If The Cap Fits
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?
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.