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
The problem is that you have drawn the boundary round one problem, unemployment, and excluded the causes and consequences of your decisions.
1. Low skilled unemployment comes as a direct result of crap schools (government) and unfettered migration. Both screw people and its government choices the whole way.
2. Your solution – spend lots of cash, comes with consequences. The result of all that spending, comes from somewhere. It comes primarily from pensions.
The figures for the state liabilities for pensions are all off the books, but the ONS has the numbers. We are talking 6,500 bn, rising at 734 bn a year. Given taxes are 600 bn a year only, even someone at one of those crap schools can see the consequences. It’s no pensions, No welfare. There will be no money.
So if you want to spend lots of money, you are going to have to defend the destitution you’ve caused.
OldLb
Bollocks from you. I’ve posted the numbers, the correct counter from your side, if you want to make your case, is to put your numbers out there.
That the state owes people for its pensions is not some secret. Its blatent. It isn’t optional. People have paid up front, or in the case of civil servants, worked for their pensions.
Only an idiot would think otherwise.
Why do you think that the state doesn’t owe anyone for a pension and that the pensions (or welfare if they don’t pay) is optional?
DJT1million
Ahhhh….the penny drops.
I think I have tangled with you before only then you had a different username.
Same old story though, you know The Truth and everyone else is talking ‘bollocks’ as you so charmingly put it.
OldLb
6.5 trillion of pensions debts.
734 bn a year increase in those debts, plus another 120 bn of deficit spending on top.
Given taxes are 600 bn, its not a case of won’t pay, it is can’t pay.
Same bollocks from you as usual. To sum up your argument, I can’t make a case so lets just try and rubbish the messenger not the message.
Very simply, you might make more of an argument for your side, if you put up the numbers as to what the state owes for its pensions.
Now lets assume you work in the public sector. If so, its particularly dire for you. A considerable chunk of that debt is public sector pensions. On top, this doesn’t include the guarantees for the funded public sector pensions. Note that funded means, should be funded. Many of them, such as the LGA pension funds are in a dire position with liabilities double the assets.
So it will come down to who gets hit. Will the public decide that they won’t get their state pension so PS workers can get theirs? Will they forego the NHS so PS can get their pensions? I think not. Outnumbered the PS workers will lose.
Take the recent changes. CPI not RPI knocks 15% off your pension. Retirement age will be pushed in line with the state pension. For each extra year, its a double whammy. More contributions to pay to other people. Less payouts.
If we take the rise in the state pension age of 2 years, that’s a 20K a year loss for a 26K a year worker. 2 years less payouts, 2 more years of NI.
All as a result of not being able to admit to a Ponzi fraud. It is a fraud, sections 1-5 2006 Fraud act. False accounting leading to a risk of loss.
DJT1million
Thought so…..I just had a quick look at my own history and you provided exactly the same arguments with pretty much the same text only then you were known as LB, that was 3 months ago.
I did try to argue in detail with you then however quickly realised that you have one argument featuring one set of figures you had compiled and very little to say outside of those strict confines you had created for yourself which rendered a conversation or debate pretty much pointless. What was true 3 months ago remains true today and I will not be drawn into another pointless conversation with you again. I bid you goodbye.