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  • Published in Analysis

The largest and most radical changes to the welfare state since its inception come into being this month - Adam Tomes reviews six of the major changes being introduced and the myths used to justify them

Iain Duncan Smith

The Tory government talks of creating an “Aspiration Nation”. This nation will be based on the principle that they “will make work pay” and that the government will use “every penny.. to back hard-working people who want to get on in life”.

The radical welfare changes and cuts that hit this month are, in this account, more than just a necessary evil to tackle the deficit; they are a much-needed reform for a bloated and failing welfare state. At the same time as the welfare changes, the government is trumpeting its tax reforms that will see the tax bar raised to £10,000.

In order to tackle the government’s wilfully inaccurate arguments, we need to review six of the major changes being introduced this month before tackling the underlying myths.

The Bedroom Tax

This month sees the introduction of the Bedroom Tax, which will see working-age people in social housing losing 14% of their housing benefit if it is deemed they have one spare room or 25% if it is two. The government claims this will tackle the problem of overcrowding and save the government £465 million per year. This cut has seen large protests before its impact has even been felt and it is estimated that as many as 660,000 households will be affected losing an average of £728 per year, and that around two thirds of those households include a disabled person or someone who is chronically ill.

Council Tax Benefit

At the same time, council tax benefit passes into local control which is estimated to save the treasury around £480m per year. This benefit is currently claimed by 5.9 m low income households and the changes will leave them facing an average bill of £247 per year, which will be simply unaffordable for many.

This is revealed by the fact that Local Authorities are expecting 84% of low income households to refuse to pay and leave them with a choice of chasing the money from the poorest household through the courts in a process that makes no economic sense and is reminiscent of the Poll Tax.

Disability Living Allowance

Disability Living Allowance is to be scrapped and replaced with Personal Independence Payments, based not on your condition but how your condition affects you - which will narrow the access to this benefit.

Scope and Demos have modelled all the welfare cuts and their impact on disabled people to show by 2017-18 about 3.7 m disabled people will lose collectively £28 billion in benefits leading them into debt, to become reliant on charities for crisis help and making them more prone to social isolation and mental illness.

Welfare Uprating Bill

Welfare Uprating begins with benefits and tax credits rising not in line with inflation but by 1% for the next three years saving £505 m this year. A rise in line with inflation would have seen an increase of 2.2% so in real terms this is a cut in benefits. This is made worse by the escalation of energy costs and housing costs which is far in excess of 2.2%, plunging more people into fuel poverty and homelessness. This will affect nearly 9.5 million families - including 7 million in work - by around £165 per year.

Welfare Benefit Cap

The Welfare Benefit Cap is fixed at not more than the average annual household income after tax and national insurance, which will save the Government around £51m over three years. This will in particular impact on large families and of course those living in high rent areas. The Children’s Society estimates this cap will affect around 220,000 children with around 80,000 children forced from their homes due to the high level of private sector rents.

Universal Credit

April marks the start of the Universal Credit roll-out, which aims to increase incentives to work for the unemployed and longer hours for part time workers. Donald Hirsch of the Resolution Foundation has calculated that this policy will in effect remove all the gains made by low to middle income families due to the raising of the tax bar to £10,000.

In addition, the aim of forcing more part time workers into longer hours is problematic. There are many part time workers seeking longer hours but these hours are not available, so punishing them for not working longer is unjust. Secondly, many part time workers play a key role as carers for the elderly, the young and the disabled and it is estimated that this unpaid work saves the Government £119bn per year.

Perhaps the time has come to increase the hourly pay, reduce the average number of hours worked and allow people to have the time and the finances to do the socially valuable work in their own families and communities. Now that really would be a “Big Society”.

A Tory raid on the poor

The dishonesty of this government over the welfare reforms is made clear by the fact that they have carried out Impact Assessments for each individual welfare cut, yet the government has resisted all the pressure to run a cumulative impact assessment on the different groups in society. In particular this would reveal the true cost of the impact on the most vulnerable such as the disabled, carers and single parent families. Let’s look briefly at three key right-wing myths about welfare, underpinning the current sweeping changes.

Myth One: the welfare bill is not sustainable in the current crisis

George Osborne has argued that the welfare cuts are necessary to tackle the economic crises of debt and deficit. Osborne is hoping to trim £18 billion from the welfare bill by 2015. The first question is: why are millions of ordinary people suffering cuts to feed a debt and deficit they did not cause? Why, in the same month, is the top rate of tax being cut by 5p saving millionaires over £40,000 per year on average?

It appears that the most vulnerable should pay for the sins of the rich elite. Indeed the richest 1,000 people in Britain have seen their wealth increase by £155 billion since the crisis began by exploiting misery, which, if confiscated, is enough to pay off this year’s deficit and still have change left over.

Myth Two: welfare only goes to fraudsters and skivers

Much of the mainstream welfare debate is about fraud and idleness. This ‘skivers’ rhetoric distorts public perceptions, with a recent YouGov poll showing people believe that 41% of the social security budget goes to the unemployed, whereas the real figure is that actually 3% of the budget is unemployment benefits. The public believe that 27% of the welfare budget is spent on fraudulent claims. The reality is that 0.7% of the welfare budget is spent on fraudulent claims, which totals £1.2 bn per year.

This pales in comparison to the estimated £70 bn lost per year in fraudulent tax evasion, yet this goes almost unmentioned in the media or in the government’s policy making. Most of the spending goes on pensions (47%) and benefits for low to middle income working families to make up for the lack of secure, permanent work that is well paid. It is time to start exposing the fabrications of the right wing press and elites.

Myth Three: welfare creates unemployment

Iain Duncan Smith has been arguing that the welfare system has parked 5 million people in unemployment. The thrust of this argument is that welfare has created a dependency culture which has in turn created unemployment. It is a truly perverse argument which reverses the idea that the welfare state is there to protect against unemployment.

For a start, it fails to recognise the forty years of deindustrialisation, which has hollowed out the British economy removing permanent, well paid and skilled working class jobs in industry and manufacturing. In return, we have created an economic culture of precarious, low paid and low skilled employment with a vast reserve labour army of unemployed people, who are desperate for work.

Just recently Costa Coffee advertised 8 jobs in Nottingham and received 1,701 applications. The answer to reducing the welfare bill is to skill up young people by investing in education and invest in our infrastructure and the green economy to create hundreds of thousands more well paid, permanent skilled posts. This will not only drive down the welfare bill, it will drive up the tax receipts.

It’s time to turn the tide

Tory ministers are looking to dismantle the welfare state as brutally and quickly as possible, with no concerns for the social impact or human cost. By the general election in 2015, the damage will be done and they know Labour will not have the ambition or ability to roll back the changes.

This means that the time for action is now. We need to build the nationwide protests against the bedroom tax and a range of attacks which drastically affect millions of people. We must promote the People’s Assembly as a radical alternative to the cuts. It can provide a platform to bring together all those who oppose this attack on the most vulnerable in our society. It can provide the platform to urgently build a mass movement against this government and its dehumanising politics.

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