Thursday, 25 June 2015

David Cameron, Welfare Fraud Is Not Your Biggest Concern

I'm a Tory when it comes to a number of issues, and one of them is this: the Welfare State needs serious reform. It’s turned into something it was never meant to be: a system in which 64% of the country’s families receive a benefit of some sort. We face a real problem in this country, and I think the Conservative government’s heart is in the right place: it needs to tackle these issues. The Prime Minister is right: “those who can, should; and those who can’t, we will always help.”

But we now live in a culture of blame, and Cameron is riding the wave: we have succumbed to the inevitable acceptance of false stereotypes perpetuated by the prejudices of poverty porn. A study done by the Joseph Rowntree Foundation estimated that in 2011-12, 0.8%, or £1.2bn, of total benefit expenditure was overpaid due to fraud. The public, however, as revealed by a TUC poll recently, believe 27% of the welfare budget is claimed fraudulently. Poverty porn is working marvelously for those with an ideological war against welfare.

People are perpetually attacking so-called benefits frauds who take home £27,000 a year and yet have never worked, whilst there are families who are working and who are only earning £24,000 a year. The assumption is that this sort of behaviour, which is undeniably unfair, is common. And yet, only 13% of benefits actually go to people out of work. More than 80% of Jobseekers allowance claimants never go near the work programme: not because they are scrounging off the state, as Cameron suggests, but because they aren't on the benefit for long enough, and they are back in work as soon as possible. The majority of claimants are off Jobseekers Allowance in under six months, so the idea that there are thousands of families around the country just scrounging off the state is clearly false.

In 2012, the Prime Minister told the nation: “But when you have got 300,000 children living in households where no one has ever worked, then you cannot shy away from them any longer.” But, according to the Joseph Rowntree Foundation’s study, under 1% of workless households have two generations who have never worked – about 15,000 households in the UK. Families with three such generations are even more of a rarity.

As Douglas McGregor argued, people thrive under work and responsibility, and the JRF’s study shows that families experiencing long-term worklessness are committed to the values of working and would far rather have a job than be on benefits. There may be people who take advantage of what Cameron calls a “culture of entitlement”, but the actions of this minority does not legitimize £12 billion of cuts to welfare. 

The reasons for long term worklessness are not, as Cameron would have us believe, an epidemic of laziness: it is a result of complex problems related to long-term poverty. We have a shortage of jobs, and so people with little or no education, who have never worked before and who have never had the chance to develop skills for the workplace, are inevitably going to be pushed to the back of the queue.

I also wonder whether Cameron’s numbers accounted for those who have mental health problems preventing them from work, those who are disabled and thus are unable to work, those who are desperately seeking jobs but are continuously rejected, or even those who are, though out of work, at university, doing an apprenticeship or frantically attempting to gain the qualifications they need. There may be workless households, but there are reasons for this.

David Cameron celebrates Iain Duncan Smith’s work, who he says has reassessed tens of thousands of claimants of incapacity benefit, finding them ready for work. This is great: but at what cost?

There have been over 60 cases of suicides directly related to the coalition government’s welfare cuts. They have taken away benefits and found people ready for work who have simply been unable to do so. I personally would rather live in a country where there are thousands scrounging off an overly liberal welfare state (which just isn’t true), than a country in which government policy directly leads to suicide.

Duncan Smith argues that a link cannot be made between government policy and these suicides: but there are suicide notes that read, amongst other things, “blame nobody but the government.” It’s no wonder he wants to stifle the research into these deaths.

People who cannot walk and talk are being called into ‘back to work’ Jobseeker’s interviews. A man had his benefits slashed because he failed to turn up to an interview: he was having a heart attack at the time. The government’s generalising of many benefit recipients as scroungers is having dangerous effects: the £12 billion being sought will lead to death, suffering and humiliation.

And I want to address another problem: the proposed scrapping of the Independent Living Fund. Cameron has vowed to protect the most vulnerable, but will he really? The independent living fund ensured care for thousands of disabled people who were previously ignored by the state, and the Conservatives are planning to repeal it.

The funding of and responsibility for ILF care and support will be transferred to local authorities. But there is no obligation to use the money for ILF, and there is no way of ensuring the money will be spent correctly. After one year, the support from the Government will be stopped, meaning local authorities will be forced to support their disabled with money they simply don’t have.

Many disabled people who may not be able to afford a carer or who don’t have family members there for them, are really going to suffer over the next five years. Those who are able to use the toilet, with help from a carer, may be forced to wear incontinence pads and to sit in their own excrement until a carer arrives to help them. Nobody, anywhere, should be forced to endure these sorts of hardships.

I also agree that the system of tax credits introduced by Gordon Brown has some flaws: I agree that it’s a “ridiculous merry-go-round” to give money to people who are paying taxes, only for them to give it back. So Cameron needs to continue raising the tax brackets, and I will personally applaud the government when they do so. But the fact is that a significant number of tax credits go to people who aren’t actually paying taxes: take them away, and these people will plummet back into poverty yet again.

Tax credits have played a big role in one of the most impressive improvements in child poverty seen since World War Two. Between 1998 and 2012 the number of children living in poverty fell from 35% of the child population to 19%, due to the tax credit system.

Fine, take away tax credits: but please ensure first that those who are paying tax have a realistic means to do so, and that those who aren’t are given the money they need to live independent and fulfilled lives. The only way that this can be ensured is by raising the minimum wage to a real living wage. I am incredibly pleased to say that a raise in the minimum wage was announced in the Conservative Budget, although calling it a 'Living Wage' is simply false. 

Indeed, despite the new 'Living Wage', the IFS estimates that tax credits claimants will be up to £1000 worse off under the Tories' plans. But, if the minimum wage continues to rise (which it hopefully will), Cameron will make tax credits unnecessary for many families, which is surely the way forward. Indeed, the best incentive to work isn't to plunge families into poverty if they are, for whatever reason, not working - it is to make work pay

Moreover, we must remember that 4 million of those who receive tax credits (out of 4.5 million) have children, so it is of vital importance that the welfare state does what it was intended to do: fund those children when their parents cannot do so themselves. The Institute for Fiscal Studies estimates that the number of children living in poverty has increased in the last three years from 2.3 million to 2.5 million. Cameron's job is to make sure that no more children end up living below the bread line. 

So what do I agree with Cameron about? I agree that austerity is, to an extent, necessary, and I agree that the welfare system in this country needs to be reconsidered. But I fundamentally disagree with £12 billion of cuts to welfare: it’s dangerously extreme. We need the money to reduce the deficit, but to take that money from the most vulnerable in society is not only idiotic, it is immoral.

Yes, there are people who abuse the system, and it is unfair to have people earning more on benefits than people who are in work, but there’s no guarantee that, whilst the government cuts may target those who can and should work, people who are unable to work will not have their benefits taken away from them.

There are other sources for this money: raising taxes for the super rich and for large corporations, not renewing trident (which could cost us up to £25 billion), investing in sustainable energy, and much, much more.

How about closing tax loopholes? Richard Murphy FCA of Tax Research UK estimates £119.4 billion pounds of tax evasion in 2014 alone. The government argued that £120 billion (the figure estimated in 2010) was too high and instead estimated a tax gap of £35 billion in 2011/12.

But even if the government’s unlikely claims are true, if tax loopholes were closed, the £12 billion of welfare cuts would be completely unnecessary. These studies just show the hypocrisy of this government’s policies, also evident in the absurd attempts to raise MP wages in a time of government cuts to public expenditure, a wage rise that 72% of the public and many MPs oppose.

The tax gap is a real problem, and it is a problem that, if tackled, would not only lead to a more honest and moral society, but would also reduce the debt and make the £12 billion pounds of welfare cuts unnecessary. And don’t be fooled by the scaremongering: the rich will not just leave our country if taxes are raised.

We have far more to offer economically, culturally, and socially: if they only lived in places with low tax rates, they’d live in Monaco, the Cayman islands, the Bahamas, or numerous other places. The idea that the rich only care about keeping their money just isn’t true: look at the Patriotic Millionaires, who believe in putting their country and the welfare of their people before their own income, and are levying for higher tax rates on the rich.

The same can be said of big businesses: our economy and our people have far more to offer them than they have to offer us. They aren’t going to just leave if we increase corporation tax. Big businesses don’t just flock to Uzbekistan because they have an 8% corporate tax rate, nor do they shun the United States, who have the third highest at 39.1%. We can afford to raise corporation tax: the rich should carry the burden, not the poorest and most deprived members of our society.

This doesn’t mean welfare reform is unnecessary: it is a problem that needs to be addressed. But £12 billion of cuts does not equate to reform. All it’s going to do is create more and more problems.

If such a high number of benefits and tax credits go to people who are in work, surely this shows an inherent problem with the system in the UK: the government are subsidizing big businesses because they refuse to pay living wages. If the government cuts these benefits before wages increase, it will only result in more working people living in poverty. Osborne and Cameron have (perhaps surprisingly) made a step towards eradicating poverty in this country by raising the minimum wage; let's just hope it keeps going up!

And again, we shouldn’t listen to the scaremongering of employers: raising the minimum wage does not lead to mass unemployment, and this has been proved time and time again. The Fair Work Commission, the group responsible for setting the minimum wage, has found that “modest minimum wage adjustments lead to a small, or zero, effect on employment”.

The UK Low Pay Commission has produced over 130 studies from highly respected economists which have shown that unemployment is unaffected by rises in the minimum wage. The only thing these raises do is to create a fairer society, allowing these people to live the comfortable lives they deserve. Just look at Australia: they have a minimum wage of over £10 an hour, something we really ought to aspire to.

It also leads to more commitment in the workplace: as Norman Bowie, a Kantian ethicist argues, fair pay results in productivity and loyalty. If this Conservative government gradually raises the minimum wage over five or ten years, then the cuts will make themselves: many people won’t necessarily need their benefits if they are being paid enough.

This is why I think Cameron’s attempts to take power away from the Unions, who are vital in ensuring fair wages, is so dangerous: it will only lead to more and more people on lower pay, and so more and more people will be claiming benefits in order to afford food, housing, child care and so on. Raise the minimum wage, give power back to the unions, build more affordable housing (the Tories have consistently failed to meet the demand of 240,000 a year), and stop this hypocritical madness of a dangerous war on welfare.

It needs to be reformed, but not in the way the Tories propose. Though it may be a problem, the real concern isn’t an over generous welfare system: the only reason the welfare budget has seen a gradual increase is because of the increasing number of pensioners in our country as people live older. In fact, we spend significantly less a head than France (12% higher) and Germany (19% higher).

So, my real problem is the ruthless blanket approach and the generalization, the extreme measures and the apparent carelessness. If only an estimated £1.2 billion is fraudulently taken in benefits, then why do we keep blaming the poor for problems they never caused? Why do we insist on taking more and more from the welfare budget, money that is so necessary to so many people? The reason why is, as Monbiot argues, Malthusiasm. Because the British population believes that 27% of welfare is claimed fraudulently, the Government is obliged to make huge cuts. 

Cameron says he wants to tackle poverty at its roots, and many of the initiatives championed by his government have attempted to do so: but cuts to a family’s benefit or tax credit should come after their impoverished circumstances have improved (through a real-time rise in the minimum wage or through raising the tax brackets), not before. In the majority of cases, taking an axe to welfare isn’t going to stop poverty; it will do exactly the opposite. 

We need to abandon the Malthusian myth that welfare hurts the poor, and we need to escape this idea that everyone on benefits is a scrounger. I can understand wanting to scare people into work, but that will never work if it's done with a blanket approach - it will only lead to more poverty. The government need to do less scaring, and more enticing. 

For my blog post on the anti-Austerity march: CLICK HERE

1 comment:

  1. Raising the tax brackets is actually a regressive policy, unless it is accompanied by a corresponding increase in the top rate(s) of tax (which it almost never is). The reason being, by increasing the lowest tax threshold you actually cut *everyone's* tax by the same ammount, even the super wealthy. If the reduced revenue isn't made up for by a corresponding increase in taxation then public services inevitably suffer, and as the poor are generally speaking the greater beneficiaries of said services they thus benefit less in real terms from an increase in the tax threshold than the rich do (again, unless offset by tax increases at the top).