Maintaining social security

idsby Joseph Markus

Over the past few days much has been written seeking to predict the course of events in the New Year. Among the left-leaning columnists and writers, social security – a “war over benefits” – tops the list. That this is the case should not surprise anyone. This year will be the year when, for the first time, social security payments will fail to keep pace with the rising costs of living caused by inflation. We have also seen Iain Duncan Smith, Secretary of State for Work and Pensions, unleashing splenetic attacks on the alleged overspending of the last Labour government, most recently in relation to tax credits. This is the same Mr Duncan Smith that believes in the Romney-esque mantra that the worst possible thing that society can do for the poor and out-of-work is to maintain their “dependency” on the state.

As usual, these views depend on a number of ideological leaps. IDS, for instance, seems either to ignore or to minimise the relevance of the fact that the unemployment rate stands at 7.8%. In effect Mr Duncan Smith’s reaction is this: he is affronted by the temerity of jobseekers who continue to claim benefits while failing to locate jobs that do not exist.

tax benefitsAnother distinction – routinely enunciated by the Chancellor and Prime Minister – is that between “skivers/shirkers” and “strivers”. The idea is to demonise a whole category of people with a sweeping and unsupported generalisation. Well the first important fact to keep in mind is that the changes to social security will affect strivers as well as skivers. The Resolution Foundation has clarified that “far from hitting only the out of work, 60% of the value of the £3.7 billion cut [arising from the 1% uprating proposal] would fall on in-work households”. Second the distinction is based more on prejudice than evidence – never a good basis on which to set policy.

His views also rely on a good deal of mendacity. Principally the doctrinaire belief that Labour were profligate with the benefits bill. However his claim that 10% of spending on tax credits was lost to fraud was simply false, as was his analysis of the total spending under the Labour governments and when it took place (he alleged that large spends immediately preceded the 2010 general election). In any event the sum lost to tax evasion is considerably larger and the moral case for collection considerably stronger.

Similarly, Mehdi Hasan writing for the Huffington Post makes clear that benefit spending as a share of GDP fell during the first 11 years of the last Labour government. The bill only began to rise in 2008 after the financial crisis and the beginning of mass unemployment. The claim is also routinely made that social security spending is out of control – so it must be cut. But it is rarely – if ever – made clear that the majority of welfare spending, some 53%, is on pensioners. No one is suggesting that this significant portion of the budget should be reduced.

Putting these factors to one side, however, what is most disturbing is the detachment of the idea of benefits from that of social security. Instead we see the American import – “welfare” – figuring more regularly in political discourse. This interloper does not imply the same type of security and solidarity. Rather the concept emphasises the discretionary nature of the payments. On this understanding, the state acts charitably in making welfare payments. And, as with the growing number of food banks, it remains a choice – based in gift and charity – as to how much to give at any point.

One argument underlying this detachment is that the real wages of private and public sector workers are not keeping pace with inflation, so why should the income of the out-of-work rise any faster? The argument can easily be turned around – an attribute of an argument that actually proves nothing. The better point is that we ought not to encourage this type of “race to the bottom”. The government’s reductionism cannot deal with the argument that social security should provide a minimum floor to enable individuals and families to live a minimally-decent life when work is not available. Similarly, low wages on the part of some does not justify low incomes for all. The ultimate problem lies somewhere else.

george-osborne-pic-pa-334776670There are larger issues lurking in the background: chronically low wages, chronic un- and under-employment, a low social-housing stock, and persistently high rent in private housing are four of these. Those issues generally remain unaddressed as the Treasury insists that the other Departments pick up the slack from George Osborne’s misguided austerity “economics”. It’s also important to emphasise that I’m not suggesting that no benefits-reform is necessary. But any reform must remain in touch with the guiding principles behind the system: that it exists for social security.

All things considered, the New Year is likely to be tough for those who are not in work (and perhaps even for those who are). For the time being, at least, the terms of the welfare debate continue to be set by the government. The Chancellor is anxious to paint Labour as the party of profligacy – a party that cannot be trusted at a time of economic retrenchment and crisis. For the New Year, my hope (no predictions here!) is that the opposition are able to reclaim the valuable language of social security and solidarity and reveal precisely why the Tories continue to be the nasty party.

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4 comments
  1. if ever there was a scrounging toad, it’s the average politician who offers his services to whoever has the greatest influence. And, unfortunately, the people who have to scrape by on benefits have no influence whatsoever.

  2. I find the assertion that this is the first year that social security payment increases will fail to keep up with inflation is just flat wrong. I think this has been going on for many, many years. Where is the supporting research to back up this assertion?

    • josephmarkus said:

      I didn’t mention the fact that benefit payments have been “chained” to CPI rather than RPI since around 2011. But as far as I know payments have never been chained to an arbitrary number, set well below the possible rate of inflation. Of course I’m happy to be proven wrong! At any rate, for me at least, the difficulty with the 1% uprating is the fact that, unlike with CPI, the government has given up any semblance of keeping benefits in line with living costs.

  3. senex72 said:

    It would seem that the Liberal(Dem) Party alliance with the Tories now has made possible the destruction of welfare and continuance of cheap labour now just as it did in the ‘thirties, by choking back channels of criticism; otherwise available and doing sot at time when Eurooe was then introducing paid holidays and social improvements as a response to the last Depression.

    Perhaps we need tro get our targets right?

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