Fraser “see no evidence” Nelson wrong on UK benefits generosity

Declan Gaffney disproves Fraser Nelson's claims that UK benefits "are some of the most generous in Europe".

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Last week, Fraser Nelson announced that “our benefits are some of the most generous in Europe”. This assertion has led to some surprise and a certain amount of confusion.

fraser_nelsonHow generous is the UK social security system in international comparison? Full Fact looked at this in response to Nelson’s comments, but their article focussed on expenditure levels rather than specifically on generosity.

Usually welfare generosity is assessed not in terms of how much government spends but on how much benefits are worth.

A common summary measure of this is the ‘replacement ratio’ which shows how benefits when out of work compare with income when in work.

Fortunately the OECD publishes detailed comparable national data on net replacement ratios for different household types and at different points in the earnings distribution so it’s possible to assess Fraser’s assertion on the basis of evidence.

On the OECD’s summary data on net replacement ratios, the UK is placed 18 out of 24 European nations: the nations which have lower ratios (on this summary measure) are Poland, Estonia, the Slovak Republic, Hungary, Greece and Italy.  So on the face of it, the claim that the UK is among the most generous looks severely misplaced.

But, inevitably, there is no single figure that summarises the comparative evidence in a simple manner. The generosity of the benefits system varies by family type, with some systems, including the UK’s,  skewing support heavily towards families with children.

Relative generosity varies by earnings level: a system that provides ‘generous’ protection to a low-waged worker can be stingy towards higher earners. In many countries, benefit levels are higher during an initial phase of unemployment (typically 18 months to two years) and lower for the long-term unemployed.Average wage levels affect estimated generosity. And the UK’s relative generosity depends a lot on how much of ‘Europe’ is included in the comparison.

Still, looking at the full range of evidence, two broad conclusions about UK benefit generosity seem clear. For people who have just become unemployed, the UK has one of the least generous benefit systems in Europe.

 


See also:

After Jubileegate: Five reasons why the Work Programme gets it wrong 6 Jun 2012

£25bn welfare cuts? Hilton’s plan is absolute nonsense 17 May 2012

MSPs outline “grave concerns” about UK welfare reforms 16 May 2012


 

Over the longer term, as people in other countries exhaust earnings-related benefits and move on to social assistance benefits, the UK looks far less stingy compared to other European countries, although it is still stretching things to say unequivocally that UK benefits ‘are some of the most generous in Europe’.

Here’s the evidence.

The table below shows how the UK replacement ratio during the initial phase of unemployment compares to the average for 24 European nations. Yes, these are ratios of ratios unfortunately – we need some way of summarising a lot of data, so I’ve divided the UK  ratio by the cross-national average.

Where this gives a figure less than one, the UK replacement ratio is lower (less ‘generous’) than the average. Three points in the earnings distribution are shown- 67%  of the average wage, 100% and 150%. Six different household types are also shown so there are 18 combinations of earnings and household type in total.

table 1

The UK is below the cross-national average for all 18 categories. In two cases, for single earner couples with children on low or average earnings, the difference is trivial. For other categories the UK ranges from .52 to .89 of the European average. In general, people without children receive much less generous benefits.

But perhaps the cross-national average is being pulled up by a handful of exceptionally generous welfare systems? In that case the UK might still be among the most generous while being below the average. Unfortunately not. This table shows where the UK fits in a ranking of the 24 countries.

table 2

Out of the 24 countries, the UK ranks 24th for eleven of the eighteen categories and between 20th and 23rd for five of the remaining categories. Only for two categories, single earner couples with children on low to average wages, is the UK higher than 20th:  not coincidentally, these are also the only two categories where the UK ratio is close to the cross-national average.

Once Europeans have exhausted any earnings-related unemployment benefits the picture changes. The UK is now above the cross-national average for most household types and earnings levels, although this result is influenced by the fact that two countries have a net replacement rate of zero for some household types, pulling down the cross-national average. The last table shows where the UK fits in a ranking by long term replacement ratio.

table 3

Again, there are eighteen combinations of wage and household type and 24 countries. The UK is in the top third of the national rankings (i.e. 8th or higher)  for 7 of these combinations, all families with children. We could say that for seven out of 18 combinations, the UK benefit system is among the more generous in Europe for long-term claimants.

So the UK benefit system is spectacularly ungenerous compared to other European countries for people who are not long-term unemployed: that is, let’s remember, for the great majority of people who ever experience unemployment. But because it tends to tilt support towards families with children, and because European countries reduce generosity sharply when earnings-related benefits are exhausted, the UK is among the higher ranked countries for longer-term generosity to out-of-work families with children: similar to France, somewhat less generous than Germany, a lot less generous than Denmark.

Which of these aspects is more important? It depends what you’re interested in. Personally, I’m interested at the moment in why attitudes to social security are so negative in the UK compared to other European countries.

In that context, the lack of generosity of the UK system in the initial period of unemployment is by far its most striking feature. Yet again,  ‘nothing for something’ rather than ‘something for nothing’  seems to be the defining feature of out-of-work benefits in the UK.

 


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97 Responses to “Fraser “see no evidence” Nelson wrong on UK benefits generosity”

  1. Jules Clarke

    How generous is UK benefit system? For newly unemployed, UK ranks 24th out of 24 in Europe http://t.co/RCkl3e8r Overall, 18th out of 24.

  2. Martin McGrath

    How generous is UK benefit system? For newly unemployed, UK ranks 24th out of 24 in Europe http://t.co/RCkl3e8r Overall, 18th out of 24.

  3. Hannah Dunbar

    How generous is UK benefit system? For newly unemployed, UK ranks 24th out of 24 in Europe http://t.co/RCkl3e8r Overall, 18th out of 24.

  4. liane gomersall

    Fraser "see no evidence" Nelson wrong on UK benefits generosity | Left Foot Forward http://t.co/4IAmA7Mw

  5. Mavis Wombat

    How generous is UK benefit system? For newly unemployed, UK ranks 24th out of 24 in Europe http://t.co/RCkl3e8r Overall, 18th out of 24.

  6. Declan Gaffney

    @MasonDAutistic attempting to answer the question you raised regarding benefit generosity http://t.co/RCkl3e8r (not my choice of headline)

  7. Katie Stanton

    Fascinating piece about the misconceptions that UK benefits are "the most generous in Europe" http://t.co/WVgeTcVO

  8. Hossylass

    @MasonDAutistic attempting to answer the question you raised regarding benefit generosity http://t.co/RCkl3e8r (not my choice of headline)

  9. Amanda Kendal

    'No evidence' for claims that UK benefits are among most generous. http://t.co/sXjLrNdK

  10. Sandip

    How generous is UK benefit system? For newly unemployed, UK ranks 24th out of 24 in Europe http://t.co/RCkl3e8r Overall, 18th out of 24.

  11. Jaime Fay O'Connor

    How generous is UK benefit system? For newly unemployed, UK ranks 24th out of 24 in Europe http://t.co/RCkl3e8r Overall, 18th out of 24.

  12. Mary Tracy

    Guys, this post on how UK Benefits' system compares to other EU countries is really good: http://t.co/EbnC9kYT Spoiler! UK doesn't fare well

  13. Tentacle Sixteen

    Guys, this post on how UK Benefits' system compares to other EU countries is really good: http://t.co/EbnC9kYT Spoiler! UK doesn't fare well

  14. Elly

    Guys, this post on how UK Benefits' system compares to other EU countries is really good: http://t.co/EbnC9kYT Spoiler! UK doesn't fare well

  15. Elaine

    Guys, this post on how UK Benefits' system compares to other EU countries is really good: http://t.co/EbnC9kYT Spoiler! UK doesn't fare well

  16. paul and lynn hewitt

    Guys, this post on how UK Benefits' system compares to other EU countries is really good: http://t.co/EbnC9kYT Spoiler! UK doesn't fare well

  17. Ferret Dave

    Guys, this post on how UK Benefits' system compares to other EU countries is really good: http://t.co/EbnC9kYT Spoiler! UK doesn't fare well

  18. michelle maher

    Guys, this post on how UK Benefits' system compares to other EU countries is really good: http://t.co/EbnC9kYT Spoiler! UK doesn't fare well

  19. Rob Perry

    Guys, this post on how UK Benefits' system compares to other EU countries is really good: http://t.co/EbnC9kYT Spoiler! UK doesn't fare well

  20. Outinthecold

    Thank you.
    I am sending the link to my Labour MP in the vague hope that he gets an education.

  21. Claire Q

    Guys, this post on how UK Benefits' system compares to other EU countries is really good: http://t.co/EbnC9kYT Spoiler! UK doesn't fare well

  22. H. O.

    RT @leftfootfwd: Fraser "see no evidence" Nelson wrong on UK benefits generosity http://t.co/oKEN1qoy

  23. Martin Steel

    Fraser "see no evidence" Nelson wrong on UK benefits generosity, writes @djmgaffneyw4: http://t.co/egm9Ulq1 @FraserNelson

  24. Becki

    Guys, this post on how UK Benefits' system compares to other EU countries is really good: http://t.co/EbnC9kYT Spoiler! UK doesn't fare well

  25. Betty Broken

    Guys, this post on how UK Benefits' system compares to other EU countries is really good: http://t.co/EbnC9kYT Spoiler! UK doesn't fare well

  26. Chaz

    Guys, this post on how UK Benefits' system compares to other EU countries is really good: http://t.co/EbnC9kYT Spoiler! UK doesn't fare well

  27. Catherine Brunton

    Guys, this post on how UK Benefits' system compares to other EU countries is really good: http://t.co/EbnC9kYT Spoiler! UK doesn't fare well

  28. KelvinMcDonaldFraser

    Fraser "see no evidence" Nelson wrong on UK benefits generosity, writes @djmgaffneyw4: http://t.co/egm9Ulq1 @FraserNelson

  29. Mary Tracy

    I really appreciate this post. Goes a long way in clarifying misconceptions about the UK’s benefit system. It shows how welfare is practically designed to keep people in benefits for generations, rather than “lift them” out of anything.

    I would have also liked to see tables of how benefits compare to other EU countries, by country. Ie: a list of initial replacement rations by country.

  30. Lord Blagger

    Interesting. However, what are people paying for the benefits they get out?

    I don’t see the free health care, paid for by others.

    I don’t see the free schooling, paid for by others

    I don’t see the housing benefits in the figures, paid for by others.

    ie. It looks like complete spin. Omit lots of things off the ‘benefits’ to make the ratio look smaller.

  31. Michael Simpson

    The implication you’re making is that free healthcare and schooling are bequeathed to us plebs by the sheer generosity of the state, rather than some signifying and hard won marker of development as anyone living in poverty in say, South Sudan, might argue if they weren’t so busy being bombarded in refugee camps. Supplant ‘generosity’ with ‘basic human right’ and you have something approaching the tacit social contract that, financial crisis or not, makes the UK one of the most wealthy, developed countries to have ever existed in the history of humanity.

  32. Declan

    The link to the OECD data http://www.oecd.org/document/28/0,3746,en_2649_33729_50404572_1_1_1_1,00.html will bring you to the complete sets of tables by country. The right hand tables in the initial replacement rate set are preferable as (contrary to what the previous commenter assumes) they reflect housing assistance as well other social assistance unemployed are entitled to.

    People on benefit ‘for generations’ is a bit of a myth though. This article sets the record straight

    http://inequalitiesblog.wordpress.com/2012/02/21/never-working-families-a-misleading-sound-bite/

  33. Anonymous

    No, he’s saying they’re evil and need to be ended. As usual.

    And we are not acting like a wealthy country, so we’re not going to be one in a few decades.

  34. Anonymous

    It’s worse that that. Far worse. Britain’s poverty premium is sky high (in particular for utility meters), and housing benefit has none of the protections other countries put on their equivalents – the kind of routine shortfall which needs to be made up out of other benefits doesn’t happen in most EU countries.

    Then there’s the “minor” fact that the conditionality in the UK is deliberately punitive, and severely hinders real job searches in many cases. Heck, it focuses entirely on spamming applications to employers.

  35. JC

    Don’t follow your tables at all. More explanation and clarity needed.

    I know that the UK is not very generous to those who are expected to be short term unemployed. All I ever received was JSA as I had received redundancy payments. Since I had a wife and kids, this forced me to get a job as soon as possible rather than one which reflected my experience and ability. Over 9 job losses since 1997 I have moved from being a European Technical Manager to working at minimum wage in a lab. Had it been more generous, I might still be earning a good wage.

    However, the longer term unemployed seem to get a better deal. I’m unconvinced that a benefit cap is all bad.

  36. John O'Donoghue

    Fraser “see no evidence” Nelson wrong on UK benefits generosity – http://t.co/A0fJVReO

  37. Brian Tomkinson

    Frm earlier: Fraser "see no evidence" Nelson wrong on UK benefits generosity, writes @djmgaffneyw4: http://t.co/egm9Ulq1 @FraserNelson

  38. Melissa

    How generous is UK benefit system? For newly unemployed, UK ranks 24th out of 24 in Europe http://t.co/RCkl3e8r Overall, 18th out of 24.

  39. BenM_Kent

    A benefit cap is bad for the economy and answers a question that just isn’t being asked.

    It will depress demand at a time when shopkeepers and other businesses are crying out for sales.

    Your local shopkeeper cares not a fig where that money comes from, just that they can earn it to pass it on through the economic system.

    Benefits should be flexible to respond to the needs of each region – a flat maximum is much too simplistic. A typical Tory response to anything.

  40. Declan Gaffney

    This http://t.co/m1QW7WAE uses more detailed methodology than this http://t.co/RCkl3e8r re: benefit generosity. UK still lowest in Europe.

  41. Keith Davis

    This http://t.co/m1QW7WAE uses more detailed methodology than this http://t.co/RCkl3e8r re: benefit generosity. UK still lowest in Europe.

  42. Rob Tolan

    This http://t.co/m1QW7WAE uses more detailed methodology than this http://t.co/RCkl3e8r re: benefit generosity. UK still lowest in Europe.

  43. Anonymous

    Fraser Nelson has already been given a good going over by Full Fact for his claim and it’ not the first time they’ve exposed him for the insignificant clown that he is.

  44. Alan Gibbons

    RT @leftfootfwd: Fraser "see no evidence" Nelson wrong on UK benefits generosity http://t.co/7rEXWNwI

  45. Anonymous

    Fraser Nelson is not the only right wing bigot to promote the idea of overly generous benefits to support the right’s contention of immigrants coming to the UK for a benefits holiday. This blather has never stood up to any type of analysis but supports the current coalition, and IDS, in the attempt to demonize the most vulnerable in society and punish the poor for their poverty.

  46. Mercy Might

    RT @leftfootfwd: Fraser "see no evidence" Nelson wrong on UK benefits generosity http://t.co/NabDXR3C

  47. Anonymous

    “benefit cap”

    Call it what it is – a charter for breaking up families. Which will be the effect, in many cases sending disabled people into institutional care and badly affecting children. All because housing benefit has spiraled under successively governments who have not built housing.

    Rents could be capped instead, but no – better to break up families.

    It’s also a MINOR effect compared to the immense damage being done by other changes to housing benefit, such as the fact it’s down to paying for under a quarter of properties and falling (by design) rapidly.

    Even medium-term unemployed are made to do slave labor. That’s not “generous”.

  48. Sue Bowyer

    How generous is UK benefit system? For newly unemployed, UK ranks 24th out of 24 in Europe http://t.co/RCkl3e8r Overall, 18th out of 24.

  49. Timbo

    clown, yes.

    sadly he is not insignficant and we have to battle to prevent people swalling the BS of people like Nelson.

  50. Declan

    Long term unemployed do NOT get a better deal, in UK or elsewhere. They fare less badly in UK in comparison to other countries. The contrast with the initial period of unemployment is because other countries are less generous to long term, not because UK is more generous.

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