Welfare reforms: Freezing benefits punishes the have-nots
Having strategically reshuffled the Cabinet to include more Conservatives to the right of the party, plans to cut public spending in the second half of parliament seem to have stepped up. At the same time a group of young Conservative MPs to the right of the party made up of five of the 2010 intake, Kwasi Kwarteng, Priti Patel, Dominic Raab, Chris Skidmore and Elizabeth Truss, are publishing a new book called Britannia Unchained. It claims that, "Once they enter the workplace, the British are among the worst idlers in the world" and argues for new work reforms and a better work ethic.
Kwarteng argues that part of the problem is that,
We have created a culture in which people can, as a lifestyle, opt not to work.
With high inflation and slow wage growth, the cost of living for those in work is getting tougher. On the other hand benefits have seen a small increase because they are linked to inflation. The coalition has revealed that it will freeze benefits and then prevent them from increasing ahead of wages. The Institute of Public Policy Research thinks that over the last year had benefits been uprated in line with earnings the government may have saved £5bn. This is part of their commitment to cut public spending and reduce the benefits bill. The change should also make it more rewarding to work than to live off benefits.
This idea of the need for welfare reform can be seen in this year’s British Social Attitudes survey which shows that around 60% of people believe benefits are too high and discourage work with fewer than 20% believing benefits are too low and cause hardship. Public attitudes towards benefits show that Britons are more disgruntled with the benefits system, thus justifying the coalition’s cuts.
However the perception and reality are very different. Chris Goulden from the Joseph Rowntree Foundation argues that the generosity of benefits is overstated. He argues that,
benefits for children and pensioners have increased but benefits for working-age adults (e.g. Job Seekers Allowance) have slipped behind…The bitter irony is that childless, unemployed adults now – likely to be at the forefront of public ire about 'scroungers' – are the one group who have become persistently worse off over the last 30 years.”
The target of the freezes is most likely to be those of working age, but Goulden says that with the current changes to the benefits system, poverty is predicted to increase so any further cuts will lead to a bigger rise in poverty. Among the benefits affected are Job Seekers Allowance and housing benefits. Whilst this cut would reduce the welfare budget and ease cuts in other departments, it will not punish supposed idleness and incentivize work. This is because in order to claim JSA an individual must be actively looking for work, and over 50% of all housing benefits claimants are currently in work, so there is no added incentive here. In fact they are caught in a poverty trap.
Other arguments state that cutting benefits is counterproductive to stimulating the economy because the poor are more likely to spend their money than save it. This argument was made by none other than Iain Duncan Smith MP. The Liberal Democrats resisted a similar change last year protesting about the affects it had on low-income groups.
The 'haves' vs the 'have-nots' dichotomy in which many feel that the have-nots are just lazy, lifelong dole scroungers is far too simplistic, crude and often at times ideologically driven. The British Social Attitudes survey, comments by Kwasi Kwarteng and the current UK government policy exaggerate and embellish the extent to which worklessness is a problem.
The government has framed the discussion as a problem of people not wanting to work, but in reality one of the main problems is that there are no job opportunities because of the government's own short comings in improving the economy. If we are not careful, policies which aim to tackle the issue will attack the most vulnerable, those in work but on low wages, and fail to solve the root of the issue.