Saturday 13 April 2013

The Tories' relentless war on the poor

The attack on the poor

There is an old ruling class saying,”never let a good crisis go to waste”. It refers to the way in which economic meltdown and social breakdown can be used to make public opinion malleable to ideas which they would never normally countenance.

Nowhere is this more true than in the current debate on the Welfare State. The ruling class, with its willing helpers in the media, has created a toxic atmosphere of hate, by zeroing in on a tiny number of untypical cases, spreading lies and disinformation, and culminating in the blatant use of of an horrific tragedy to denigrate and demonise people who rely on benefits.

The Philpott case was a gift to the tabloids who were able to use it as an example of the “welfare culture”. After a week of media exposure, I still find it hard to work out the actual line of reasoning here - does living on benefits really make you more disposed to kill kids? As other commentators have pointed out, we don’t blame the NHS for Harold Shipman, nor the road haulage business for Peter Sutcliffe. No-one called for a cap to be placed on inherited wealth when a man called Stephen Seddon murdered his parents to get his hands on their fortune. But when it comes to benefits, the right-wing dog whistle is so strong the “logic”, it seems, doesn’t even need explaining.

It is true that this narrative has found some level of public support, although as the TUC has found, this is largely based on completely false ideas about how the benefits system works and how much people actually get. The picture of public opinion changes when people are given the correct information.

The TUC research showed that the public had a completely exaggerated view of
how much benefits actually are
how easy they are to get
what proportion of benefit goes to unemployed people
the level of fraud in the benefit system

The true statistics

In 2011-12, the total benefit spend in the UK was £166.98 billion, slightly higher than the total spending on the NHS - a useful soundbite for politicians in itself. But if we look at this figure more closely, we find that -

42% of that money went on the state pension and other benefits for pensioners
20% goes to people on a low income (usually in work)
16% goes to disabled people
Just 2.6% actually goes to unemployed people.

In terms of fraud, the DWP’s own figures give the proportion of “fraud and error” as 2.1%. Fraud and error are of course different things, though politicians usually wilfully conflate them. But even so, compare that with the public notion that it runs at 30 to 35%.

Fraud has been coming down for years, as improved technology makes it more detectable. In their terms, you might think that the DWP would trumpeting this success, but instead they continue to perpetuate the idea that the benefits system is riven with fraud.

The cuts from April 1st

The latest cuts to attract the headlines are -

The bedroom tax - a reduction in housing benefit in the social rent sector if you are deemed to have too many bedrooms in your home. It is estimated that 660,000 households are affected and the cut could be 14% or 25%. Disabled people and people needing extra rooms for carers will not be exempt. It is estimated that potentially displaced tenants outnumber available smaller dwellings by a factor of 10 to 1.
The cut in council tax benefit - the effect of this varies across the country, as local councils have been given the responsibility for it with 10% less funding, but the net effect leaves the poorest having to find council tax payments from benefit payments which were never designed to cover it. Millions of households are affected by this, and 450,000 households are affected by both this and the bedroom tax. The average loss of income for this latter group is £16.90pw.
1% uprating of benefits - in reality this represents a massive cut with inflation at nearly 3%. Benefits have always gone up with inflation but in a classic bit of divide and rule, Osborne and Duncan Smith argue that this is “unfair” as wages are lagging behind. What this overlooks is the pitifully low level of benefits; indexing at least helped to ensure that the position of people reliant on benefits did not get any worse. This cut, taken with the others, represents a “perfect storm” for hundreds of thousands of people.
Abolition of Disability Living Allowance - to be replaced by Personal Independence Payments. The new benefit, with stricter criteria, will drive thousands of disabled people into poverty.

Divide and rule, demonisation and the tax swindle

One of the tactics used by the ConDems most effectively has been to set the interests of people in work against those of the unemployed, whereas the reality is of course that those interests are the same. We have had the rhetoric of “strivers and skivers” and those drawn early-morning curtains.

But many of the benefits being cut are claimed by the working poor, who need those benefits to survive.

People in work will be hit by the bedroom tax and council tax benefit reductions. For example a council tenant paying a rent of £80pw in low paid employment and perhaps receiving £10pw in housing benefit will lose that money if they have a “spare” room.

Tax credits are also being squeezed, with more hours needing to be worked in order to qualify and the amounts payable being cut in real terms. Help for childcare is being cut while childcare costs spiral.

All of this will more than cancel out any rises in tax allowances, and increases in net earnings will simply cut housing benefit entitlement, as that is worked out using net income. Working people on means-tested benefits already suffer an effective marginal tax rate of 85% on rises in earnings because of the loss of benefit. But Osborne’s budget has given the 13000 richest people a tax windfall of £100,000.

The government continues to expand Workfare, but the evidence is now clear that it really is just a cheap (actually free) labour scheme. The “work experience scheme” is being touted around Homebase stores as a way of “avoiding payroll costs”, and workers in these stores are having their overtime cut as Workfare placements are brought in. It is clearer than ever that workers have no interest in seeing unemployed people being brought in to do their jobs for no wages.

Universal nightmare

Later this year, all of the main means-tested benefits will be merged into Universal Credit. This will mean cuts for large numbers of people, with people needing to keep in work to derive any small benefit. Payment of UC will require people to meet ever tightening “commitments” to seek work, with the threat of complete loss of benefit if they are judged to be not trying hard enough. Alternatively, if they are claiming on grounds of illness or disability they face ever more medical tests from ATOS, an IT firm, most of whose staff have no medical training.

UC will rely on a sophisticated interaction of IT systems, and everyone claiming it will have to do so online. Around 40% of likely claimants lack the means to access the internet. There is already evidence that there are implementation problems and the project is behind schedule. There is therefore the very real prospect of chaos for claimants.

Labour’s inadequate response

New Labour buys into much of the Tories' rhetoric on benefits. They support the bedroom tax "in principle" and they also back workfare. It was Labour who brought in and then privatised the assessment of sick and disabled people. They do little to challenge the demonisation of the unemployed and disabled because they fear the effect on what they see as their core "respectable working class" vote. That Osborne's cynical exploitation of the Philpott case was too much even for them to stomach isn't really saying very much.

Now Labour has come up with the idea of higher benefits for those who have worked and paid tax into the system, although when in power they did little to protect or promote the contributory principle. In any case, there will always be some people who have not paid in - young people or people (most likely women) who have had long-term domestic or caring responsibilities. How will they be protected? There is also the question of disabled people who may never have worked.

What the Left should be campaigning for

A basic Citizens Income for all
The abolition of Workfare and a complete labour movement boycott of it
Take benefits delivery away from the failed private sector predators
An end to discrimination against young people in the benefits system
A real Living Wage, which would reduce the subsidy to employers from the benefits system
Rent controls - to reduce the amount of housing benefit ending up in private landlords’ pockets
An end to council house sales and investment in housebuilding
Abolish the bedroom tax and demand that council refuse to evict tenants because of it.
Support those who cannot pay rent or council tax as a result of the cuts

- Posted using BlogPress from my iPad

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