The Taxpayers Alliance has released a new report on welfare dependency, but the proposed solutions do little to save costs and only adds to hardship.
The right wing organisation the TaxPayers’ Alliance has released a new report on welfare dependency, arguing that the amount the country spends on benefits is too high and it is necessary to implement a ‘Work for Dole’ scheme.
The report’s proposed Work for Dole scheme will do little to solve the costs it moans about and only add to the hardships of the poorest in society.
The report begins:
“Over the past 50 years, welfare spending has relentlessly grown and now consumes 28 per cent of all government spending. 57 per cent of this goes on benefits for working age people.”
At first glance the TaxPayers’ Alliance’s picture of a Britain suffering the costs of paying for benefit claimants seems shocking, but the statistics reeled off here – similar stats often emblazoned in Daily Mail articles – are not so shocking when you take a look at the detail.
So, where has the 28% figure come from?
Yes 28% of government spending goes on welfare, but welfare isn’t just made up of the benefits this report attacks. A huge amount of welfare spending, 43%, actually goes on pensions. So the author could have simply started off with the less startling fact that 16% of all government spending goes on ‘benefits for working age people’, but I guess this is a less eye-catching figure. It’s good that in the second line the TaxPayers’ Alliance does admit that only 57% of this goes on the type of benefits it focuses on, but it really makes you wonder what was the necessity of the first line…
Anyway, 16% of total government spending is still a vast figure so it’s worth investigating what exactly all this money goes on.
Are taxpayers funnelling money to the lazy?
What do these ‘benefits for working age people’ involve?
The list of benefits that the welfare budget goes to (excluding pensions) includes:
- housing benefit
- child tax credit
- disability living allowance
- child benefit
- income support
- working tax credit
- job seekers allowance
- employment support allowance
The largest amount of money on this list goes on housing benefit and child tax credit, which are both benefits that are open to people who are in work. This somewhat detracts from the picture of a Britain that can’t help giving money to the workless.
It is also not as though these benefits are lining the pockets of the idle. For example, housing benefit goes straight to landlords. Over the years spending on housing benefit has risen by a lot but this is more a result of successive governments failure to build new houses rather than any upshot in people happily revelling in welfare dependency. The housing crisis in this country has contributed to a great many social and economic problems and one of these is the huge growth in spending on housing benefit.
So what is the Taxpayers Alliance’s solution?
Their solution is ‘Work for the Dole’. This scheme involves anyone who has been claiming Universal Credit for a certain period of time to undertake activity like clearing parks or graffiti, working for a charity, participating in a training programme or work experience. The amount of work you are expected to do depends on whether you are in a job, how many hours you work or whether you have childcare commitments. The report says that
“the programme shall continue indefinitely, until either (i) the person is working more than 30 hours per week (or their benchmark if lower) or (ii) until they stop claiming Universal Credit benefits entirely.”
Work for the Dole is very similar to the government’s own much despised Workfare policy. Both schemes involve people working without receiving a wage. And it is fair to say that both schemes have major drawbacks. For example, jobs like clearing parks or cleaning graffiti are that – jobs. People who do these socially valuable activities deserve proper pay. To force unemployed people to do them is not only punitive and unnecessary, but is patronising to people whose job it actually is to clear parks or clean off graffiti. It also ignores the fact that most jobseekers are actively seeking jobs. It is not their fault, and they should not be penalised, for an atrocious job market.
The Taxpayers Alliance’s proposals also includes the brutal specification that anyone who ‘is not compliant with Work for the Dole activity requirements’ will ‘have all of their Universal Credit payments suspended.’ It even goes onto admit that there might have to be changes to, or an opt out from EU laws to achieve such a punitive policy.
We have seen a huge rise in the number of food banks in the UK in recent years, and there is strong evidence that this is connected to the government’s welfare reforms. This means that we are already seeing the disastrous effects of a more severe benefits system. Another round of even harsher benefits reforms – as proposed here by the Taxpayers Alliance – is likely to drive even more people to use food banks.
Will the Work for the Dole save money?
The report boldly claims that its proposed ‘Work for Dole’ scheme will make annual savings of £3.51 billion a year . When you look a bit closer you realise that this is a saving of 4.7% of expenditure on benefits included in the Universal Credit umbrella and also housing benefit and child tax credit. So this means it is not even a saving of 4.7% of the non-pensions welfare budget, let alone 4.7% of the welfare budget as a whole. If you are seriously looking to save costs, is piling on the pressure on a very vulnerable group of society a sensible solution? Evidence shows that big companies avoid paying taxes to the tune of £5.5 billion, but we don’t hear the Taxpayers Alliance harping on about this.
After all we read from the Taxpayers Alliance about the horrors of our bulging welfare state it is a little disappointing that their solutions amount to relatively little in financial savings for the taxpayer, but contribute so much more to the hardship faced by the poorest members of society.
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47 Responses to “TaxPayers’ Alliance welfare proposals save little money, but add to misery”
John
Hmmm, I seem to have seen this before. I suspect you’ll recognise this too.
Nicely summarised, but what do you suggest?
1) Leave the EU: Economic collapse (you can debate this one, I’ll admit, but with the protectionist policies in place for outside EU countries trading into the EU it would, in the short term, stifle our UK to the brink of collapse since we actually export a large amount to the EU. A fact arising from us being IN the EU)
2)Stop the pension: Well that seems pretty evil to, if you want to use such terms. People work their whole life, trusting that the government will do what it promised (something my generation may well learn to NEVER do from now on. I certainly won’t) and then a government turns round and steals the money
Except it isn’t theft; it can’t be if a government does it, any more than a government can commit murder.
3) Partially cut services. Which is what they are doing. Bit by bit chipping away at ‘the welfare bill’. Except they can’t cut the bits which actually COST as that’d be political suicide and no-one has the political balls for it.
4)??? Seriously; I genuinely want a credible alternative.
OldLb
Leave the EU? How does that affect the amount of debt the state has run up? It doesn’t. It’s an irrelevance when it comes to pensions.
Protectionism doesn’t work.
Control of migration? Partially it helps. The state is spending 12K per person per year. That needs a salary of 40K just to break even. Even that ignores the increase in pension debts. Should migrants pay a fair share of that? That pushes the income needs up. Remember too that migrants earn pension rights. If they leave, they still get the pension, but they don’t pay tax to offset it. Control low wage migration has to be a must. High wage migration, the more the merrier.
Stop the pension? well If you can’t pay you can’t pay. It’s what’s going to happen.
1. Means test.
2. Lower the means testing threshold.
3. Huge cuts to civil service pensions.
Even that isn’t enough. The pension debts are going up at 734 bn a year. Borrowing is going up, on top at 120 bn a year. Total taxes, 600 bn. Even Mason Dixon can do that bit of maths.
So that leaves the evil choice. Deprive people of their retirement.
I don’t think their is a credible alternative. It’s gone too far. What’s needed is something to cushion the blow.
My suggestion is this and lets start with the evidence. 26K a year is median wage. We can back test NI to see what would have happened if the state hadn’t looted the cash. 40 years ago, median wage was 800 a year. Put the same proportion of NI now, for historical wages into the FTSE. End of the year, add on dividends, take away charges, and from the change in the index make or lose. Repeat 40 years. It’s the direct comparison to say if NI is a cost effective system.
End result, 627K in a fund. The state pension costs 152K. That’s a whopping difference.
Now NI does provide more than just pensions, but if you read the article, its not a big percentage. In fact if you look at the DWP income and expenditure accounts (asset/liability – state secret), 10% goes on insurance, 5% (!!!!) on charges, 85% on pensions. So that 63K out of 627K that should cover the insurance part.
That gives an income way in excess of the state pension. You are well out of the benefit regime.
So lets do this. Abolish state pension. In its place you get a guarantee that if your fund runs out, the state will cover it with a state pension payout funded by tax. However, you have to save your NI in a fund. Then on retirement you go into drawdown, and only if the money runs out do we all help.
Initially, that could be expensive. People have to build up funds, and since most comes compound growth it takes a while. However, its still cheaper than the current system.
Then on death, the remainder of the fund goes to your heirs. This helps the poor. They die young, so their money isn’t wasted.
Now look at the secondary effects. All that money being invested. So long as you don’t drag in low skilled migrants the poor get jobs.
So a possible solution. Think what would happen if governments decided to tax your pension? So I think it also needs a referenda lock in place. Would people vote for being taxed?
You’re correct on 3. It’s the direct result and its going to carry on drip drip drip hitting at the poor. They will of course be expected to carry on paying tax.
Mason Dixon, Autistic
You haven’t gone far enough off-topic.
Mason Dixon, Autistic
Well I have tried explaining it to you before but you seem content to invent opinions for others rather than listen.
OldLb
Put some numbers up and then we can discuss.
Otherwise its just waffle from you.
My guess, you’re on the public payroll and shitting bricks. Forced to pay in all that extra cash, and when it comes to your turn to be paid out, its going to be a choice.
Your gold plated pension or welfare for those with no pensions?
Hmmm, let me think. … PS workers 0, welfare 3.