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.
47 Responses to “TaxPayers’ Alliance welfare proposals save little money, but add to misery”
Mason Dixon, Autistic
What numbers are you even asking for? You appear to be having an entirely different conversation with someone else, regardless of anything I’ve actually said.
John
Debt is a symptom of income being outweighed by expenditure. Cut government income by reducing profits of companies and, obviously, debt increases. A fact this government seems to have missed. You seemed intelligent however.
I agree. Yet there it is. Shall we tell the EU commission together?
Sorry, what? You argue based on pension and then go on about migration while attempting to wave away the impact of the EU? Either deal with only the issue or deal with the whole. You can’t pick and choose. Migration is a fraction of the welfare bill directly. Indirectly the short-term benefits of working-age migrants, skilled or not, outweigh the long-term problems. Frankly the pension is such a huge issue a couple of hundred, even thousand, immigrants won’t make a huge difference at this point. Unless they help plug the huge skills gap we have at the bottom end of the scale. We desperately need more plumbers, electricians, teachers and welders etc. It seems british people aren’t willing.
Yes. We’re trying to avoid that, remember?
1. Since the government is attempting to squeeze every last penny from people means testing will still include a HUGE whack of people, as it already allows working people to claim on housing benefit & other means tested benefits. And thats with councils ignoring the ACTUAL rent paid, and simply assuming people are paying a ‘fair’ rent.
2. To include more people? see above, just more so.
3. How many groups are going to be squeezed before the whole things collapses? This may work in the short-term, but it’s the underlying issues which are the problem.
Indeed. Solution?
This is your solution? ‘The evil choice’. Well morally mine is little better but at least neither of us are under any illusions.
Not credible? If you can’t pay you can’t pay. What you mean is you doubt any government will do this unless they absolutely have to. Well I agree. No party has the balls. It would be suicide, and wouldn’t pass through parliament anyway.
So… lets see if I understand this. Lets pretend we didn’t loot the money and calculate from there. Not sure if a fictional ideal is a good place to find practical solutions, but fair enough.
OK. Assuming a government didn’t touch that whopping pile of cash… optimistic to say the least (which is how we got IN this mess) you can operate a hedge fund from the pot. Fine. Paying out only when people run out of pension. Except… if people knew the money was there why save? Mandatory? Then why budget once they DO start getting a pension. You’re relying on the basic sense of the average persons. Call me a cynic, but since the basis of all Conservative rhetoric is that poor people are immoral money-grubbing leeches I’m not sure this is a plan they would embrace.
Labour, by comparison, wouldn’t abolish the state pension.
Furthermore if one party or another, or maybe a coalition again, which I suspect will be a more present force in out political future for a while (I hope I’m wrong), actually DOES pass it through parliament I can’t imagine they wouldn’t pillage this pot they way they did the last one.
Actually under the welfare state the age gap on death between rich and poor is fairly narrow here less than 10%. A triumph of our welfare system. Everyone is abused or ignored equally. And you think the poor would have savings left over? I really hope you’re right.
Again with the migrants thing. Do a little research and get back to here. Here are three places to start.
http://www.independent.co.uk/news/uk/politics/halting-immigration-would-cost-uk-18bn-in-five-years-8555344.html
http://migrationobservatory.ox.ac.uk/briefings/fiscal-impact-immigration-uk
http://www.migrationwatchuk.co.uk/briefingPaper/document/235
Then stop picking on some of the most vulnerable in the world.
I remain unconvinced about this as a solution, especcially since one of your core assumptions is no further plundering by the government.
Indeed; the ones least able to bear the burden while the rest of us have our income chipped away by inflation outstriping wages, which affects everyone equally. It’s like the ultimate poll tax. Meanwhile more and more will fall into the exemption bands for tax, cutting tax income while multinationals continue to engage in tax avoidance so aggresivelly they pay nothing.
Oh! There’s a solution! Why don’t we simply get the tax businesses owe!
OldLb
Very simple.
I’ve said that the state pension won’t be paid because they cannot tax enough to pay for it.
You’ve said that isn’t the case.
So you need put up the numbers that justify it being affordable.
So we need to know some basic information.
1. How much does the state owe for the state pension?
2. By how much is it changing year on year? It could be going up, or it could be going down.
For both of those, the current value is the number that’s needed. There is no point in totalling up future payouts, since they are affected by inflation.
Then we have to look at spending and income to see if its affordable.
3. What’s current spending?
4. What’s current taxes?
Remember the state treats pensions as welfare That’s why its relevant to the post.
Let me help you with two of the answers.
3 Current spending is 722 bn a year
4. Current taxes are 600 bn a year.
It’s questions 1 and 2 I would like you to answer, with some evidence to back them up.
http://www.ons.gov.uk/ons/dcp171766_263808.pdf is out of date, but it will give you some hints.
OldLb
Debt is a symptom of income being outweighed by expenditure.
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That is just part of the debts. That part of the debt, the accumulation of deficits over time is borrowing.
There are lots of other debts, not related to income and expenditure.
For example, the civil service pensions. Services received in the past, but to be paid for in the future. That is a debt or a liability (same meaning), just as much as borrowing.
Similarly if you take payment up front for services to be delivered in the future, that’s also a debt/liability.
Sorry, what? You argue based on pension and then go on about migration while attempting to wave away the impact of the EU?
In or out of the EU, the pensions debt doesn’t change.
Where migration matters, is whether or not migrants make that debt problem worse or better. If you are low paid, you make it worse. If you are high paid, you make it better. Pure and simple economics.
Migration is a fraction of the welfare bill directly.
So what? If the average person consumes 12K of state money, then welfare is an irrelevance. We should get rid of overseas welfare claimants. That saves some money. Why just consider welfare as your criteria. There are overseas workers in Starbucks paying a couple of hundred a year in tax and NI. The NHS costs 2K per person per year. They are not an economic benefit. Add on top they are building up pension rights, and its even worse.
By restricting the measure to being on benefits or not, you’ve omitted huge swathes of the cost of those migrants being here to inflate the case for migration.
High paid migrants, let them come. Low skilled migrants, no way.
Except… if people knew the money was there why save? Mandatory?
Yep. Mandatory. You are forced to save.
A triumph of our welfare system. Same has happened elsewhere without a welfare state. However, what’s the cost? Tell us how much the welfare state owes in pensions for past contributions. You can’t say its a triumph if you ignore the bad.
I remain unconvinced about this as a solution,
You asked me for a solution, I provided one option.
So over to you.
1. How much do they owe?
2. How are they going to pay it?
That’s the solution you need to provide. With some numbers please not waffle.
I’ll give you a starter for 1.
Total debt, is 8,000 bn rising at 850 bn a year. [Interest, inflation,, and growth in the liabilities]. Taxes raise 600 bn, and spending is 722 bn.
Doesn’t take a rocket scientist to work out the consequences.
Labour, by comparison, wouldn’t abolish the state pension.
Yes they will. They can’t pay it.
John
That is just part of the debts. That part of the debt, the accumulation of deficits over time is borrowing.
There are lots of other debts, not related to income and expenditure.
For example, the civil service pensions. Services received in the
past, but to be paid for in the future. That is a debt or a liability
(same meaning), just as much as borrowing.
Similarly if you take payment up front for services to be delivered in the future, that’s also a debt/liability.
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You are making a distinction between short-term and long-term debts. It’s fine, but be clear about it. I had thought we were discussing possible ways of mitigating the long-term debt using revenue (that seemed to be your immediate solution; use revenue to create a fund paying the debt on an as-and-when basis if people ran out of their mandatory pensions savings)
Also payment up-front for services in the future isn’t a debt; it’s a prepayment. Or are you talking about from the position of a service provider? In which case yes; it’s a balance sheet item on the credits side.
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In or out of the EU, the pensions debt doesn’t change.
Where migration matters, is whether or not migrants make that debt
problem worse or better. If you are low paid, you make it worse. If you
are high paid, you make it better. Pure and simple economics.
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Except… things are never that simple.
Studies have shown (which I linked you to; please read them) that even low-skilled migrants have a positive net [i]NET[i] effect. Not gross; net. That means AFTER payments and deductions. It may be small; but it’s positive.
The problem comes when low-skilled migrants come in who can’t find work. They’re in the exact same position as many of OUR low-skilled workers; suggesting the problem isn’t lazy poor people, as many would have you believe, but a dearth of jobs in the market. THAT would be the problem to solve in that instance. Not migration as that would still leave over 75,000 long-term unemployed 18-24 year olds, never mind those who aren’t even IN that age band.
And no; stopping net migration will not magically award them jobs.
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Same has happened elsewhere
without a welfare state. However, what’s the cost? Tell us how much the
welfare state owes in pensions for past contributions. You can’t say its
a triumph if you ignore the bad.
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A triumph of our welfare system. Same has happened elsewhere
without a welfare state. However, what’s the cost? Tell us how much the
welfare state owes in pensions for past contributions. You can’t say its
a triumph if you ignore the bad.
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http://www.worldlifeexpectancy.com/
See the red? All have a form of welfare state. Drill down and the lack of a welfare state becomes more damning. Try again; with figures next time.
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You asked me for a solution, I provided one option.
So over to you.
1. How much do they owe?
2. How are they going to pay it?
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You did. Forgive me for critiquing it.
1. It’s more or less immaterial. However it’s calculated the money isn’t there
2. Abolish mandatory retirement. There is alraedy a lot of people working in their ‘retirement’ to make ends meet; so let them. They keep earning, without paying NI I suspect, though that may change, and their pension (which is pretty poor already anyway) doesn’t become an issue.
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Yes they will. They can’t pay it.
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Alright, allow me to refind my statement; they would cut anything else except the NHS first (doing incalculable damage to the country)