The UK is not skint: in defence of social security

A friend of mine tweeted yesterday to say she was so fed up that she was considering emigrating. It wasn’t the seemingly endless Arctic weather that was causing her distress. Instead it was the perfect storm of NHS and social security reforms which came into effect this week.

I’m using the proper British term ‘social security,’ rather than ‘welfare’, because the latter conjures up images of Welfare Queens and a particularly American-style caricature of benefit-recipients.

In responding to Gareth Streeter’s threads article, it’s worth saying that I agree with one of his conclusions: “The Jesus of the gospels had no knowledge of a contemporary welfare state. We need to resist the temptation to twist his teachings to suit our arguments.” Indeed! That’s why this won’t be a theological piece, but a response to Gareth’s ideological defence of the government. Let’s first of all deal with a few basic economic errors.

1. He says: “In short, the UK is skint.” This is simply not true. According to the New Economics Foundation, at 86 per cent of GDP, national debt is significantly lower than it has been in the past. It is much lower than Japan’s (about 200 per cent of GDP), and comparable to Germany’s (83 per cent) and the US (80 per cent). By international or historic standards, the national debt is not high.

2. Gareth relies on a tired old canard, suggesting that the national debt is like a credit card. This has been comprehensively debunked elsewhere, so there is little point spending more time doing it here.

3. There is more sleight of hand in the following statement, given that his figure appears to include items such as pensions in ‘welfare‘ spending: “Spending on welfare (at £215 billion a year) is by far the biggest slice of the pie. Sheer mathematics means this can’t continue.” Well, firstly, it’s only Gareth’s opinion that it can’t continue. As the great economist John Maynard Keynes pointed out: “Anything we can actually do, we can afford.” More worryingly, there is an implication that spending on social security has in some way caused the current crisis. This is not correct. In fact, the proportion of our tax bills spent on welfare has remained stable for the last 20 years.

So now to deal with the central argument made by work and pensions secretary Iain Duncan Smith. He claims many are trapped by the welfare system because it allows benefits to be so cushy as to make work unattractive. With this in mind, Duncan Smith has capped the total amount of benefits a household can receive at £26,000 per year – the average UK household income.

This has the advantage of sounding superficially fair. Why should benefit recipients earn more than those in work?

Well, therein lies the problem. It’s impossible to divide the population into those in work, and those on benefits. Or in the delightful parlance of George Osborne… strivers and shirkers. It’s a dangerous over-simplification, not borne out by the evidence. The majority of children in poverty are from working households. In-work poverty is now more common than out-of-work poverty. In other words, those in work are not subsidising those on benefits. Those in work often are those on benefits.

In real terms, wages have fallen to the extent that the state is now subsidising the private sector through the benefits system. The answer to this is not to punish those with disabilities who can’t work and those who can’t find a job. The answer is to make work pay – by promoting a living wage across public and private sectors.

Raising the income tax threshold to £10,000 is a pitiful gesture when benefit cuts and regressive taxes like VAT eat up any savings voraciously, while food and utilities prices rise almost daily.

I could go on critiquing the short-sighted, ham-fisted benefit reforms all day. But there is a more fundamental question. What kind of society do we want to live in? A society that allows a decent standard of living to those unable to work? Because the price of such a system may well be that occasionally it gets taken advantage of. But most benefit claimants are genuinely in need of assistance. For a more detailed analysis of the benefits system and the stigma attached to claimants, read this superb report from four major UK church denominations. And don’t believe what Gareth says about those church leaders being out of touch with reality. In many parts of the UK, church leaders are the only middle class professionals left in tough areas. Ask yourself whether you know any benefit claimants. If not, you really should get out more. If you do, are they living the life of Riley?

As the benefit changes have kicked in, the top rate of income tax has been reduced. When the richest are having their taxes cut, the poorest are having their benefits cut. I’ll end this piece as I started it – with a tweet. Comedian Nadia Kamil mustered her most sarcastic, yet truthful tone this week when she said: “It’s so great all those unemployed, disabled & low income people are finally getting their comeuppance for causing the banking crisis.” Quite.

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