Benefit cuts are unfair

06 Jul 2010, by Richard Exell in Society & Welfare

The latest edition of Social Trends provides the data that confirms fears that welfare cuts will hit the poorest hardest, as benefits account for such a high share of their income. The Budget announced benefit cuts worth £11 billion, and the Chancellor hinted at the possibility of more to come: “if we can find any additional savings to social security and welfare beyond those which I will shortly outline, then that will greatly relieve the pressure on these departments and that 25 per cent figure.”These cuts will mean more to the poor than to people on middle incomes and much more to people on middle incomes than to the rich. Table 5.8 of Social Trends shows households’ “sources of gross income” in 2007/08, and divides households into ‘quintile’ – fifths, ordered by their income. This allows us to see how much of each quintile’s income comes from pensions, from wages and from ‘state support’. The table in the report is damning enough – if we only look at how much each category is worth in cash we can immediately see how much more important benefits are for the poorest:

Sources of gross income, cash

If we look the figures for the proportion of families’ total gross income accounted for by each category, the picture is even clearer:

Sources of gross income, share of the total

It is very hard to see how this can be squared with a commitment to fairness. If benefit cuts were part of a balanced approach there might be some justification to this policy – though it is hard to see how, even then, it would be fair to people with their heads just above the water. But the point about the Coalition’s policy is that they want to maximise the contribution made by benefit cuts: the more they succeed, the greater the unfairness.