Who benefits from benefits?

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It’s time to tell a different story about where public money goes and who benefits from benefits. We need an alternative to the current narrative from the government about “hardworking people” who “do the right thing”, who end up paying for those who aren’t working. However, the chart above shows that the spending on people on the edge of society who are working hard looking for a job is a very small part of social security spending. And the changes to Job Seekers Allowance means that it can be very hard to do all the right things required of you to avoid a sanction. (I took the chart from this blog and the information in it comes from this government paper on page 57).

Huge amounts are spent on pensions, but I’m not going to go there…

Four times as much money is spent on housing compared to unemployment benefits, and the housing benefit bill has been steadily rising. Housing benefits pay rents which people would otherwise not be able to afford. But this safety net means that rents can rise as they are not held back people’s ability to pay. This is the logic of capping housing benefit, so that it doesn’t continue to fuel rent rises. But who suffers the most with this policy? Those who can’t afford to pay rents. This takes power away from the already pretty powerless, and cedes more power to the powerful. Those with little power or money have little choice and are at the mercy of uncaring landlords providing poor accommodation. Meanwhile hundreds of thousands of pounds of public money is being paid to wealthy private landowners, making the rich richer, as this article explains.

Capping rent not benefits would cut the benefit bill but this time the change to the balance of power would be in favour of the weakest. I don’t believe that we should kneel before the altar of the market, but if we want to use market forces, a better way of reducing prices would be to increase supply, especially as rising prices can’t diminish demand of what is an essential rather than a luxury good. This means building more houses, which would also increase employment. And as it would be a good idea to make sure these houses were affordable and not susceptible to soaring rents, why not let them be council houses?

We need to join the dots. Giles Fraser writing about why the church should be angry about welfare policy, says that homelessness in London has risen by 60% in two years. We do have choices, and I believe we need to make choices which don’t just make economic sense, but choices which protect the most vulnerable in our society. So in this case, that is the tenant and not the landowner.

And while we’re on the subject of public money going to already wealthy private individuals, lets join some more dots up and widen it out to private companies. Take another look at the chart above and the figure paid out to families and children. Some of this will be child benefit, a universal benefit. There are good reasons to keep benefits universal, not least so we all have a stake in our society, but that’s another subject. The rest includes child tax credit and working families tax credit. This is paid as a “top-up” to ensure low-paid families can still afford a reasonable standard of living, and tries to ensure being in work pays more than not being in work.

This is somewhat at odds with the government’s narrative. Hardworking families who are doing the right thing still need to claim benefits, because they are not earning enough. Maybe this is to do with working part-time because of issues around childcare. Or maybe because there are only part-time jobs available (I talked about underemployment in my last blog). But plenty of these benefits are paid out to people working full-time but still considered to be earning too little for a decent standard of living. How can this be? How can it be that it is possible to work full-time and still not be able to afford to pay the bills and feed your family? Surely that’s why we have a minimum wage? But sadly, since its introduction in 1999 its value in real terms (taking into account rising prices) has been declining since 2010. An independent body calculates the hourly rate required for someone working full-time to earn enough for a decent standard of living, and this is know as the Living Wage.

Meanwhile, non-Living Wage employers are paying minimum but inadequate wages, which need to be topped up out of public funds. Some of these employers may be small businesses struggling themselves, which is why the Living Wage is a voluntary scheme. But plenty of these businesses are large firms making large profits. Supermarkets are a classic example. A quick scan of the list of living wage employers did not reveal any supermarkets to me, and yet they are posting huge profits. Profits built on low-paid workers subsidised by public money.

I don’t know what difference my little blog will do. But we need to talk about these things. We need to challenge anyone who says we cannot afford our welfare bill. Protecting the vulnerable is a key function of a civilised country. Our spending needs reform, but reform should protect the interests of the weak not the powerful. We are all stake-holders in a system which protects us when times are tough. The powerful have the capacity to protect their own interests, and they are doing very nicely at this thank you very much (Church Action on Poverty estimates tax dodging costs the UK at least £45 billion a year). A lot has been said this week about the morality of welfare reform. The Bible is full of exhortations to support the poor and the weak, to be a voice for the voiceless, especially the Old Testament. But I came across this the other day. Right at the heart of his plans to spread the message about Jesus, Paul says this: “All they asked was that we should continue to remember the poor, the very thing I had been eager to do all along.” (Galatians 2:10, NIV)

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