THE BLOG

Benefit Cuts - True or False?

02/04/2013 15:33 | Updated 02 June 2013

The government's welfare 'reforms' have just been launched, but they are now combined with a powerful smokescreen of claims that the government is not cutting welfare at all. It's all very confusing.

Unfortunately it is hard to reconcile the claim that benefits are not being cut with the fact that cutting welfare has been central to the government's plans and central to the 'reform' of benefits. In fact the Autumn Statement 2012 set an even more ambitious target for the annual cut in benefits by 2015 - adding a further £4 billion on top of the previous target of £18 billion.

If we take an overview of the government's fiscal plans we see the following pattern:

2013-04-02-352CutsinRealTerms2010201501.jpg

There is no obvious economic logic to this pattern - but there is a powerful political logic. Cutting the NHS or Pensions or Education is perceived as electorally dangerous. Cutting local government or benefits is perceived as either neutral or electorally positive. After all, disabled people or those in poverty are rarely swing voters.

The cuts will come in a number of different ways:

  • Reducing the value of benefits over time (e.g. changes to 'uprating')
  • Reducing the numbers eligible for benefits (e.g. about 0.5 million will lose DLA)
  • Changing the rules to reduce the level of benefits (e.g. the bedroom tax)

As I have explored before, the real cost of benefits is very low - it is almost all repaid in taxes. These measures will not help balance the budget they will just increase inequality and inequality leads to greater crime, reduced health and poorer educational standards. We are already the third most unequal developed country - these measures make this problem worse.

What is even more striking is the way in which these cuts fall hardest on those in greatest need.

If we examine these cuts in percentage terms then we see that the deepest cut is to local government, and 60% of local government expenditure (at least the non-protected spending from which this cut must come) is for social care for children and adults:

2013-04-02-401PercentageChangeRealTerms20101501.jpg

This means many disabled people will experience a mixture of:

  • Cuts in income support
  • Cuts in disability-specific benefits
  • Cuts in social care
  • Increased taxes like VAT

It seems that those who did not cause the economic crisis - who didn't over-lend and didn't over-borrow - are paying the highest price for it.

Groups like the Campaign for a Fair Society are trying to resist these cuts and Pat's Petition has made the modest demand that the government calculates the 'cumulative impact' of their cuts on disabled people. Unsurprisingly, the government claims that the task of calculating the combined negative of all these policies on disabled people is just too difficult for its army of civil servants. But is undeniable is that the impact will be very negative indeed.