014
Successive Government policies that unfairly target the young are making this the worst time to grow up in decades, campaigners say.
High levels of youth unemployment, increased university tuition fees and the difficulty of getting a mortgage have been cited as problems affecting young people, along with changes to the benefit system and cuts to youth support services.
People working with young people in the North East say they are being disproportionately targeted in the Government austerity cuts so that Ministers can protect older people who are statistically more likely to vote.
And there have been warnings that the situation is creating a “a generation without hope” who do not feel part of society.
Liz Emerson, co-founder of the Intergenerational Foundation, a national charity set up to ensure fairness between the generations, said: “This is the first period in recent history where children will have worst standards of living than their parents and their grandparents.
Successive Governments have put the interests of older generations before the interests of younger ones. They’ve taken away the EMA, they’ve taken away Sure Start schemes for young people, they’re taking away their travel concessions.”
Concerns about the young being unfairly targeted came earlier this month when Chancellor George Osborne signalled benefit cuts for the under-26s just a day after Prime Minister David Cameron said he would “triple lock” the state pension, which accounts for half of all welfare spending.
Jeff Hurst, who runs the Newcastle YMCA and is vice-chair of the city’s children’s trust board, said: “I was brought up in a generation where anything was possible and everything was positive. Now we are creating a generation without hope.
“What I see is fantastic young people who are motivated, who are clever, who are innovative who are able, but who are very frustrated.”
Mr Hurst said the combined effect of higher pension ages, more graduates, and a flood of axed public sector workers were squeezing the young out of the labour market until far into their twenties.
The situation is particularly acute in the North East, which has the highest rate of youth unemployment at nearly 24% and the worst score of any region on the Intergenerational Foundation’s age fairness index.
Geoff Mount of the charity Barnados, which has a number of youth projects in the region, said: “Times are tough for young people. Funding for courses is being cut, young people now are having to take out loans, and EMA has been taken away. We’ve got a bursary scheme in place but that doesn’t meet in my opinion the needs of those young people in greatest financial need. There are fewer job opportunities out there than ever before.”
Workers also cited a squeeze on housing, with last week’s ONS figures showing a quarter of 34-year-olds are now living with their parents.
The number of “boomerang children” has soared by 25% in the last 17 years, despite the youth population remaining the same, with under-24s in the North East the least likely in the country to have a mortgage.
Source – Newcastle Journal, 27 Jan 2014