By John Charles Dyer, UK Correspondent
3 Jan 2013. The political year is off to a flying wedge start. Work and Pensions Secretary Ian Duncan Smith leapt from the starting blocks with two salvos in support of the government’s proposed cap on benefits increases. The good news is, life as we know it didn’t end 21 December. The bad news is, politics as usual didn’t either.
Duncan Smith alleged Welfare Fraud cost the taxpayer £10 billion.
Duncan Smith also separately alleged benefits rose 20% while private wages only grew 12 per cent. Duncan Smith argued this particularly unfair to those who work hard for a modest living. Low wage earners should not have to support benefits recipients in the life to which they’ve become accustomed when the private workers living standards can’t be sustained. Repeating a major Coalition theme, Duncan Smith argued work must always pay, implying when benefits rise faster than earnings it doesn’t pay to work.
The Tory spin tent fanned out in the aftermath to reinforce Duncan Smith’s message. Why now you ask? Parliament will vote 8 January on the government’s planned cap. Labour vociferously opposes. The polls thus far split with at least one showing the public against the government on this issue, a surprise to Tory strategists.
What are the facts?
Job Seekers Allowance rose at a faster rate than private wages, but at a lesser cash amount.
One category of benefits, Job Seeker’s Allowance, rose £12 a week over a 5 year period, from £59 to £71 a week. During that same time period average private sector wages rose £48 from £420 to £468 a week. While the private sector wage increase was 4x the benefit increase in cash terms, in percentage terms the benefit increase was 20% while the wage increase was 11.4 per cent.
Reliable estimates put the cost of fraud at around £10 billion just as Duncan Smith alleged - but over a decade, which Duncan Smith neglected to mention.
Certain questions may occur to you.
It may seem miserly to begrudge society’s poorest £12 a week, but the coalition says it is all about fairness. The private sector worker didn’t get 20 per cent. Private sector pay increased less than twelve.
The question may then occur to you, if it is about fairness, why isn’t the Coalition proposing to raise the JSA the additional $36 pounds a week to the £48 a week increase the private wage earners received? Or, why not require private employers to increase private wages the additional 8 and a half per cent to give private workers a 20% increase? The coalition says it’s all about making work pay, after all. Wouldn’t the logical thing to do, then, to be to raise worker pay? Not that kind of fairness.
Of course, you also might ask, how would cutting benefits ever make work pay? The answer may escape you. It does me.
But the man who heads the effort says it isn’t really about any of the above. It’s about saving people from themselves, from a life of dependency on the easy road of benefits. It’s about redemption. Yes, that was the word.
One might wonder what parallel universe Duncan Smith occupies. It would be one where a £12 a week increase on a total of £59 a week represents a life of dependency on an easy road. That question occurs to many, but not, it seems, to Ian Duncan Smith (or the Telegraph or the Mail or the Right Wing of the Tory Party). On the other hand, if that is the point, Secretary Duncan Smith had better let his government's spin docs know. They don’t seem to be getting the concept. Not that I blame them entirely.
The Coalition ignores certain other facts that don’t fit their narrative.
Framing disguises other facts. First, Job Seeker’s Allowance is only part of the benefit picture. Second, as much as 60% of benefit recipients work, often in low paying jobs in the private sector - the very people to whom the benefit increase allegedly was unfair. Third, Duncan Smith chose the time period following the crash (2007 to present). Had he chosen a longer time period - say the last decade - private wages rose at a faster rate than benefits during the last decade. Fourth, Duncan Smith didn't compare changes to wages within the decade, say comparing up until the crash to since the crash. Fifth, Duncan Smith made no economic impact assessment for a plan that redirects money that would have gone out in benefits to the somewhat amorphous exercise of deficit reduction. Recipients spend every pound of benefit in the local economy. Who knows the impact of deficit reduction? The arguments sometimes seem more Nicean Creed than analysis.
Then there is that £10 billion fraud figure. Fraud is wrong, no doubt. Something should be done, no doubt - to the perpetrators, reliably estimated to be less than 0.5% of benefits recipients. To put this issue in proper perspective, benefit fraud is £10 billion a decade while reliable estimates put tax fraud at £70 billion a year.
It might occur to you to ask how this budget pencil dust justifies denying much needed cost of living increases to people who survive on now £71 a week. Wouldn’t a focus on tax evasion be more productive? These questions do occur to many, even within the Coalition. But it doesn’t fit the government’s narrative, does it.
And therein lies the point.
The facts do not comfortably fit the government’s narrative. The narrative's logic is even more tenuous.
For Americans wondering what all this may have to do with you, consider. The UK today is what the business end of a "fiscal cliff" looks like once one has jumped off it with a loud "whee." Food for thought before anyone rushes out to embrace the GOP's grand solution to the US "debt crisis."