On Friday evening, a page entitled “We’re interested in your views about the fairness of our benefit reforms” popped up on the Conservative party website. It invited people to comment on the decision announced in the Autumn Statement that the Coalition want to limit increases in most welfare benefits by 1% for the next three years.
The language used on the website reflects that contained within the Autumn Statement document. Similarly, the main argument used for defending the 1% rise is that “since 2007, [out of work] benefits have increased by 20% whilst salaries have only increased by 10%.” For fans of Treasury produced graphs, this is reflected in Chart 1.14 of the Autumn Statement.
These figures are accurate. However, their use is very misleading and another example of how the language being used by the Coalition Government (and I use that term as it is not only the Conservatives who are guilty of this) distorts the impact that government policies are having on the poor.
Another way of comparing the increases in out of work benefits and salaries is to look at the actual monetary levels of growth. In 2007-08 Jobseeker’s Allowance and Income Support were set at £59.15 per week for over 25s. For 2012-13, these benefits are now worth a weekly amount of £71, an increase of £11.85.
Over the same period, average earnings have risen from £440 in April 2008 to a predicted level of £481 per week in April 2013 — a rise of around 10% or, to put it another way, £41.
So, while in percentage terms out of work benefits have increased by twice as much as average earnings over this period, in monetary terms average earnings have increased four times as quickly as benefits.
Returning to the Conservative party website, they next turn to the increase in the income tax threshold. They state that “anyone in work and receiving benefits will gain more from paying less tax, than what they lose from benefits not increasing in real terms.”
Firstly, I believe that the increases in the tax threshold are a real Lib Dem win in government and something that we should rightly boast about. However, this statement is clearly false. One of the things frequently forgotten about the tax threshold rise is that it doesn’t actually benefit the very low paid, i.e. those who earn below the threshold. As a result, the low paid who don’t gain from the threshold increase are in work and receiving benefits and will lose out from the 1% cap on benefit increases.
This group, the working poor, are among those who, despite our arguments otherwise, are bearing the brunt of the Coalition’s spending reforms. According to the Joseph Rowntree Foundation, 6.1 million people now live in poverty in Britain despite someone in their family going out to work. This is one million more than those living in poverty in workless households.
This statistic should shock Liberal Democrats.
I will readily acknowledge that the Autumn Statement was better for Lib Dem participation in the Coalition. There was no removal of housing benefit for under-25s, child benefit wasn’t capped after the second child, and, thanks to the triple-lock we introduced, the basic state pension is now at the highest share of average earnings in the last 20 years.
However, as a party we must also be ready to acknowledge that limiting welfare increases to 1% is a policy that will hit the same people who have already been impacted upon by the household benefit cap, the local housing allowances cap, the VAT increase and the changes to council tax benefit. It should also not be forgotten that the majority of people who will be affected by this latest welfare policy are in work.
It’s time that we stop couching welfare cuts in terms that pit those in receipt of benefits against those in work. Much of the time, these are one and the same. The Tory DWP Minister Lord Freud recently claimed that the poor have the least to lose. Maybe this is true, but only because they’ve had the most taken away.
* Jonathan Featonby is a Lib Dem Member in Bromley