Wednesday, 1 February 2012

Welfare Claimants are Scapegoats for Financial Crisis

The ConDem government is attempting to cut £18 billion from welfare benefits in the latest wave of austerity measures, that they insist is necessary to cut the UK budget deficit and borrowing requirements. This policy seems to have attracted a fair amount of populist support in the country, with the government’s friends in the right wing press producing screaming headlines about ‘benefit scroungers’ and the like.

The proposal to cap benefits at a maximum of £26,000 per year, per family, has been held up by the House of Lords, but will be returned to the House of Commons, and no doubt eventually pushed through into law. This does seem like an extraordinary amount of money to be claiming in welfare benefits, when the average UK gross wage is exactly the same figure, but this tells only part of the story. The vast majority of people receiving this sum live in the south east of England, mainly in London, and most of the money claimed is in the form of Housing Benefit, from tenants of private sector landlords. So the claimants never really see this money, but if they lose it, then they will more than likely lose their homes along with it.

Disability Living Allowance (DLA) is also to be cut for those lucky enough to still be in receipt of it, whilst the rest are forced onto Jobseekers Allowance (JSA), whether they are really fit for work or not, by ATOS, the government’s private health company assessors. (The Guardian reports here that a man who has been registered blind since 2000 due to a hereditary degenerative sight condition was surprised to read his report's conclusion that "the client's level of disability would be expected to improve with time and appropriate treatment"). And of course everyone on JSA gets harassed and threatened with the loss of their benefit, regardless of the lack of job opportunities; with unemployment soaring as the economy stagnates and public sector jobs are cut to the bone. The only growth area I have heard of in the public sector is in benefit fraud investigators.

Contrast this with cuts in the government’s tax inspectorate, where far more money is lost to the public purse than in fraudulent benefit claims, and you can see a pattern emerging in ConDem strategy. The whole aim of this government is to pin the blame on people on welfare benefits for the poor state of the country’s finances, (and by implication the last Labour government), when it seems to have been conveniently forgotten that the current financial crisis was caused by the reckless behaviour of the banks, where the directors of these banks are richer now than they were before they plunged the nation, and indeed most western nations, into recession.

There’s not much sympathy for the bankers though amongst the general public, so the benefit cuts have to be sold as being not fair to the ‘working poor’. Classic divide and rule, as Diane Abbott might say. There are far too many workers on low wages, but the government’s rhetoric doesn’t match its actions. Most claimants of Housing Benefit are actually in work, but this isn’t stopping the government reducing payments and ‘localising’ the system to that end. The government is also cutting Working Tax Credits, which go to the lowest paid workers, and the likely increase to £10,000 of the income tax personal allowance (tax free earnings), will not fully compensate those on the lowest wages. Oh, and it will be made easier for employers to sack workers too.

The only problem for the government with this strategy is that it is not reducing the budget deficit, quite the reverse. The government admits that the deficit will be £158bn higher by 2015, but they have managed to drown this fact out, by shouting noisily about ‘fairness’ and ‘scroungers’. What a pity people fall for this irrelevant diversion, but I hope eventually the proverbial penny will drop, and people will see all of this for what it truly is.

And there is another way. We need to catch the tax cheats and we need to tax the very wealthy properly, and there are a variety of ways that this can done, see here and here on this blog for some examples. To address the Housing Benefit situation, we need to build more social housing and reintroduce rent controls in the privately rented sector.

We need to stop blaming the victims for this mess that we are in, and lay the responsibility at the door of the perpetrators. Now, that really is fairness.

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