On 25 June David Cameron bid to shore up his support on the Tory right by floating plans to cut welfare benefits.
All the proposed cuts would come on top of what’s already under way: drastic cuts in housing benefit and in eligibility for disabled benefit; increases in the state pension age; and more.
Cameron pitched his proposals as an appeal to hard-pressed working people who pay taxes and end up no better off than jobless people on benefits; and as a drive to get people into jobs.
He ignores six facts:
• 2.65 million people are unemployed. There are 2.65 million fewer jobs than there are people trying to get jobs. If all the jobless suddenly improved their job-getting abilities, that might “churn” the figures — some people currently with jobs would lose them, and some people without would get jobs — but there would still be 2.65 million jobless.
• Of those who have jobs, 1.4 million can only get part-time work, though they want full-time.
• The Government is rapidly cutting public-service jobs. At present, the number of private-sector jobs is rising a bit. That’s a recovery from the drastic private-sector crash in 2009 that would happen more or less whatever the Government did. With the global economy at best depressed, there is no guarantee that small increase of jobs will continue.
• Real wages are being pushed down, in part by the Government’s public-sector pay freeze. The pay of bosses of the top 100 companies rose 10% in 2011, but the income of a middling household fell 3.2%, to below its 2004-5 level. The government has cut the top income-tax rate back from 50% to 45%.
• The government is cutting the legal minimum wage in real terms. In October, the money minimum-wage rate will be increased just 1.8% for over-21s, and not at all for under-21s. Inflation is 2.8% (CPI) or 3.1% (RPI).
• Many, in fact most, benefits are claimed by hard-pressed working people who have jobs but low pay. The proportion of households “in poverty” which are also “in work” has been increasing for a decade. More than half of all children “in poverty” live in “working” households.
For example, Cameron proposes to abolish housing benefit for people under 25, unless they can prove (how?) that they had a “terrible, destructive home life”. But many people under 25 claim housing benefit because they move to find a job, and can’t instantly find a permanent one well-paid enough to pay the rent. Should stay with their parents in areas where there are no jobs?
For example, Cameron spoke about housing benefit as if it is claimed only by the jobless. But 93 per cent of new housing benefit claims made between 2010 and 2011 were made by households containing at least one employed adult. The high housing benefit bill is a subsidy by the Government to profiteering landlords, generated by the refusal and then failure of successive governments to invest in cheap social housing.
The official Labour Party response to Cameron, from Work and Pensions front-bencher Liam Byrne, was piffling. “Chaos at DWP is stalling the Government’s reforms... The Government’s welfare plans are shambolic...”
The labour movement should say: tax the rich heavily — not just income, but wealth. Nationalise high finance, and reorganise it as a public banking, pensions, and insurance service under democratic and workers’ control.
Redirect investment to expand affordable social housing and public services, and thus create good, useful jobs for all!
According to the Royal College of Nursing, the Government’s cuts have already taken 26,000 “front-line” NHS jobs, and are set to take another 35,000. Already the number of teachers in schools has been cut by 10,000.
Cameron sketched a big range of cuts, some of which he will discard as unworkable when they’ve done their job of rallying the flog-the-feckless brigade.
The proposals include:
• Axing housing benefit for under-25s. (Currently 385,010 under-25s claim housing benefit, of whom 204,450 have children).
• Excluding people on higher incomes from council housing (and maybe also from housing-association places).
• Uprating benefits only by the lower of prices and wages, so that they decrease both in real terms and relative to wages.
• Cutting benefit rates for those out of work for long periods.
• Further “capping” housing benefit so that large households in expensive areas have to move or become homeless.
• Cutting income support and possibly child benefit for single mothers if they have three or more children.
• Cutting off benefits after a time unless you pass a literacy and numeracy test.
• Making full-time “work for the dole” compulsory after a time.
• Refusing benefits to school-leavers until after they have first had a job.
• Paying welfare benefits “in kind” (vouchers?) rather than in cash.
Instructively, Cameron’s proposals do not include cuts in state pensions, or in other payments to the elderly such as free bus passes or winter fuel payments. Cameron started his speech by boasting that the Government has committed to raise pensions in line with whichever rises faster, prices or earnings, and to fold the complicated pension-credit system into an increased basic state pension.
He skated over his government’s plans to raise the state pension age; but it’s true that benefits for people who are currently past pension age, or nearing pension age, are surviving this government’s cuts much better than benefits for younger people.
By now, possibly for the first time ever, people in their 60s are on average better-off, and less likely to be in poverty, than people in their 20s (Financial Times, 16 March 2012).
Older people have become better-organised, have campaigned harder, and use their votes more. The labour movement has failed to organise, inspire, and mobilise young people sufficiently. That is why Cameron’s proposals specially target younger people.