Saving Our Safety Net Fact of the Week: 58 per cent of benefit cuts will hit working families
As we come up to the election, the government’s plans for benefit cuts are going to be a vital issue. The reality of this policy is that most of these cuts have hit families in working poverty, but the politics of this debate mean that the key issue is whether the government can persuade voters that the typical victim is someone who could get a paid job, but doesn’t.
Last summer the TUC published Benefit Cuts By Household Type, an analysis commissioned from Landman Economics, looking at how families will be affected by social security cuts and changes announced during the current Parliament. By 2016-17, nearly 80 per cent of the annual impact of the cuts will fall on working age families and that three quarters of these cuts will hit families where one of the adults is in employment. Altogether, more than 58 per cent of the cuts will hit in-work families.
Annual impact of social security cuts by household type
The tax credits have been repeatedly cut, hitting in-work claimants and the successive changes in uprating policy (most recently, applying a 1 per cent maximum to uprating of benefits and tax credits) have hit the working poor. Some of the cuts aren’t usually described as cuts to in-work benefits, but they are nonetheless: most of the £3.4 billion of cuts in Child Benefit will hit working families, for instance.
This is not what most people believe the cuts are doing. The British Social Attitudes Survey in 2013 asked people which groups should benefit from more government spending and which should receive less:
Attitudes to government benefit spending on different claimants (%)
I think the prejudice against unemployed people is very unfair, but that’s an issue for another day. What I want to emphasise is that the structure of our benefits system has been shaped by these preferences. According to the Office for Budget Responsibility’s first Welfare Trends Report, just £4 billion of the £206 billion spent on benefits and tax credits was spent on JSA – about 2 per cent. DWP statistics show that, in May 2014, there were eighteen and a half million people claiming benefit, of whom 6,150,000 were working age (16 to 64). Just 973,000 claimed Jobseekeer’s Allowance – one in six working age claimants, one in twenty of all claimants.
In other words, the group that is unpopular already accounts for only a small part of the benefits system and a group that is popular, with a majority saying they should benefit from more government spending, accounts for a majority of the cuts. And yet, the government believes, probably correctly, that benefit cuts will be a vote winner at the next election.
How have they managed this? One clever tactic has been to focus attention on cuts to benefits for high profile unpopular groups – like immigrants, large families and young people. These cuts are often impractical (and are quietly shelved after a bit of high profile kite flying), or only account for a tiny fraction of the total benefit cuts. But that isn’t important – these policies highlight the government’s claim to share voters’ concerns that “the wrong people” are getting benefits and that they want to do something about it.
The flagship for this approach is the Benefit Cap (a £500 weekly maximum that most working age families can get in benefits). This policy has amazingly high levels of support and the Prime Minister has announced that the cap will be cut from £26,000 to £23,000 if the Conservatives win the election, telling voters “this tells you everything you need to know about our values”.
This policy does not reflect the government’s strategy. Our research into benefit cuts showed that Benefit Cap savings (then estimated at £500 million) were dwarfed by the cuts to tax credits, expected to take £12 billion from low-paid families by 2016. (The disparity is even greater now, with more recent research reducing the forecast for Benefit Cap savings to £185 million a year.)
But policies like the Benefit Cap are so terrible, they can’t just be ignored, and we need a response to them before we try to change the frame of the debate to the assault on low-paid workers’ benefits and tax credits. My favourite fact for these discussions is that three quarters of the people hit by the Benefit Cap are children and Frances Ryan demonstrates that Ministers must know that most of those children will be forced into poverty as a result. A recent post by Karen Rowlingson provides a great reply to the Prime Minister’s claim that this policy led to a “stampede to the jobcentre”, pointing out that most of them would have got work in any case and that most of the jobs people in this position are likely to get will be low-paid and insecure – usually requiring in-work benefits to supplement the wages. The cap doesn’t get people into jobs that are a route out of poverty, it’s just another entrance point for the low pay/no pay cycle.
We need these responses – to parry the government’s bid to make austerity popular. But the next move has to be going on to the attack: men and women struggling with low pay are being hit by benefit cuts. They are doing their best but the government is making things worse.