Tag Archives: welfare benefits

New New Labour: a choice of poverty or work

A philosophy of cynicism and cruelty

As a country, we have a very long and complex history when it comes to how we treat our most vulnerable. In recent years, it is abundantly clear that our country has failed to treat these people with dignity. From the Elizabethan Poor Laws to the introduction of austerity, we have a pattern of taking one step forward, followed by two steps back — and this Labour government is no exception to the rule.

We have a government that solely values its citizens based on how much income tax they pay, disregarding the many other ways they may contribute to our society — whether through intellectual, creative work, or contributions to their communities. To believe that the value of a person is derived from economic output alone is simply cynical and callous, although the Treasury does not share that worldview.

Ideology above basic economic sense

Upon hearing the recent announcements regarding the incoming welfare cuts, I took it upon myself to research the harms that will be inflicted, beyond increased food insecurity and squalor. On the surface, one might think that if welfare spending is likely to spiral out of control, it would make sense to make cuts to rein it in. However, once you consider the harms of doing so, you will arrive at a very different conclusion.

Rachel Reeves and Liz Kendall would have you believe that welfare cuts will encourage people to enter the workforce and that our benefits are too ‘generous’ — even though the Resolution Foundation disproved this. Making our most vulnerable poorer will only make them sicker, not more inclined towards employment.

However, it doesn’t stop there — as we all know, bad policy leads to a domino effect of even worse outcomes. Whether you agree that current welfare spending is unsustainable or not, you cannot fail to recognize that making people poorer and sicker often comes with self-compounding economic harms:

  • Cutting benefits will inevitably lead to deeper poverty, increased NHS spending, and a reduction in employment figures — you won’t make people find a job by making them sicker.
  • Many claimants rely upon these benefits to afford care, whether that be social care or even from the private healthcare sector due to waiting lists. However, cuts to benefits such as PIP would distort both supply and demand in health and social care, due to reduced affordability, increased costs for local authorities, and unmet care needs — leading to inflationary pressure.
  • Health and social care won’t be the only sectors affected — it will reduce demand in retail and local business, as lower-income households tend to spend most of their income on essentials. Additionally, this could risk cost-push inflation.
  • We will see increased reliance on credit, as claimants will be left out of pocket by these cuts, leading to rising interest rates — a contributing factor to inflationary pressure.

Benefits such as Universal Credit and Personal Independence Payment have a stimulus effect, because recipients have a high marginal propensity to consume, which leads to higher spending in local economies, a fiscal multiplier effect, and increased employment and productivity. Cancelling that effect with cuts will affect everyone.

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12 September 2023 – today’s press releases

  • Wage Figures: Sunak must commit to triple lock now
  • NHS staff cannot be left to suffer in silence
  • Government may have broken law over sewage: “Environmental vandalism on an industrial scale”
  • Liberal Democrats welcome TfL’s new road safety charter

Wage Figures: Sunak must commit to triple lock now

Responding to today’s wage figures which would be used to uprate pensions, Liberal Democrat Treasury Spokesperson Sarah Olney MP said:

Rishi Sunak must commit now to the triple lock to ensure the state pension rises in line with the cost of living.

His failure to commit to the triple lock earlier this week will have left a cloud of uncertainty hanging over struggling pensioners. We also need a guarantee that welfare payments won’t be slashed in real terms.

Families and pensioners should not be made to pay the price for years of economic mismanagement under the Conservatives.

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Our party can seize on the spirit of the times

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Liberalism’s answer to populism, I believe, is to give people what they really want, not what the forked tongues of populism tell them they want. Hopefully in the USA a majority has now chosen a President to give them what they really want.

But here in Britain we still have a populist Prime Minister with his inadequate government. There is still Lockdown, winter weather and seasonal colds and ‘flu yet to come – and the looming problems of Brexit, with or without a last-minute trade deal, before most of us can expect to share in a new vaccine.

There is some comfort in the government’s U-turn on providing vouchers for free school meals in each holiday, and in the continuation of the furlough scheme till March. We have been surprised at seeing a Tory government abandon their previous obsession with running down the Deficit, instead increasing it vastly, to save jobs and livelihoods and retain some spending power in the economy.

Yet this coming winter is likely to be a hard one, with many working-age people poorer if they have been on furlough, and especially if they have been made unemployed and are struggling to find a new job or restart their self-employment business. What will the government do then?

We know the Tory instinct will be to put up taxes – not to affect the wealthiest much, naturally, but to ask most people to contribute more. And among them, the millions of people now on welfare benefits will be expected to tighten their belts and ask no more than they can get now, inadequate as that is to prevent people falling into poverty.

However, the tide is turning. The British Social Attitudes Survey new annual report shows that the hardening of views on social security of the last few years has started to go into reverse. Their survey reveals attitudes have changed and this year more members of the public agree with the statement, ‘benefits are too low and cause hardship’ than last year. And fewer believe that ‘benefits are too high and discourage work’. This survey was conducted between July and October last year, so its findings are likely to be even more affirmed this year, when since March the number of people receiving Universal Credit has doubled to six million.

Posted in Op-eds | Also tagged | 61 Comments
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