The welfare state really does go to the deserving

The cuts announced this week to some benefits have predictably focused attention once again on the UK’s allegedly unaffordable welfare bill. Aside from the discussions on child benefit, which you can find almost everywhere, was the additional announcement that no households, with the exception of those households containing people with disabilities, would be allowed to claim benefits that totalled above the median income – which is roughly £25,000.

Predictably, this has been used as an excuse by some tabloid newspapers to trot out the usual clichés of large families on benefits having a laugh at the expense of hard-working citizens. The clichés were further expressed by culture secretary Jeremy Hunt telling Newsnight that the cuts would encourage people to take responsibility for the choice of the amount of children they have.

The usual myths about the benefits system are proving to be a useful cover for the coalition in its deficit reduction plan.  In reality the number of families claiming more than £25,000 in benefits is going to be so small that the savings to the treasury are negligible. Even then the reason these families are claiming so much in benefits is down to the absurdly high levels of rent in London and a few other parts of the country. In other words the benefits are effectively going to private landlords and financial institution rather than funding a hedonistic lifestyle of an allegedly irresponsible family. I’ll leave it to readers of this blog to draw their own conclusions of what the effects on the financial industry will be of reducing housing benefit that repays loans.

At the EY2010; building a fairer Wales conference a couple of weeks ago, one of the main conclusions reached was that the provision of educational opportunities was important for people in poverty. But so was the need for educating the rich and powerful about poverty. Such is the ignorance about the reality of poverty. In a similar way, there is a need for greater understanding of just how the allegedly unaffordable welfare bill is spent. So in the interests of public service I have produced the table below showing where the £87 billion spent on welfare actually goes (this figure excludes pensions and some benefits such as the winter fuel payment). The data is based on a spreadsheet available here

The table above shows the greatest area of spending is actually on tax credits – which are received by people in work (tax credits).  When one also considers that the majority of recipients of housing benefit, child benefit, maternity pay and council tax benefit, are people working and in employment, it is clear that the welfare bill is really not about subsidising feckless lifestyles and more about subsidising low pay. Furthermore the areas of spending to people not in employment are those benefits aimed at people who cannot work such as disability living allowance, incapacity benefit and carers allowance. It is blatantly obvious from the table above then that benefits cannot be cut by the 25% target without significantly harming people in employment or with disabilities.