Treasury tax breakdowns: misleading propaganda is a poor basis for debate
Today’s press stories around the Treasury’s income tax breakdowns make the political purpose of these statements clear:
‘How the biggest chunk of your hard-earned tax goes on welfare’
reports the Daily Mail.
‘Families will be sent letters by the Government showing that a quarter of their taxes are spent on Britain’s welfare budget’
states the Telegraph.
Leaving aside the issue of whether presenting information in this format can ever truly inform public debate. The basic facts here are wrong. Declan Gaffney has done a fine job of setting out just how misleading the Treasury’s presentation is, and anyone who is interested in the detail should read his blog. Key headlines are:
- Around £29bn of ‘welfare’ is spent on personal social services – not what most people think of as welfare and incidentally at least seven times more than is spent on JSA.
- When you exclude benefits that go to pensioners (whose entitlements go beyond the state pension) the proportion on working age benefits and tax credits is more like 12.8 per cent of spending (so about half of what HMT are presenting).
- There is no such category as ‘welfare’ in any government accounting framework – it’s been made up for the purposes of this chart.
More broadly, the HMT statements simply provide no context to these figures. They play on, rather than trying to challenge, the misinformation about social security spending that informs public debate.
In contrast, the OBR has just published a hugely informative report on social security, but key findings from that are unfortunately not being sent to every taxpayer in the country. A few top level headlines from their analysis included:
- Spending on unemployed people is around 2.1 per cent of total welfare spending
- Most people will claim a social security benefit at some point in their lives
- The key drivers of rising spending include low wages, high rents and an ageing population.
And if you want to understand how the Chancellor’s programme of social security cuts has affected those who claim benefits, the TUC’s own recent analysis (undertaken by independent economist Howard Reed) is worth a look. Key fact: three quarters of working age welfare spending cuts have hit working families.
There is probably a balanced discussion to be had around whether this type of information can ever accurately inform public debate. Perhaps if produced by an independent authority, accompanied by a full analysis of revenues (including the costs of, for example, corporation tax cuts), published alongside evidence of the drivers of spending changes (including demographics, tax rates, growth rates and service improvements) and set in a narrative that illustrated the future investment returns that public spending can bring, it could. But today’s statements do not even attempt this complex task. They are simply a cheap political trick, and their distribution is to the detriment of honest political debate.