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.

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.

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