Cameron’s hamstrung Exchequer
THE NATIONAL tabloids are often full of foaming at the mouth headlines about ‘scroungers’, stories about ‘dole fiddlers’, and tales expressing horror that some people pretend to be ill to get disability benefits.
That is nothing new and it is conspicuous that there is a spike in such stories (particularly involving those from outside the UK) when governments of whatever complexion have announced ‘welfare reform’ (cuts) ‘designed to deliver to those most in need’ (not those in most in need).
WHERE THE MONEY GOES: PENSIONS
Welfare spending makes up around 35% of the UK Government’s spending and totals over £260b per year. However, ‘welfare’ is a broad term and only a fraction of welfare benefits spending is on unemployment benefits.
The largest amount paid out in welfare benefits is for pensions and the Office for National Statistics’ last available figures show that £108b of the £258b welfare spend in 2014/15 went on pensions.
In fact, total pension spending has increased by 25% since the financial year 2010/11. This isn’t surprising as life expectancy has been steadily increasing, so state pensions are being claimed for longer. The remaining life expectancy for someone aged 65, in 2016, is 21 years for a man and 24 for a woman.
What that means is that the idea that people have ‘paid in what they get out’ is increasingly untrue. Some of those claiming pensions will have contributed comparatively little to their state pensions, whereas actuarial calculations on future pension need carried out when older pensioners were working would have been predicated on them dying within a few years of retirement. The fact that we are all living longer means that the proportion spent on pensions is likely to continue to rise just at the point when the working age population which funds the spending is in decline.
WHERE THE MONEY GOES: CARE AND DISABILITY
£29 b is spent on personal social services. About £41 b goes on benefits for people who are ill or disabled, while £10 b goes on elderly care payments. Disabled people are more likely to live in deprived areas and work in routine occupations. In the 2011 Census, 18% of people (10 million) reported some form of disability.
As for elderly care, there were 9.2 million people aged 65+ in 2011, making up 16% of our population. The care home population has actually stabilised over the last decade at around 300,000 people, but there has been an increase of 600,000 people (likely family members) providing unpaid care between 2001 and 2011. In total, 5.8 million (10%) provided unpaid care in England and Wales in 2011, and the majority were of working age.
W HERE THE MONEY GOES: POVERTY AND THE UNEMPLOYED
£44 b goes on family benefits, income support and tax credits. This includes benefits such as child benefit and support for people on low income. Around £3.5 b goes to the unemployed.
There were around 3 million people in in-work poverty in 2013. This meant their household income (adjusted for household size and composition) was below the poverty threshold and were in employment themselves. The 10% of households with the lowest disposable income spent an average of £196 a week in 2013. Of this, half (£98) was spent on food and non-alcoholic drinks, transport, housing (including net rent), and household fuel and power.
As for out of work people claiming Jobseeker’s Allowance and Universal Credit, there were 760,200 people claiming these benefits in January 2016. This number has decreased by 11.2% compared with a year earlier
WHAT ABOUT FRAUD?
The notion, often pushed by the tabloids, is that there is a massive amount of benefit fraud. A poll carried out by the TUC in 2012 revealed that British people believed that 27% of benefits were claimed fraudulently.
To describe that as a ‘wild overstatement’ does not do how wrong it is justice. It seems to be one of those figures arrived at on the basis that ‘everybody knows’, rather than being remotely founded in reality.
The actual level of all fraud in the UK’s welfare benefits system was 0.8% in 2014/15.
While that is the amount of detected fraud, to suggest that it is completely out of line with actuality is to ignore the fact that the UK government employs 12 times as many benefits fraud investigators than it has tax fraud investigators.
The UK loses six times more through tax evasion and aggressive tax avoidance than the total value of fraudulent welfare benefit claims. Moreover, the UK fails to collect £34b in tax each year. And that is providing you accept the UK government’s figures, which are disputed by some economists as a wild underestimate.
While benefits fraud is an issue, there is an argument that the amount of time spent on it and the amount of publicity it receives is out of all proportion to the actual value of the fraud involved.
University of Warwick political scientist Adam Taylor said: “
This isn’t to say that benefit fraud is OK or that HMRC isn’t doing anything about tax evasion. But it is wrong that the government feels it can openly threaten the poor while merely cajoling the rich. And it is sad that the tax-burdened middle class reserve their outrage for the single mother working in the cafe while lionising the rich, famous and powerful who are getting away with it, tax free.”
Successive governments have been aware of the crisis facing benefit payments for over two decades and yet none of them has sought to do anything more than fiddle at the margins and target the most vulnerable and weakest members of society: the Cameron Government spent an enormous amount of political capital to no good end making an economically pointless adjustment to housing benefit with the hated bedroom tax. The projected savings from that policy were tiny.
In addition, the amount of direct tax paid by the working population is contracting along with the numbers of those in work and the changing profile of work economic activity.
In the past, when the welfare model was fixed, there was generally one full time bread winner per working class family in a job which lasted an entire working life. Stable incomes represented a stable and predictable tax yield. However, the change from a high labour manufacturing economy to a service-based one with lower labour requirements, altered the whole dynamic of working class life. Multiple part time jobs may reduce the number on the unemployed role, but lower income jobs pay less into the UK’s tax base.
So, the question that all governments face is how to provide people with the welfare benefits they need without upsetting voters who have to pay for them.
NO EASY ANSWER
The issue is particularly acute due to David Cameron’s 2015 promise not to raise National Insurance, Income Tax, or VAT. Where else, the question might fairly be asked, would the money come from? Especially as there is a guaranteed 2.5% increase per annum in the state pension.
Oh – and older voters and pensioners vote in far higher numbers than the young. On the basis that turkeys seldom vote for Christmas, you can guess why politicians are wary of doing anything to affect that demographic.
One thing is certain, fiddling at the margins is not enough. But whether politicians have the will to make the sort of changes needed to the UK’s tax and welfare system, is one of those questions to which there is no glib answer.
Which do you prefer, after all, higher taxes or cuts targeted at those least able to defend themselves?
Local coronavirus restrictions imposed to control outbreaks in South Wales
Coronavirus laws are being tightened in four more Welsh authorities – Blaenau Gwent, Bridgend, Merthyr Tydfil and Newport – following a sharp rise in cases, Health Minister Vaughan Gething today announced.
The new measures will come into force at 6pm on Tuesday 22 September 2020, to protect people’s health and control the spread of the virus in the four local authority areas.
The new restrictions will apply to everyone living in Blaenau Gwent, Bridgend, Merthyr Tydfil and Newport:
People will not be allowed to enter or leave these areas without a reasonable excuse, such as travel for work or education;
People will only be able to meet people they don’t live with outdoors for the time being. They will not be able to form, or be in, extended households;
All licensed premises will have to close at 11pm;
Everyone over 11 will be required to wear face coverings in indoor public areas – as is the case across Wales.
From 6pm on Tuesday 22 September, the requirement for all licensed premises to close at 11pm will also be extended to Caerphilly borough.
Health Minister, Vaughan Gething, said:
“Following the decision to place additional coronavirus restrictions in place in Caerphilly and Rhondda Cynon Taf, we have seen a worrying and rapid rise in cases in four other south Wales council areas – Blaenau Gwent, Bridgend, Merthyr Tydfil and Newport.
“In many cases, this is linked to people socialising indoors without social distancing. We are seeing evidence of coronavirus spreading. We need to take action to control and, ultimately, reduce its spread and protect people’s health.
“It’s always a difficult decision to introduce restrictions but coronavirus has not gone away – it is still circulating in communities across Wales and, as we are seeing in parts of South Wales, small clusters can quickly cause real issues in local communities.
“We need everyone’s help to bring coronavirus under control. We need everyone to pull together and to follow the measures which are there to protect you and your loved ones.”
The restrictions are being introduced following a rapid increase in the number of confirmed cases in coronavirus, which have been linked to people meeting indoors, not following social distancing guidelines and returning from summer holidays overseas.
The Welsh Government will call an urgent meeting of all local authority, health board and police forces from Bridgend to the English border tomorrow to discuss the wider situation in South Wales and whether further measures are needed across the region to protect people’s health.
The new local restrictions measures will be kept under regular review. They will be enforced by local authorities and by the police.
Keep Wales safe by:
Always keeping your distance
Washing your hands regularly
Working from home wherever you can
Following any local restrictions
Following the rules about meeting people
Staying at home if you or anyone in your extended household has symptoms.
Julie James AM attends the launch in Swansea of new research on benefits of Community Led Housing
JULIE JAMES AM, Minister for Housing and Local Government, attended the launch at Down to Earth in Swansea of new research from the Wales Co-operative Centre, with support from the Nationwide Foundation, which found that residents who live in community led housing (CCLH) experience improved mental wellbeing and happiness, as well as improved skills development.
Over 50 residents from 22 community led housing schemes across Wales and England were interviewed. The top benefits that residents highlighted were:
Residents felt less isolated, being surrounded by a supportive network
• Improved mental wellbeing and happiness
• A better quality of life with the potential for skills development and increased levels of confidence, as well as a better financial situation
• Wider benefits to the community including a reduction in antisocial behaviour and greater community collaboration
• Derek Walker, Chief Executive of the Wales Co-operative Centre, said of the research: “We were really pleased with the research findings and the range of softer benefits that residents have seen. As well as the expected financial benefits, there is a much wider impact on mental wellbeing and skills development which is great to see.”
Minister for Housing and Local Government, Julie James AM, said: “I have been overwhelmed in hearing the benefits residents gain from living in community-led housing. The difference tenants feel in terms of improved skills, increased confidence and improved mental wellbeing to name but a few – demonstrates why community-led housing can, and should be part of the solution to the housing crisis we face here in Wales. Building more affordable housing and providing people with safe, warm and secure homes is a key priority for this Welsh Government. I’m looking forward to watching community-led housing grow and flourish – and contribute towards our commitment to building 20,000 affordable homes during this Assembly term.”
Lib Dems slam ‘botched’ scheme
THE WELSH Liberal Democrats have slammed the Conservative Government for their “hapless treatment” of EU citizens after the Home Office released guidance on the new EU Settlement Scheme.
The Home Office has confirmed that for the duration of the trial period, until 30 March, EU citizens applying to stay in the UK must either use an Android phone or travel to one of 13 ‘document scanning’ centres instead.
For Holyhead, the closest ‘document scanning’ centre is Trafford.
According to an analysis by the Welsh Liberal Democrats, EU citizens travelling from Holyhead would face costs of £55 on the train for at least a six and a half hour round trip. The drive would be a 224-mile round trip costing around £56 in fuel.
The only document scanning centre in Wales is in Caerphilly. Travelling from Pembroke to Caerphilly and returning the same day by rail would cost £32.10 (the cheapest available fare at the time of enquiry), the cheapest off-peak fare from Aberystwyth would be £77.10 return. By car at an average of 40mpg, the cost of travel would be at least £27 to and from Pembroke, while from Aberystwyth the cost would be at least £25. Both car journeys represent round trips of over 180 miles.
Welsh Liberal Democrat Leader Jane Dodds said: “Too many people in Wales are deeply anxious about their right to stay. Many of them fill vital roles in the health service, our schools and the tourism sector. They want to register as soon as possible, but Theresa May’s hapless treatment of EU citizens could result in a new Windrush scandal.
“For anyone who doesn’t have an android phone, this botched scheme means they will have to travel. For people in Holyhead, that means facing a 224-mile round trip and paying over £50 for the privilege. This postcode lottery is simply unacceptable.”
Liberal Democrat Home Affairs Spokesperson Ed Davey MP said: “Following significant pressure, the Prime Minister said there will be no financial barrier for any EU nationals who wish to stay. How long did that commitment last?
“It is Conservative Ministers who have made a mess of Brexit. They should either pay the cost for EU citizens or change the application system and ensure EU citizens are made to feel welcome in the UK.
“Ultimately, the best way to avoid all of this mess is by giving the people the option to remain in the EU with a final say on Brexit.”
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