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If The Cap Fits

January 24, 2012

Usually one has to tune into the Jeremy Kyle Show to hear as plentiful a flow of populist, self-righteous, ill-thought diarrhoea as that which emanated from the Government yesterday. Indignation was the mot-de-jour for assorted ministers, wheeled out to express their incredulity at the latest defeat in the Lords. What could be unfair about a massively generous cap of £26k on benefits, they asked. How dare a bunch of unelected Bishops vote against such a popular measure?

Well, they didn’t.

Two hundred and fifty-two peers (hailed for the last thirteen years as “experts” by Tories, every time they defeated the Labour government) voted for an amendment which would take Child Benefit out of that cap. Only five were Bishops, not that this matters. They argued that to impose the same arbitrary cap on any family, regardless of size might result in unfairness to children. What argument could there be against that? Plenty.

The exclusion of Child Benefit rendered the measures “pointless” said Iain Duncan Smith, as it “would effectively raise the cap to £50,000” for some households. That is a big jump! Removing the Child Benefit from the cap would add £24k to it?

The current rate of Child Benefit is £20.30 per week for the first child and £13.50 per week for each subsequent child. This would mean that in order for the cap to go from £26k to £50k we would need to be talking about a family with 33.7 children. That’s not a household; that is a small rural community.

A different objection, as articulated by Lord Freud, is about “the real cost” of the amendment; which is that “it takes the pressure off” these families. A sentiment echoed by the Prime Minister speaking to ASDA employees yesterday and the Deputy Prime Minister this morning celebrating the creation of a thousand McDonalds jobs.

“We have to make work pay” said Cameron. Naturally, this will be achieved by reducing benefits. Not by ensuring that the ASDAs and McDonalds of this world pay a living wage, so that the public sector does not have to subsidise them by continuing to pay their workers benefits. That would be anti-business. It is precisely this fervour to “make work pay” which ensured that Tories fought the minimum wage provisions tooth and nail, while in opposition.

So, the philosophy behind this initiative is that it will motivate people to get off their backsides and find a job. The logic being that the reason nearly three million unemployed people cannot be shoehorned into half a million vacancies is a lack of motivation on their part. Cue joke involving benefit scroungers in a Mini. Wipe away tear of laughter.

We are asked to ignore those bleating Bishops who say people will be made homeless as a result of the measures. The problem, Iain Duncan Smith explains, is the definition of homelessness. Try to explain this concept to a man sleeping in a doorway. He will probably agree to any definition in exchange for a cup of tea.

People have to make lifestyle adjustments, said reasonable Grant Shapps on Sky News. If you lose your job, you cannot expect to continue to live in the same house as you did when you were working. A noble sentiment, but let’s assess it against the rate at which unemployment is growing: tens of thousands each month; 120,000 added to the total at the last monthly count. These are not scroungers – they are people like you and me being made redundant.

So, I wonder (as a former dabbler in economics) whether all these brilliant free-market-thinking ministers have given any consideration to what might happen to affordable housing rental levels, if the government forcibly adds 120,000 to the demand-side each month. Without any significant projects to add to the supply side. You see, this is the bit that your average person may not realise instantly. It is the ASDA and McDonalds employee that will end up paying much more in rent.

Why should anyone on benefits be taking home more than someone working on £35k a year, Cameron asked. But demagogy, as opposed to politics, is all about timing and venue. It is not a coincidence that the PM and DPM defend their destructive plan outside ASDA and McDonalds. They do so, because they understand that the value of money is relative. They wouldn’t make that announcement at the annual CBI dinner, where £35k is the bar-tab of a rather excellent night.

The value of money is relative. £35k was what Cameron wanted to pay his personal photographer out of the public purse. £35k is less than half the £72k which Iain Duncan Smith claimed on staff costs, including employing his wife Betsy as a diary secretary. £35k is one twentieth of the £700k overclaimed by MPs during the expenses scandal. £35k is one fortieth of the £1.5m bonus the RBS chief is set to receive this year and on which Cameron claims it would be wrong to intervene.

“And you’re entirely comfortable with the position your party has taken, whereby you can be quite specific about pounds and pence when it comes to people on benefits, but you refuse to be specific when it comes to Bankers’ bonuses” asked Jeremy Paxman on Newsnight. “Well, they are two different things”, responded Conservative MP Margot James. Indeed.

You see, set against this backdrop, the grand illusion becomes all too clear: convince the low-paid worker that the dispossessed deserve to be punished and that the money saved will come to you. Sadly, no element of it is true. It is a very effective, but totally dishonest card trick. It is sharply exposed by the fact that even IDS, before the election, thought the only way to reform welfare in a way that encourages people back to work would involve a short-term rise in the welfare bill.

And let us put things in further context, as the UK debt hits one trillion pounds. And because that is such an inconceivable figure, let me give you an analogy. If the total UK debt was one hundred grand (£100,000) then the Government has spent the last 48 hours squabbling about Child Benefits worth a total of twelve pence (12p). My suggestion is that there are other, much bigger things which need fixing urgently and deserving of public anger.

So, with a calm head and a steady heart, ask yourselves the question again. Why should anyone on benefits be taking home more than someone working on £35k a year? The answer is simple: if a fair judgement is made that, looking at all their circumstances, it is the minimum they need to survive.

And the simple beauty of this generous principle is that it applies to everyone. Once ASDA or McDonalds have decided that they have no further use for you, that is.

21 Comments leave one →
  1. January 24, 2012 2:40 pm

    Wonderful thanks Alex another great blog

  2. Cath permalink
    January 24, 2012 3:01 pm

    Marvelous as always Alex. Where are these hordes of families by the way? I’ve never met a family on benefits taking home anywhere near the numbers spouted by those in power. Has anyone ever actually met a family that fits the description?

    • January 24, 2012 3:05 pm

      I’me sure there is one and it will be the subject of a Mail on Sunday exposé this weekend.

      • Captain Disco permalink
        January 24, 2012 3:33 pm

        I believe tyhis all started from that Wife Swap family which took home between £40-45k of benefits yyears ago.

        We can thank Channel 4 (Mark Thompson era Channel 4, if I am right) for finding the Daily Mail a reason to crucify those on benefits.

    • January 24, 2012 9:30 pm

      Alex, excellent. The way you balance the exaggerated claims made by this goverment with their own double standards saves me from hypertension,. Cath I work in public centre in the community and have not encountered a family who had been awardedthat amount of benefit.

  3. January 24, 2012 3:39 pm

    Not so sure about this counter argument Old Boy. Peasants get a whiff of it an they’ll be wanting £35k as a minimum wage!

    Devious buggers you know. Twist anything to suit themselves.

  4. keeshond permalink
    January 24, 2012 4:08 pm

    Alex, I occasionally use your blog to stiffen my resolve and post a fact or two dressed up in the most easily digested language Mail Online website readers can tolerate. Any suggestion that these ASDA individuals (who appear in the same photo on their site) may themselves claim a benefit simply doesn’t get published as anything to do with working tax credits is disregarded – perhaps deemed too popular an echo of a Labour reform.
    Any suggestion that an employee on his or her own would not be in receipt of £26,000 if they gave up work disappears in a sea of red arrows. If so many in “middle England” really have fallen for the Duncan-Smith ploy that almost paints 26k as a starting figure then it’s no surprise, after the vote, that this arbitrary sum can be manipulated ever onwards and upwards to Cameron’s delight and the dumb ones’ disgust.

  5. January 24, 2012 4:19 pm

    A good example of why the left loses every argument on economics. They shouldn’t, but they do. You answered every point except the one that rings true. I thought you might, but you went wandering off onto MPs’ expenses, questioning their right to make the point but avoiding the point itself. Why should a family get more on benefits than an identical family in work?

    I don’t like the Conservative Party any more than you do, but I have never doubted that they know exactly how to exploit people’s instinct. The middle class left, not meaning you because I don’t know you and I have no wish to make it personal, in general are hopelessly distant from millions of people’s life. When the Conservatives ask why a family on benefits should be better off than an identical family in work, millions of people are listening because it chimes with us in a way the left have forgotten how.

    • January 24, 2012 4:23 pm

      An identical family in work would not get less. It’s actually not possible. An identical family on low income would have equivalent tax credits for each child. And possibly Housing benefit which is not just for the unemployed.

    • Ben permalink
      January 24, 2012 5:43 pm

      I don’t believe that people in work do get less than people in work, it is just that it is very easy for those with an interest in doing so make it look as if they do.
      For example, someone who is working may have to deal with the expense of running a car, which will make a big dent in their income compared with his otherwise-identical-jobless twin, who only has to use public transport once a week to visit the job centre.
      Large families can also be made to look as if they are claiming huge amounts in benefits if they happen to be housed in privately rented accomodation (this is a double whammy for the right wing press, because asylum seekers often fall into this category) over which the local authority has no power to set the rates at a reasonable level.

  6. January 24, 2012 4:53 pm

    If taking money from ‘workshy scroungers’ without hurting vulnerable groups was easy, our last ‘left-wing’ government would have announced plans on day one (alongside those for the operational independence of the Bank of England, probably). Sadly it’s not easy, and I’m not sure this lot are even trying. I think you’re right about them playing to the gallery here – not just the deserving poor, but also the ‘comfortably off’ in the shires – and it seems they’re fairly unconcerned about the impact on disabled people or children as long as they hit the right note in the press.

  7. January 24, 2012 5:03 pm

    Another good posting Alex. It’s what we’ve come to expect from you.

  8. January 24, 2012 5:10 pm

    Excellent- but I fear that underlying this , rightly stated, ‘guff’ from DC is far from a desire for “fairness” but a continuing and effective rhetoric which not only sets one section of the working class against the other (natch!) but also drip by drip wears away the emotional foundations of the welfare state. Never mind that the Tories welfare bill will actually end up costing more (& they know it and don’t give a toss), it is this latter purpose that is more corrosive and dangerous

  9. January 24, 2012 5:11 pm

    Sorry- I’m David Thomas- Anna’s my partner

  10. Mike permalink
    January 24, 2012 5:18 pm

    When you have a minority ruling a majority they will use any method to keep their position.”Let them eat cake ” is as true today as it was when it was written.Real cash is only acheived by producing goods and sharing decisions as well as profit .This country is taxed to death in order to keep none producers of goods on their thrones.Money is a mans invention which only exists to control the poor for it does not affect the rich and everything on our planet after all is free…….Unless God has started to charge our governments……..maybe thats who the world owe all this money to.Unless the aliens have become bankers because how can the world owe anything to itself.Debt must therefore also be a mans invention which is used to justify stopping the majority of humans getting a fare share of all that our world offers for free

  11. Kris permalink
    January 24, 2012 9:56 pm

    Quite a bit of myth busting that needs to be done on legislation – for example people don’t seem to realise part time workers are being hit by the cap – this is NOT just about the unemployed – these individuals will have the work related expenses mentioned above but will obviously be makin less than full timers. This is less and less some sort of life style choice latest figures indicate many are finding often part time jobs are all that are about at the minute… I’m sure we all know people who are forced in to this position in the present climate it has nothing to do with laziness or scrounging.

    the Child Action Poverty Group have a short myth buster section on their website for anyone who wants to find out some more.

  12. January 25, 2012 2:09 pm

    The solution is simple: allow poverty-stricken parents to beat their children. Frustrations alleviated and more work for soon-to-be-privatised NHS staff!

  13. January 26, 2012 8:15 am

    Two identical families paying the same rent. One on benefit. One in low paid work. One capped at £26,000. The other gets minimum wage plus working and child tax credit, housing and council tax benefit and child benefit Is the one on benefit still better of than the one in work ?

  14. agneswinifred permalink
    January 30, 2012 8:57 am

    Nice use of numbers here

  15. keeshond permalink
    January 30, 2012 1:12 pm

    Talking of useful numbers, six days on from the initial reaction to the Lords’ amendment I am amazed to still hear people talking about £26,000 being the kind of sum that can be accessed by anyone who prefers not to work. Of course, the government’s cleverly honed presentation of the figures can be perfectly replicated by dishonest and lazy journalism. When, for example, did you read a table that showed how high a proportion of such an amount is paid in Housing Benefit or the new Local Housing Allowance?


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