A cap on the total amount of benefits that people receive begins rolling out across England, Wales and Scotland today. The cap applies to those aged 16 to 64 and means that couples and lone parents will no longer receive more than £500 a week, with single people limited to a maximum of £350 a week.
A cap on the total amount of benefits that people receive begins rolling out across England, Wales and Scotland today. The cap applies to those aged 16 to 64 and means that couples and lone parents will no longer receive more than £500 a week, with single people limited to a maximum of £350 a week.
Extraordinarily popular, the policy is supported by some 70 per cent of the electorate, meaning one risks the charge of elitism in pointing out that in this instance the mass is probably of lower intelligence than its constituent parts.
The fact the benefit cap is popular in fact makes it all the more likely that it is bad policy; for what politician can resist pandering to the crowd when it chimes with their political leanings?
The problem is that the cap tackles a real problem from the wrong end.
Clearly it is undesirable for people to be claiming large amounts in benefits rather than earning their keep through a job. But when commentators and politicians wax lyrical about the amount of benefits being paid to individuals and families they are in reality talking about something quite different.
We, the taxpaper, are often not subsidising claimants at all, but rather handing large sums of money to private landlords who don’t particularly care whether it is the state or the individual who pays their rent – they know that benefit claimants will be conveniently on hand to take the flack which should by rights be directed at them.
Just this morning a new report came out detailing how a third of Britain is now effectively off-limits to lower income families because of the increasing cost of rent. This being the case, it shouldn’t be a surprise to learn that the benefits bill has also been increasing – the key point which the government has seemingly missed is that the state is subsidising landlords, rather than tenants.
Another non-sequitur is the idea that driving down the living standards of the unemployed is what makes work pay.
Ministers insist on repeating those three precious words: “making work pay”. It’s a clever rhetorical trick but it’s also an inversion of the truth. Reducing the living standards of the unemployed is not the same as ensuring that job pay what they should; and declining living standards for those without work is more likely to have a downward effect on the wages of those in work than it is to make anything pay.
In this sense, ‘making work pay’ is a bit like snatching away a homeless person’s cardbox box and claiming that in the process you’ve made mortgages more affordable for everyone else.
The benefit cap will also punitively hit families with lots of children; or more accurately, it will hit children who are unfortunate enough to be born into large families.
In the pilots for the cap around 80 per cent of those hit were single parent families. The idea that it is possible to put a set cap on how much money a family requires regardless of how many children there are also defies logic. More children cost more money, obviously.
It goes back to politics, though. It’s popular to be seen to be ‘cracking down’ on the entitlements of poor people with children, probably not unrelated to the fact that our society has always been terrified of the poor breeding too much.
We should, however, stop trying to think that there is some easy solution on child benefits. You either provide adequate money for parents to feed and clothe their children or you don’t. By paying less money to parents the government may think it is punishing them but it is in reality punishing their children.
The question then is this: is it ok to punish children for the behaviour of their parents or isn’t it?
Don’t hold your breath in waiting for the correct (and no doubt unpopular) answer.
One thing that is clear from all this is that the Tory view that rich people will not work unless they are given money whereas poor people will only do so if they are not is now a majority one.
In combating this the left has to be honest – it is a bad thing for people to be on benefits when they could be in work – but it also mustn’t sacrifice principles for popularity: the benefits bill is a consequence of much larger failures and won’t be significantly reduced by indulging narratives about “fecklessness”.
44 Responses to “The benefit cap tackles a real problem from the wrong end”
John
Only inasmuch as Schools are part of the state system; their income, cashflow and lines of power are seperate to westminster, their authority isn’t derived from westminster; they’re seperate elections.
It IS a tax, I grant you, but seperate to the governments. LIke a charge on having a bank account. We HAVE to have one, one of Thatchers legacies, so the charge on our Bank account could be seen as a type of tax. The government doesn’t set the tax, doesn’t get the money nor has any control on how it is spent yet they have mandated we need to have an account, with a bank, which has a charge for their services
1. Positive consequences? Government can’t meet it’s debtors, debts are called in, government has to slash spending on order to service the growing debt-pile. What savings reduced taxes would bring would pale in comparison to the hugs social and economic unrest unleashed by the economic collapse of our country. I do NOT want to live in Greece, which is what this country would mirrir if taxes were cut and income not raised elsewhere.
3. I’ve seen the figures. The government ones don’t include things like the assets the government is garunteeing or the pension liability. I wonder what the governments balance sheet would look like if it’s own laws were enforced on it.
But how is this in any way related to my point? The state can’t afford to build. Fine. Use it’s legislative power to encourage OTHERS to build; the market for it is clear, it could provide a huge return on initial investment.
4. I didn’t even MENTION free markets in this point. As to your point about the EU, leaving would impose huge costs on exporting into the EU, which is still one of our primary exporters. It would cut down in investment into this country (both from inside the EU, as it would be harder and more expensive and outside the EU, as the fact they can easily export to other EU countries from ours is a draw) and all it would do is allow us to halt the influx of immigrants.
No. No we cannot. We need a reason. ‘We don’t like them’ is not a permissable reason. ‘They cost us money’ is ALSO not a permissable reason. I’m no lawyer, but I honestly can’t think of a good reason to get rid of the low-income people who have already entered the country.
So you’re suggesting we declare an emergency as acute as the cypriates in order to stop the movement of capital from our country? I doubt the Troika will buy that. It actually IS enshrined in EU law, same as privacy and free speech laws are enshrined in ours. Government have a tendancy to ignore inconvenient laws when it suits them, and it’s up to the judiciary to hold them to account when they do. Or rather us, the electorate, to bring a case forward TO the judiciary. Which is exactly the way to appeal against an EU amendment which contradicts it’s own laws, it’s not as if the EU is unaccountable. Just lacking a popular mandate. Much like most of our governments technically speaking.
OldLb
No.
First you have to ask the question, what would a median wage earner have got in the fund, if their NI contributions had been invested over the last 40 years. Well I’ve done detailed calculations, and I’ll give you a link if you need it. It’s 627,000 pounds. The state pension costs 152,000. They have lost 475,000. Or another way of putting it, 475,000 is the cost of the insurance elements to NI. Bereavement benefit, JSA. etc. In practice, the money has been siphoned off for other things, plus no compound interest.
Now, what I would propose springs from that.
1. Your NI goes into a fund in your name,
2. If married half goes to your spouse and vice versa, and this fund is not part of any divorce. You’ve already got half of those assets.
3. If you die early, the fund is split between your heir’s funds. This benefits the poor and their offspring, because they tend to die young. It’s also an incentive for the people who claim they won’t live to see it etc.
4. On retirement you go into drawdown. Rate to be agreed.
5. If, and only if, the money runs out, do we all help.
Now since that fund is going to generate 19K a year indexed linked joint life, and the guarantee is for 5K (SP), its a very cheap guarantee over the long term.
6. So, state pension is abolished. It’s replaced by the guarantee.
So consider someone with 1 year to retirement. They will have for the sake of argument, 2K of NI plus a bit of growth. That runs out fast, so they get the guarantee. At no point then are they worse off than now.
However, for people with longer to go, that fund starts to build up. End result, they will be better off.
You also get the knock on effects. Lots of money, 100 bn a year, gets invested. Not in negative return HS2 projects. That creates lots of jobs.
So no increase at all. Everyone gets to keep their NI. After all they earned their money.
Now you may ask, how are people never worse off. It’s quite simple. It’s back to what the state is doing with NI. It’s diverting it to other things. In effect its a tax on people’s retirement and on the insurance parts.
So the follow on to that is the question, how much does the insurance part of NI cost in reality. Well, again its quite easy to work out. 10% of NI goes to the non pension parts. Another 5% goes in annual charged. [Way more than any private pension many times over]
So the 627K pension would drop by 63K for the insurance coverage. That mean 417,000 pounds is effectively tax and charges from the state. Enough to make most people better off many times over.
Couple that with the state not being able to pay its pension promises and its the right thing to do.
OldLb
Not true. Succesful people are more likely to be the offspring of the better off.
OldLb
I do NOT want to live in Greece, which is what this country would mirrir if taxes were cut and income not raised elsewhere.
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Neither do I. However its going to happen. Its all down to the debts, as it is in Greece.
UK state owes 8,000 bn. That debt is increasing at 850 bn a year. [Pensions included]
Taxes 600 bn, Spending 722 bn. They can’t pay.
Councils, Westminster are all government. It’s tax that pays for them. It’s tax that is making most people poor.
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I’ve seen the figures. The government ones don’t include things like the assets the government is garunteeing or the pension liability. I wonder what the governments balance sheet would look like if it’s own laws were enforced on it.
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Or even the accounting standards such as GAAP and FRS17. I can tell you. 8,000 bn on the liability side. So what about assets? Difficult selling off hospitals etc. Then you have the citizens are the property of the state argument. If only we could book people as assets (see slave owner’s books), then we could book future tax receipts as an asset. However, that logic also means you have to book the expense of keeping the slaves. So revenue in, 600 bn, expenditure out, 722 bn. Oh dear, the average British serf is a liability.
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They cost us money’ is ALSO not a permissable reason. I’m no lawyer, but I honestly can’t think of a good reason to get rid of the low-income people who have already entered the country.
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It is. Here is how. If you are a migrant, introduce a law that you need a work permit. Perfectly allowable under EU law. See Cyprus. EU law says freedom of movement of people, goods, services and CAPITAL. However the EU said you don’t have the later in Cyprus. So there is a precedent. Freedom of movement of people is optional.
Now you just set the conditions on work permits to mean you can come, so long as you aren’t a burden on others.
‘We don’t like them’ – Agreed. It would be in my view racist.
“They cost us money” – Disagree. It’s a financial test. Its non-racist and its simple to understand. I would even say that its good for race relationships. The whole BNP way of thinking is that there are migrants are getting something for nothing. They then go and generalise and state wrongly that means all migrants must be doing this, so no migrants. Pure racism. However, given the rule, you can’t come if you need a subsidy, then the BNP can’t make any such argument.
On leaving the EU. If we leave, we save lots of money. On top the EU then has to decide. It could retaliate and say you can’t trade with us freely. The UK could then retaliate and send back immediately all those migrants from EU countries that don’t meet the threshold. Pretty dire for the EU countries, too as they have a trade surplus with the UK. So they won’t.
You might have missed Merkel’s statement. We won’t allow the UK to leave and gain a competitive advantage. That let the cat out of the bag. The EU is damaging UK competitiveness. Time to leave.
On the Troika, again you give the game away. Ruled from Brussels by the unelected. The law is optional. Cyprus is clear. The rule on capital is the same rule as movement of people.
John
Sadly this is true. Money buys a better education. That doesn’t mean better off people are more intelligent however. Australia proves that one.