There are likely to be a few big political battles during the forthcoming year. At Westminster the economic arguments will continue as recession looms yet again, while the Lib Dems will strain the coalition as they try to show that they are not just stooges for the Tories. Meanwhile Europe and marriage equality will continue to exercise back bench Tory minds. And in Scotland there are now less than two years to go until the referendum.
The first big battle of the year though will be on the subject of welfare benefits. In his Autumn Statement George Osborne announced a bill that would mean most benefits for those of working age would be increased by a mere 1% per annum for the next three years – well below the expected rate of inflation in each year. In other words three years of cuts in real terms.
Cameron, Osborne and co feel that this is an issue they can gain support on. After all ever Daily Mail reader knows that everyone on benefits is a workshy scrounger who doesn’t want a job. And many of them are immigrants too. So cutting benefits will not only save money, it will also encourage these scroungers to go out and get one of the many jobs available everywhere. (Note – there is no prize for noticing the obvious flaw here.)
And the posh boys also think that this wheeze will put Labour in a difficult position, forcing them to defend scroungers. But Ed Milliband and Ed Balls look to be up to the challenge, arguing rightly that benefits claimants, those in work and those unemployed or sick, are entitled to a minimum standard of living, and that a 3% rise on the basic £71.00 per week level of adult Jobseekers Allowance is hardly reckless spending or the equivalent of a lottery win.
Iain Duncan Smith has now entered the fray, releasing a series of figures to back the Tory case. But the problem for IDS is that, like George Osborne’s economic approach, the figures just don’t stand up.
Smith claims that benefits have risen over the past three years at a faster rate that private sector wages. Now when you have to define a category of wages over an arbitrary time period to make your case then that should flag up a problem immediately. Look back five years and we find benefits falling behind wages. Pick another arbitrary point, say 1979, and we find that unemployment benefit was 22% of the average wage compared to 15% today. So the long term picture is actually of falling benefits.
Smith has also pulled out the old myth of fraudulent benefit claims costing the country billions. Yet his own department’s figures show that less than 1% of benefits are misclaimed – less than the amount that staff errors cost. And less than the amount of benefits unclaimed by those who do not know what their full entitlement actually is. More Tory lies then.
But in essence this is a political argument and not a financial one. The Tories are attempting to cut the living standards of the poorest in the country at the same time as those on the highest rate of income tax are given a bonus. The driver is ideological and not economic. And a benefits freeze is only one strand of the attack.
Later this year the government’s benefit cap will come into play, limiting the total amount that any family can receive. The usual Tory rhetoric of “making work pay” will be used, but the reality is that most of those who claim high levels of benefits do so because of expensive rental levels. Analysis by the Children’s Society indicates that some 220,000 children will suffer as their parents are forced to cut spending or try to find cheaper accommodation. And many will be forced to move to different areas in search of affordable housing, especially from London and other cities where rents are highest. Of course acting against landlords and controlling rents would mean interfering with the market, something that the Tories are not too keen on.
The process of “reassessing” those on Incapacity Benefit as they are moved to Employment and Support Allowance continues, with many likely to lose out. And severely disabled people will also face difficulties as Personal Independence Payment (PIP) will be introduced to replace Disability Living Allowance (DLA), which meets the costs of care and mobility. Again this will mean cuts for many. The assessments are meant to be objective – but we are told beforehand that they will result in a reduced number entitled to benefit.
But the biggest change to welfare payments will begin in April with the trial of Iain Duncan Smith’s big idea – Universal Credit. This is described as a simplification of the complex benefits system, but not surprisingly many will find their benefits cut. According to the DWP’s own impact assessment, “approximately 2.8m households will have notionally lower entitlement than they would have done as a result of Universal Credit. The average reduction in entitlement is estimated to be £137 per month.”
And at the heart of Universal Credit lies a complex computer system that, at present, does not work. Given the poor track record of large government IT projects the idea that all claimants will be switched to the new system by October seems fanciful. Treasury secretary David Gauke stated in a parliamentary answer that the system underpinning UC failed for over a quarter of pilot cases in November. It has also been reported that at least one cabinet minister sees problems, calling it a “disaster waiting to happen”– but IDS is not for delaying any further.
The Tories are driving the income of the most vulnerable in society down, aided it has to be said by their Lib Dem partners. Their hope is that this will help them to stop the haemorrhaging of support that sees them trail in the opinion polls. For Labour this is the time for Ed Miliband to stand up and fight back. He must show that his One Nation rhetoric has some substance behind it by fighting for a basic living standard for all.
There are many people who want to work, or to increase part time hours to make a decent income. But the jobs are simply not there because of the economic slump made worse by this government’s failed economic policies. The debate is really a simple one: do we see the most vulnerable people in society as worthy of help and support – or do we define them all as scroungers?