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:
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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)
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People estimate that £24 out of every £100 spent on benefits is claimed fraudulently, compared with official estimates of £0.70 per £100
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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…
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19 Responses to “Two major speeches targeted at less than 2 per cent of welfare spending”
OldLb
And nothing boggles like the true cost of having them choosing not to work.
Add on all the other things, and you will see the true cost.
johnmcardle
What’s wrong with making the corporations. banksters and assorted filching, sponging, robbing rich freeloaders pay? They got us into this crisis! LET THEM PAY FOR IT you economic and political illiterate.
OldLb
Except you are the one who is deluded.
1. Banks got into a mess because people didn’t pay their loans. Pure and simple.
2. So what the current mess? It’s governments and their debts. Not the debts they admit to, but the debts they keep off the books for the same reason as Bernie Madoff.
The UK reports a debt of 1,200 bn. However, that isn’t what they owe. That is just what they have borrowed. They owe other things. They owe civil servants pensions for the work they have done in the past. They owe people pensions for the money they have contributed in the past. They are going to have to pay out on some of the guarantees they have undertaken. They have to pay for the nuclear cleanup, because they took money in exchange for doing so in the future. They also owe money under PFI. These are all liabilities under any of the accounting standards (bar the cooked books). It’s so blatent they even admit to doing so.
So what we need to know are various things. How much do they owe in reality? What is the rate of growth of the debt? What are the assets to back up the debts?
The first part, what is owed is difficult to find out because its off the books. However, its around the 8 trillion mark. Based off figures from the ONS (office for national statistics that did the work). 6.5 trillion is pensions. Owed to Joe Bloggs, man in the street.
The rate of growth is also easy. The ONS and the DMO (debt management office) numbers put that at 850 bn a year.
The assets? Well they have no assets for the pensions. None. It’s the only number we know with 100% certainty. None. Zero. Zilch.
Now perhaps you might view future tax as an asset. However, that also means future spending has to be a liability too. Keeping the serfs happy.
So taxes raise 600 bn a year, but spending is 722 bn. On average each serf is a liability.
Notice the key thing? 850 bn a year increase in the debt, but revenue of 600. They are bust. The state is bankrupt.
So what does that mean in practice. It means those poor and middle class people who will be reliant on the state for their old age are going to be screwed.
Even your lets go for the rich plan won’t work. Branson is a billionaire. Take his 2 billion – all of it. Not sure who you are going to sell the assets too, but lets say you can. Oh dear, you’ve plug the true deficit for a day. Now who are you going to go after? Will they still be here in the UK, or will they have left? You might get another one, but I doubt many will be left after you’ve taken the lot off more than 3.
Face up to it, its just an excuse. The state has robbed people blind, both left right and center. It’s evil.
DJT1million
True…..so how about spending all that time, all that energy and all that money on a mix of job creation and proper training or apprenticeships then?
The way unemployed and under employed people are being treated in the UK today is a total disgrace. There is no defending the current system that is a mix of poverty, abuse and pointlessness.
Grow up for Gods sake and start treating your fellow citizens with some respect.
DJT1million
Nonsense.
The state is not bankrupt, the only thing that is bankrupt is the ideology you are still following even as it collapses around your selfish ears.
….and yes, we’ve heard it all before (probably from you under a different username) that there’s all sorts of hidden costs, hidden liabilities, secret stuff that only you and a few others that know The Truth really understand. More nonsense
Again, grow up and treat your fellow citizens with some respect.
Honestly, my patience has worn rizla paper thin with this repeated nonsense.