Two major speeches targeted at less than 2 per cent of welfare spending

Two major speeches, two policies announced, two benefits targeted but less than 2 per cent of welfare spending affected.

David Cameron dark

Nick Davies is policy manager for Children England

With all eyes focussed on the budget stand off across the pond, it’s important not to lose track of some of the illogical book balancing taking place in the UK.

Specifically, the government’s attempts to slim the benefits bill by focussing on relatively small parts of it (though this is clearly only one of many criticisms that could be made of the coalition’s approach to welfare reform).

The Conservative Party conference saw the debut of two significant welfare policies.

On Monday, George Osborne set out plans for those who have finished with the Work Programme to move onto a new ‘help to work’ scheme. Claimants will have to attend compulsory training, visit a Jobcentre Plus daily or undertake a work placement in order to still qualify for Jobseekers Allowance.

It is estimated that this will affect around 200,000 people, 13 per cent of JSA claimants. Assuming that these claimants are representative, they will be claiming around £650m a year. This is roughly 0.4 per cent of the total welfare bill.

The other major welfare announcement at the Conservative conference came in David Cameron’s speech on Wednesday. Despite apparently attempting a policy-free speech, he announced plans for under-25s to lose their automatic right to Housing Benefit and Jobseeker’s Allowance (JSA) if they refuse to take up offers of work, training or education.

In 2011/12, total government spending on JSA was £4.91bn. Although 27 per cent of JSA claimants are under the age of 25, they account for less than 20 per cent of spending on the benefit as they receive a reduced rate (from the DWP tabulation tool). Total spending on JSA for under-25 is therefore around £1bn or just 0.6 per cent of the total benefits bill.

Housing Benefit for under-25s appears at first to be a much riper target for savings. It is in fact the second most expensive benefit, costing £16.94bn in 2011/12.

However, claimants under the age of 25 represent less than 7 per cent of the total. Given that most under-25 receive the shared accommodation rate, rather than the full rate, it is safe to assume that they will account for an even smaller percentage of the cost. Total spending on Housing Benefit for under-25 is therefore no more than £1.2bn or just 0.7 per cent of the total benefits bill.

Two major speeches, two policies announced, two benefits targeted but less than 2 per cent of welfare spending affected.

It’s a similar story when looking at other flagship policies. The benefits cap includes benefits received by millions of people yet it will actually only affect 67,000 for a saving of £290m, less than 0.2 per cent of the UK’s spending on benefits.

Likewise, the government estimates that the spare room subsidy/bedroom tax will only save £500m, but even that looks extremely optimistic given the additional Housing Benefit costs associated with tenants moving from social to private accommodation.

Finally, fraud, a favourite of all ministers seeking to sound tough on welfare dependency, costs only £1.2bn a year or 0.7 per cent of total benefits expenditure.

Given the government’s relentless focus on these relatively small pots of welfare spending, it’s no wonder that the public is confused. A recent survey by Ipsos MORI found that:

  • 29 per cent of people think we spend more on JSA than pensions, when in fact we spend 15 times more on pensions (£4.9bn vs £74.2bn)

  • People estimate that £24 out of every £100 spent on benefits is claimed fraudulently, compared with official estimates of £0.70 per £100

  • People are most likely to think that the benefits cap will save most money from a list provided (33 per cent pick this option), over twice the level that select raising the pension age to 66 for both men and women. In fact, raising the pension age saves £5bn, compared to just £290m for the benefits cap.

Of the 20.3 million people who receive benefits of some kind, 8.7 million are pensioners. Indeed, state pensions account for 47 per cent of total benefit spending (52 per cent if you also include the Pension Credit and Minimum Income Guarantee).

Yet, while working-aged benefits are cut and made more conditional, Iain Duncan Smith used his conference speech to highlight government policies to increase pensions and remove means testing!

If only there was a phrase for an issue which is large, grey and ignored…


19 Responses to “Two major speeches targeted at less than 2 per cent of welfare spending”

  1. Joy Boyd

    I would like to know the cost to the tax payer for claimants to attend Job Centres daily. For example the space, equipment, toilet facilities and man power to ‘police’ this.

  2. treborc1

    Well of course the job center is open anyway and the people would be in work anyway, the toilets are their, and the the cost would be in admin of course the paper work. the training places and the whole process that goes with it Labour had all this when they brought in the New Deal, it nearly bankrupted the education budget which had to pay the cost of the so called training programs.

  3. Joy Boyd

    The Job Centre is there as you say, and the present staff there as you say, but not all Job Centres have toilets for the unemployed. There was a recent documented case of a claimant with Chrohns not allowed to use the staff toilet as there were none for customers. I am talking about the people who will have to spend all day there. Are you saying there will be enough room and staff to accomodate these extra customers? I do not think so. Were will they sit? How many computers available for them to search for Jobs. Job Centres are already crowded places now. Add to this with hundreds of people in there five days a week 9 -5 .It will be chaotic at best.

  4. DJT1million

    I did a quick calculation the other day when it was announced that the long term unemployed were to be forced to sign on each day:

    ‘200,000 people signing on each working day is a million extra visits to job centres each week.

    A quick calculation based on 1,000,000 visits per week at 10 minutes each visit adds up to 166,666 extra working hours a week for job centre staff or 20,833 8 hour days. A colossal waste of time and money for job centres and individuals alike.’

    Chaotic doesn’t begin to cover it, especially when you add in the additional interviews of claimants, the fact that visits often take a lot longer then my estimated 10 minutes and also the vast numbers of people currently working part time or just low paid claiming working tax credits as, under the new Universal Credit scheme, they too will be required to become ‘clients’ of the job centres too and do the mandatory job searching and possibly workfare as well.

    The mind boggles at the sheer waste of time, money and peoples lives all of this nonsense entails.

  5. OldLb

    It is estimated that this will affect around 200,000 people, 13 per cent of JSA claimants. Assuming that these claimants are representative, they will be claiming around £650m a year. This is roughly 0.4 per cent of the total welfare bill.

    ===========

    Such bollocks.

    Health care alone is 2K a year per person. Assuming none have dependants, that is alone another 400 million a year on top.

    Then there will be housing benefit. Add that on to the bill.

    Then no doubt you would be vociforous if they were denied pensions because they hadn’t paid in. Free pensions. What’s the cost there? Again 4K a year on top (152K for a pension, 40 year non working life)

    Free schooling for kids.

    Free policing

    Free defence.

    Free everything.

    Except someone has to pay.

    Nothing like being economical with the truth.

  6. OldLb

    And nothing boggles like the true cost of having them choosing not to work.

    Add on all the other things, and you will see the true cost.

  7. johnmcardle

    What’s wrong with making the corporations. banksters and assorted filching, sponging, robbing rich freeloaders pay? They got us into this crisis! LET THEM PAY FOR IT you economic and political illiterate.

  8. OldLb

    Except you are the one who is deluded.

    1. Banks got into a mess because people didn’t pay their loans. Pure and simple.

    2. So what the current mess? It’s governments and their debts. Not the debts they admit to, but the debts they keep off the books for the same reason as Bernie Madoff.

    The UK reports a debt of 1,200 bn. However, that isn’t what they owe. That is just what they have borrowed. They owe other things. They owe civil servants pensions for the work they have done in the past. They owe people pensions for the money they have contributed in the past. They are going to have to pay out on some of the guarantees they have undertaken. They have to pay for the nuclear cleanup, because they took money in exchange for doing so in the future. They also owe money under PFI. These are all liabilities under any of the accounting standards (bar the cooked books). It’s so blatent they even admit to doing so.

    So what we need to know are various things. How much do they owe in reality? What is the rate of growth of the debt? What are the assets to back up the debts?

    The first part, what is owed is difficult to find out because its off the books. However, its around the 8 trillion mark. Based off figures from the ONS (office for national statistics that did the work). 6.5 trillion is pensions. Owed to Joe Bloggs, man in the street.

    The rate of growth is also easy. The ONS and the DMO (debt management office) numbers put that at 850 bn a year.

    The assets? Well they have no assets for the pensions. None. It’s the only number we know with 100% certainty. None. Zero. Zilch.

    Now perhaps you might view future tax as an asset. However, that also means future spending has to be a liability too. Keeping the serfs happy.

    So taxes raise 600 bn a year, but spending is 722 bn. On average each serf is a liability.

    Notice the key thing? 850 bn a year increase in the debt, but revenue of 600. They are bust. The state is bankrupt.

    So what does that mean in practice. It means those poor and middle class people who will be reliant on the state for their old age are going to be screwed.

    Even your lets go for the rich plan won’t work. Branson is a billionaire. Take his 2 billion – all of it. Not sure who you are going to sell the assets too, but lets say you can. Oh dear, you’ve plug the true deficit for a day. Now who are you going to go after? Will they still be here in the UK, or will they have left? You might get another one, but I doubt many will be left after you’ve taken the lot off more than 3.

    Face up to it, its just an excuse. The state has robbed people blind, both left right and center. It’s evil.

  9. DJT1million

    True…..so how about spending all that time, all that energy and all that money on a mix of job creation and proper training or apprenticeships then?

    The way unemployed and under employed people are being treated in the UK today is a total disgrace. There is no defending the current system that is a mix of poverty, abuse and pointlessness.

    Grow up for Gods sake and start treating your fellow citizens with some respect.

  10. DJT1million

    Nonsense.

    The state is not bankrupt, the only thing that is bankrupt is the ideology you are still following even as it collapses around your selfish ears.

    ….and yes, we’ve heard it all before (probably from you under a different username) that there’s all sorts of hidden costs, hidden liabilities, secret stuff that only you and a few others that know The Truth really understand. More nonsense

    Again, grow up and treat your fellow citizens with some respect.

    Honestly, my patience has worn rizla paper thin with this repeated nonsense.

  11. OldLb

    The problem is that you have drawn the boundary round one problem, unemployment, and excluded the causes and consequences of your decisions.

    1. Low skilled unemployment comes as a direct result of crap schools (government) and unfettered migration. Both screw people and its government choices the whole way.

    2. Your solution – spend lots of cash, comes with consequences. The result of all that spending, comes from somewhere. It comes primarily from pensions.

    The figures for the state liabilities for pensions are all off the books, but the ONS has the numbers. We are talking 6,500 bn, rising at 734 bn a year. Given taxes are 600 bn a year only, even someone at one of those crap schools can see the consequences. It’s no pensions, No welfare. There will be no money.

    So if you want to spend lots of money, you are going to have to defend the destitution you’ve caused.

  12. OldLb

    Bollocks from you. I’ve posted the numbers, the correct counter from your side, if you want to make your case, is to put your numbers out there.

    That the state owes people for its pensions is not some secret. Its blatent. It isn’t optional. People have paid up front, or in the case of civil servants, worked for their pensions.

    Only an idiot would think otherwise.

    Why do you think that the state doesn’t owe anyone for a pension and that the pensions (or welfare if they don’t pay) is optional?

  13. DJT1million

    Ahhhh….the penny drops.

    I think I have tangled with you before only then you had a different username.

    Same old story though, you know The Truth and everyone else is talking ‘bollocks’ as you so charmingly put it.

  14. OldLb

    6.5 trillion of pensions debts.

    734 bn a year increase in those debts, plus another 120 bn of deficit spending on top.

    Given taxes are 600 bn, its not a case of won’t pay, it is can’t pay.

    Same bollocks from you as usual. To sum up your argument, I can’t make a case so lets just try and rubbish the messenger not the message.

    Very simply, you might make more of an argument for your side, if you put up the numbers as to what the state owes for its pensions.

    Now lets assume you work in the public sector. If so, its particularly dire for you. A considerable chunk of that debt is public sector pensions. On top, this doesn’t include the guarantees for the funded public sector pensions. Note that funded means, should be funded. Many of them, such as the LGA pension funds are in a dire position with liabilities double the assets.

    So it will come down to who gets hit. Will the public decide that they won’t get their state pension so PS workers can get theirs? Will they forego the NHS so PS can get their pensions? I think not. Outnumbered the PS workers will lose.

    Take the recent changes. CPI not RPI knocks 15% off your pension. Retirement age will be pushed in line with the state pension. For each extra year, its a double whammy. More contributions to pay to other people. Less payouts.

    If we take the rise in the state pension age of 2 years, that’s a 20K a year loss for a 26K a year worker. 2 years less payouts, 2 more years of NI.

    All as a result of not being able to admit to a Ponzi fraud. It is a fraud, sections 1-5 2006 Fraud act. False accounting leading to a risk of loss.

  15. DJT1million

    Thought so…..I just had a quick look at my own history and you provided exactly the same arguments with pretty much the same text only then you were known as LB, that was 3 months ago.

    I did try to argue in detail with you then however quickly realised that you have one argument featuring one set of figures you had compiled and very little to say outside of those strict confines you had created for yourself which rendered a conversation or debate pretty much pointless. What was true 3 months ago remains true today and I will not be drawn into another pointless conversation with you again. I bid you goodbye.

  16. OldLb

    Prove me wrong.

    Very simple to do.

    Come up with a number and a reference for how much the state owes for pensions?

    The ONS put it at 5,010 bn in 2010, rising at 734 bn a year. You can check that very easily.

    However, you won’t. You are shit scared about that number, and quite rightly.

    My guess is that you are on the take. You work in the public sector, and your livelyhood depends on the state taking money from people for their pensions, and giving you the cash.

    The funny part, if you can call being destitute funny, is that you stand to lose more than most. Your pension? Well there won’t be one.

  17. Cole

    He keeps posting the same thing, like his made up figures on NHS deaths.

  18. Cole

    You really can’t avoid vicious ad hominem attacks, can you? I suppose that’s the only way right wingers can argue. Smear, smear, smear.

  19. Peter Wild

    I coming to think that Labour need to re frame the debate and restructure the budgets. They can’t be as nasty about the unemployed as the Tories. Although god knows the recently sacked bald avenger did his best!

    Potentially moving the following “benefits” out of the DWP remit might help.

    Move Housing Benefit to local communities
    Move Pensions to a Dept for Elder concerns.

    Consider moving ESA, Carers Allowance etc away from the DWP towards health and social care budgets. The DWP know nothing about health; and are making most ESA claimants worse. Some would claim risks the medicalisation of benefits. But the piss-poor and vindictive ATOS/UNUM regime has already imposed an amateurish deeply suspect medicalisation and stigmatisation onto ESA /PIP/DLA claimants.

    That way DWP keep JSA and a couple of other benefits. And can focus on their job of supporting people into the surfeit of jobs that we have (written tongue in cheek).

    Fraud figures should be reported separately from DWP errors, and some form of comparison / benchmark should be made against Fraud: and: Error (not Fraud & Error) in other sectors eg insurance, car tax, (including MPs expenses).

    The pot looks small and growth in JSA should be graphed against the level of jobs vacancies, the tenure of these vacancies. etc….

    JSA targets should also account the expected ratios of applicants per vacancy.

    DWP admin costs
    per claimaint
    per sanction
    per visit

    Claimant attendance costs:
    innber city
    suberbs
    remote village

    Then we can start to talk about the 2% of benefits claimants!

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