Saving Our Safety Net Fact of the Week: Jobseekeer’s Allowance costs 0.3% of GDP
Why does George Osborne emphasise the government’s benefit cuts? As The Economist noted after the Conservative Party conference, even when his cuts are a comparatively small element of his plans, he still talks them up.
Mr Osborne is a notoriously ‘political’ Chancellor, and he knows that polls repeatedly show that benefit cuts are popular. That’s why the “tax summary” you’ve just been sent by HMRC tells you that “welfare” accounts for a quarter of government spending when, as Declan Gaffney has shown, working age social security (which is what the word welfare usually suggests) actually represents one-seventh of total spending.
One of the reasons for this popularity is what has happened to attitudes to benefits for unemployed people. We know from the British Social Attitudes Survey that, in 2013, 49 per cent of people wanted less spending on benefits for unemployed people, compared with just 15 per cent who wanted more. Mind you, I want less spending on unemployment benefits too, because I want there to be lower unemployment. But I doubt if most respondents to the survey meant only that: in 2013, 57 per cent of people believed that “benefits for unemployed people are too high and discourage them from finding jobs”, up from 24 per cent in 1993.
This is despite the fact that, over those twenty years, the value of unemployed people’s benefits, relative to average earnings, fell in most years. As Horton and Gregory demonstrated, there’s a fearful symmetry to this:
I’m sure that the wider ideological battle underlies this phenomenon. Most readers probably agree with me that unemployed people are the victims of unemployment: they aren’t responsible for the business strategies and economic policies that led to them losing their jobs or not being able to get a job in the first place. Politicians and news media, however, constantly describe them as the villains of the piece.
But I’m also sure that one of the reasons for this is the reduction of the debate about social security to benefits for working age people without jobs. Just as, for some newspapers, “tax” means only income tax, so “welfare” means only Jobseekeer’s Allowance, or possibly Employment and Support Allowance too.
A sign of the success of this approach is the widespread belief that this country spends a huge amount on Jobseekeer’s Allowance. Last year, MORI’s “Perceptions Gap” research for the Royal Statistical Society found that 29% of people think we spend more on JSA than pensions, when in fact we spend 15 times more on pensions.
That’s why I was particularly pleased with the Office for Budget Responsibility’s first Welfare Trends Report, which sets out some of the basic facts that are central to this debate. In 2013/14, as a share of GDP, the top ten items are:
Housing Benefit for unemployed people is 0.2 per cent of that 1.4 per cent total.
The Welfare Trends Report is essential reading for everyone campaigning for decent benefits. As I mentioned when I first reviewed the report, it’s a useful counter to the notion that the benefit budget is out of control. As a share of GDP, benefit spending goes up in recessions and down in recoveries (just the way it’s supposed to); before the global crisis, spending as a share of GDP had been very steady and the increase that we had after 2008 was actually “a slightly smaller rise than that seen during the recession and recovery of the 1990s, even though the latest recession was much deeper.”
The pressures that could force spending up over the coming years have nothing to do with the generosity of the system. The most important is the ageing of the population – nearly everyone over pension age gets some state benefits and the benefits specifically designed for older people are more generous than those for working age people. The second is the scourge of low pay, which forces a growing number of workers to rely on in-work benefits. And the third is high rents, which leave people on low incomes more likely to need more help.
The TUC is convinced that fighting poverty means that we need higher pay and higher benefits. That’s why the subject for our 2015 poverty conference is Making Work Pay? What role can the welfare state play in raising living standards? We’ll hear from expert speakers, including Howard Reed (who carried out the research for the TUC showing that working families were facing the bulk of the government’s benefit cuts) and Andy King, Head of Staff at the Office for Budget Responsibility.
A strong welfare state is one of the pre-conditions for higher living standards for working people. We won’t make progress until we recognise that unemployed people and working people need to support each other and not let ourselves be picked off one by one.