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Social Security Expenditure - We Were Spending on the Right Things

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Next week, a Committee of the whole House of Commons will be debating the Welfare Benefits Uprating bill. This 'nasty party' piece of legislation seeks to limit increases in in- and out-of-work benefits to just 1% - well below the predicted rise in inflation. As prices rise and income's squeezed, low-income families will get poorer.

One argument that the Tories have been hammering about social security has been that expenditure had been constantly rising. The impression that they want to give is that money was simply thrown away under Labour. But an examination of the facts shows that we should be proud of what we were doing.

Of course, it's easy to show benefit spending rising if you consider it in pure cash terms. But when you look at expenditure as a percentage of GDP, it's obvious that social security expenditure has been on a course that is far from unsustainable (as Jonathan Portes of the National Institute for Economic and Social Research has pointed out).

I asked the House of Commons library to look at figures on spending on benefits and tax credits over the last two decades. This is what they told me. Prior to the recession, expenditure had remained pretty constant, falling slightly from 11% of GDP in 1997/08 to 10.9% in 2007/08. But, more importantly, we were spending more on Labour priorities - cutting child and pensioner poverty - and less on the costs of unemployment: spending on children had increased from 1.3 to 1.9% of GDP, spending on pensioners increased from 5.7 to 5.8% of GDP, while spending on working age benefits (including JSA and Working Tax Credit) decreased from 3.9 to 3.2%. As a result, over that period, child poverty fell by 500,000 and pensioner poverty by 200,000. That seems like a successful policy intervention to me, as we re-invested the savings from having fewer people out of work in achieving our social goals.

Since the recession, spending has shot up. But this just makes clearer that it's economic failure that leads to rising overall benefit bills - and not Labour's decision to tackle child and pensioner poverty. That's a point we should be making loud and clear when the Tories dare to attack our record.

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