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LET’S CALL THE WHOLE THING OFF – YOUSSEF EL-GINGIHY        

We’ve heard it all before. Welfare is not working. A something for nothing culture. Britain is broken. Why? Because Labour created this mess by maxing out the nation’s credit card. They went on a spending spree, splashing out on skivers and scroungers whilst the rest of us were working hard. So what is to be done? We have to deal with our massive debts like any sensible household. Austerity may be a nasty medicine but there is no alternative. Besides, we’re all in this together.

It’s certainly a seductive story. The slogans deployed have scored precision hits against the social democratic consensus. The devices and framing of the austerity narrative have embedded into the public’s consciousness to the degree that rebuttal with mere facts is not enough to dislodge opinion. It also goes some way to explaining how the most radical upheaval of the welfare state since its inception, cutting £18 billion a year in benefits by 2015 (to be followed by a further £10 billion a year projected for the next parliament) in the context of the largest post-war public spending cuts, should be met with such equanimity by the public.

In fact, polling shows that the Coalition’s flagship policies on welfare reform are popular. It seems we have all become advocates of a fetishistic tendency for sado-masochism a la Fifty Shades of Grey. The Conservatives appear to have played a blinder. Miliband’s team and the Labour policy circle have skirted cautiously round the welfare debate; aware of how politically divisive it has become. All three main parties vie to outgun each other in testosterone machismo cloaking themselves in the rhetoric of the ascetic necessity for cuts and talking tough on welfare. Osborne has declared that austerity cuts may be extended until 2020 whilst Ed Balls plans to extend spending cuts should Labour come to power in 2015. Such connivance has made the bitter pill of massive cuts palatable for the public.

Which brings us to the million-dollar questions. How did the welfare debate become so toxic? When did the idea of claiming benefits become equated with being a social pariah? If the welfare system is indeed broken then what does this actually mean? Is the Conservative diagnosis and prescription the correct one or are we in the territory of smoke and mirrors in which we are being deflected from other realities; in which the very notion of benefits scroungers has become a proxy for the real problems?

No less a reputable body than the Institute for Fiscal Studies (IFS) has demonstrated that the reasons for the increase in the deficit were not due to excessive public spending pre-2007 but, unsurprisingly, down to the effects of the financial crisis. The Tories have succeeded in converting a private sector crisis in financial services into a public sector crisis centred on excessive spending. This translation would appear to be at the heart of the entire policy debate. Despite this horribly flawed basic premise, Labour have been hapless at correcting this fallible revisionism of recent history.

 

An unrelenting campaign from the right-wing press has demonised the welfare state to the point that it has become a pejorative term. Professor Martin McKee has pointed out that, through the near-constant deployment of negative imagery, the automatic word association of benefits and scroungers has become deeply entrenched in the public mind. A deceptive picture of modern Britain has been created in which a large underclass of benefits scroungers are parasitically living off the fat of the land whilst rampaging hordes of migrants are besieging this sceptred isle. Once this hostile rhetoric is peeled away then it becomes apparent that reality has been unrecognisably distorted and the electorate manipulated.

 

In his Conference speech in 2012, Osborne painted a picture of hard-working people – the strivers – in opposition to benefits claimants – the skivers – that chimes with a substantial section of public opinion.

 

“Where is the fairness, we ask, for the shift-worker, leaving home in the dark hours of the early morning, who looks up at the closed blinds of their next door neighbour sleeping off a life on benefits? When we say we’re all in this together, we speak for that worker. We speak for all those who want to work hard and get on… They strive for a better life. We strive to help them.”

That the strivers versus skivers dichotomy is over-simplified and misleading is self-evident as the New Economics Foundation (NEF) have shown in their Mythbusters series. Yet it is the comic resonances of Osborne’s sketch that seem to pull one in. The notion that the topography of urban 21st century Britain regularly juxtaposes middle class strivers and the underclass of benefit skivers on the same street perhaps reflects how cut off from the real world the Conservative top brass are. As the full force of welfare cuts come into effect with consequential social segregation as central London and other affluent centres become unaffordable for benefits’ claimants then the possibility of neighbourly strivers and skivers will have become a distant memory of a bygone age.

 

Based on the Coalition’s aggressive programme of cuts, the International Monetary Fund (IMF) predicts that the UK’s share of public expenditure as a proportion of GDP is set to fall from mid-table (compared to other major capitalist economies) right to the bottom. In other words, Britain will have proportionately the smallest public sector; smaller even than the USA. The IFS predicts that 1.2 million public sector jobs will eventually go by 2018 and have stated that, ‘The cuts announced were part of the biggest fiscal consolidation since the war. At any other time they would have been considered extraordinary. And there is much more to come’. The Coalition is embarking on an accelerated neoliberal programme of state shrinkage and downsizing of the public sector. And the IMF knows a thing or two about that.

So what are the hard facts about benefits once we peel away the flimsy carapace of propagandist rhetoric. Let’s start with that tabloid favourite – the genus of benefits’ fraudster. When the TUC polled the British public on welfare, the results revealed huge discrepancies between perceptions and reality presumably in some way linked to being on the receiving end of years of unrelenting propaganda. The average Briton thinks that 27 % of the welfare budget goes on benefits fraud. The reality is 0.7% according to the government’s own figures from the Department for Work and Pensions (DWP) or £1.2 billion. To put that further into perspective, the DWP’s figures show that the amount underspent on benefits due to error (ie. claimants receiving less than they should have) was greater at 0.9% of the budget or £1.4 billion thus more than cancelling out benefits fraud.

Nigel Farage and UKIP have made much political capital out of exploiting the public’s fears on uncontrolled immigration and how this impacts on public services and welfare. Again the data presents an almost diametrically opposed picture to the one we are accustomed to. The Economic & Social Research Council has shown that the net fiscal impact of immigrants is positive. To take a few examples, Eastern European migrants pay in 30% more than they take out in benefits. 2 million net Eastern European migrants moved to the UK between 1997-2009 and yet, in 2011, only 13,000 were claiming Job Seeker’s Allowance. Migrants are less likely to take out benefits than British nationals. Of 5.5 million benefit claimants, only 6% are non-EU migrants. And on it goes.

These figures and patterns are corroborated by various studies. The Centre for Research and Analysis of Migration at UCL ‘concluded that between 1995 and 2011, immigrants from the European Economic Area contributed £8.8bn more than they received in benefits. That compared with a drain on the nation’s finances of £604.5bn by native Britons’. “Between 2001 and 2011, recent EEA immigrants [had]….a net fiscal contribution of about £22.1bn”. Non-EEA migrants were also net contributors, albeit more modestly, putting in around 2% more than they took out. Whilst the National Institute for Economic and Social Research ‘concluded that those industries with higher shares of migrant workers had higher labour productivity’. 1

There has been an ongoing spat between the Conservatives and the EU, which has demanded evidence for the claims of ‘benefits tourism’. The European Commission’s latest study again emphasises that EU migrants are net contributors to the UK welfare system. They also point out that Iain Duncan Smith’s claim in 2011 that EU citizens were costing the UK £2 bn in benefits has been revised down to £150 million and even the evidence for this figure has not been forthcoming 2. The same study points out that ‘jobless EU migrants form 1% of the total EU population. In the UK the figure was 1.2% in 2011 and 2012’. Meanwhile, ‘non-active EU migrants account for 0.2% of total health spending in the EU, on average’ again underlining how health tourism is largely a myth. 3

And what of that hobby horse of the anti-benefits squad – unemployment benefits. In the TUC’s polling, the average person thinks that 41 per cent of the welfare budget goes on benefits to unemployed people, while the true figure is under 3 per cent. Job Seeker’s Allowance is currently at around £71 and thus represents one of the least generous rates in comparable economies with one of the steepest falls from average earned income. As Ian Mulhearn from the Social Market Foundation points out, on becoming unemployed, a single childless person on average earnings in the UK faces the biggest drop in income of any jobless person anywhere in the OECD. Hardly the life of Riley then. Again, Mulhearn’s work disproves and dispels some of the common myths and misconceptions. The majority of JSA claimants are back in work within a year. Furthermore, three-quarters have spent less than a quarter of the past four years on the dole and 40 per cent of claimants have an otherwise unblemished employment history. For all the machismo about talking tough on welfare, it appears to be the Conservatives, who can’t handle the truth.

IDS’ team state that Disability Living Allowance is spiralling out of control with 3.1 million claimants being triple the amount when it was introduced in 1992. However, claimants keep DLA when they retire so as the number of people retiring increases so does the number of DLA claimants. The numbers of people with physical conditions claiming DLA have not increased, in spite of a larger population, due to the decline in heavy industry. However, there has been a real growth in numbers of people with learning disability for example as premature babies survive and life expectancies increase with improved medical care. As for mental illness, 7% of people are seriously ill enough to claim but only 1% do with psychosis being the most common cause. The pattern of disability mirrors the patterns across the OECD. 4

So how about the notion of a something for nothing culture; that benefits foster an ethos of dependency and fecklessness. According to the Joseph Rowntree Foundation (JRF), under 1% of workless households might have two generations who have never worked – about 15,000 households in the UK. To quote the Economist: “Though most of them seem to end up in newspapers, in 2011 there were just 130 families in the country with 10 children claiming at least one out-of-work benefit. Only 8% of benefit claimants have three or more children. What evidence there is suggests that, on average, unemployed people have similar numbers of children to employed people … it is not clear at all that benefits are a significant incentive to have children.” Of course reading the tabloids, you would be forgiven for thinking that we are living in the midst of one of the great epidemics of modern times; a bubonic plague of benefits scroungers of unmanageable proportions. In fact, spending on welfare as a proportion of GDP has been remarkably stable. To the extent that there has been an upward trend, this is due to increasing numbers of pensioners. Benefits spending on those of working age and children has actually been flat; rising and falling in and out of recessions. The number on out of work benefits is a full million below its peak level in the 1990s.

It is astonishing that this pernicious web of lies has been spun largely unchallenged; that the construction of this vast edifice of fabrication has been permitted. Yet the powerful mythology surrounding benefits comes tumbling down with the slightest pressure; crumbles at the gentlest application of logic or rationality, shatters and splinters on exposure to mere facts.

PART 2 TO FOLLOW….

  1. Immigration brings economic and fiscal gains for UK, reports show FT 5/11/13
  2. David Cameron and Europe at odds over benefit tourism issue – Guardian 15/10/13
  3. EU study on migrants rebuffs ‘benefit tourism’ claims – BBC SITE 14/10/13
  4. Ideology meets idiocy in these brutal disability cuts – Guardian 29/10/13
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