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Strivers vs Shirkers? Ten Things They Don't Tell You About the Welfare Budget

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With the Conservative Party unveiling a new ad campaign in marginal seats, which basically divides voters into hard-working 'strivers' and stay-at-home 'shirkers', and with Lib Dem leader Nick Clegg launching an attack on universal benefits, it seems the perfect time to debunk 10 key myths about the UK's welfare budget and, specifically, 'out of work benefits'.

(Yesterday, you may have seen me tackling some of these falsehoods on BBC1's Sunday Politics - if not, you can watch my debate with Tory MP Chris Skidmore on the iPlayer; scroll forward to 29mins40secs in...)

Here are the 10 things about welfare that they - Tories, Lib Dems, some New Labour figures, the centre-right press and the CBI - don't tell you:

1) Myth: 'THE 1% RISE IN BENEFITS IS FAIR BECAUSE IT HITS SHIRKERS, NOT STRIVERS'

Fact: According to the Resolution Foundation, "far from hitting only the out of work, 60% of the value of the £3.7 billion cut would fall on in-work households". Why? Because the 1% rise - which equates to a real-terms cut - affects universal benefits like child benefit and tax credits like child tax credit.

Also, the benefit loss for a low to middle-income household is about twice the size of the personal allowance gain (the same allowance gain, incidentally, that the Tories have tried to use to deflect attention from the 1% squeeze).

2) Myth: 'SPENDING ON OUT OF WORK BENEFITS IS OUT OF CONTROL'

Fact: First, according to the DWP's own figures, the majority of all welfare spending is on pensioners - 53% - with out of work benefits accounting for less than a quarter of the welfare budget.

Second, on average, between 2000 and 2010, welfare spending grew annually, in real terms, by 1.75% - compared to 5.5% in the 1950s and 1960s, and 3% in the 1980s (under Margaret Thatcher).

Third, benefit spending in 2011-12 accounted for 10.4% of GDP, lower than under Margaret Thatcher in the mid-80s (11%) and under John Major in the mid-1990s (12%). (There are also a million fewer people on out of work benefits now than there were in the mid-1990s, off the back of the previous recession.)

Fourth, it may surprise you to discover that benefit spending as a share of GDP fell during the first 11 years of the last Labour government; it only began to rise in 2008, after the financial crash, as hundreds of thousands of Britons found themselves out of work through no fault of their own.

(They key point here is to distinguish between benefit spending figures presented in scary, cash terms and those presented - much more accurately - as a proportion of a nation's GDP.)

3) Myth: 'OUT OF WORK BENEFITS HAVE RISEN MORE THAN AVERAGE EARNINGS'

Fact: While the chancellor George Osborne was correct to point out, in his Autumn Statement, that "average earnings have risen by around 10% since 2007" but "out of work benefits have gone up by around 20%" he chose a narrow, self-serving time period, i.e. the past five years. Over the past 30 years, wages have outstripped benefits.

As economist Jonathan Portes, head of the National Institute for Economic and Social Research (NIESR), pointed out: "In 1979, unemployment benefit (the predecessor to Jobseekers' Allowance) was about 22% of average weekly earnings; today it's about 15%, a relative decline of about a third. What's going on? Simple: JSA has been indexed to inflation. In normal times, earnings rise faster than prices..."

But as Osborne knows, we are not living in 'normal times', partly thanks to his growth-killing austerity measures...

On a side note, Jobseekers' Allowance is currently £71 a week, or £10 a day. Could Osborne, or any other Tory minister, live on £10 a day? Could you?

4) Myth: 'WORK IS THE BEST ROUTE OUT OF POVERTY'

Fact: The majority of children and working-age adults in poverty in the UK live in working, not workless, households. That's 6.1million people - 2million children and 4.1million adults - a million more people than are living in poverty in workless households. Low pay is the biggest cause of poverty in this country - a fifth of British workers are paid less than the 'living wage'. The national minimum wage is now worth less in real terms than it did in 2004.

5) Myth: 'THERE ARE LOTS OF OUT OF WORK HOUSEHOLDS WITH BIG FAMILIES'

Fact: Families with more than five children account for 1% of out of work benefit claims; families with more than three children account for less than 10% of claims.

6) Myth: 'THE WELFARE STATE IS BEING UNDERMINED BY AN INTERGENERATIONAL CULTURE OF WORKLESSNESS'

Fact: Despite repeated Tory references to "three generations of worklessness" (Iain Duncan Smith) and "four generations of families where no one has ever had a job" (Chris Grayling), this whole "culture of worklessness" and inter-generational fecklessness is a complete exaggeration based on little or no empirical evidence.

Consider the conclusion of a recent, in-depth report by the Joseph Rowntree Foundation (JRF): "Despite strenuous efforts, the researchers were unable to locate any such families. Even two generations of complete worklessness in the same family was a very rare phenomenon."

In fact, a Bristol University study of Labour Force Survey figures found that only 0.3% of UK households have two generations - let alone three or even four (!) generations - that have never worked.

7) Myth: 'THE BENEFITS BILL IS RISING BECAUSE OF CHEATS AND FRAUDSTERS'

Fact: The government's own figures show that just 0.7%, or £1bn, of benefit expenditure is overpaid due to fraud - compared to, say, £70bn lost to HM Treasury through illegal tax evasion.

8) Myth: 'HOUSING BENEFIT IS BEING WASTED ON LAZY, OUT OF WORK HOUSEHOLDS'

Fact: According to the homeless charity Shelter, only one out of every eight people who receive housing benefit is unemployed - the vast majority of HB claimants are pensioners, carers, people with disability and, of course, people on low incomes (see myth 4).

As even the Daily Mail conceded back in October, there has been an 86% rise in housing benefit claims by working families over the past three years.

9) MYTH: 'PEOPLE GET PARKED ON BENEFITS FOR YEARS AND FORGOTTEN'

Fact: As public policy analyst Declan Gaffney has pointed out: "Benefit claims are much less likely to be 'long-term' as people seem to believe. The majority of people on Jobseeker's Allowance claim the benefit for less than three months; less than 10% claim it for more than a year."

10) Myth: 'MEANS TESTING BENEFITS IS FAIRER AND CHEAPER THAN HAVING UNIVERSAL BENEFITS'

Fact: According to the National Audit Office (NAO), means testing "makes the administration of benefits more complex and is associated with higher costs as well as increased rates of fraud and error". The NAO also notes that "there can be disincentives for recipients of means-tested benefits to return to work".

(With thanks to the Resolution Foundation, the Joseph Rowntree Foundation, Declan Gaffney, Jonathan Portes, Chris Dillow and David Wearing.)

Around the Web

Welfare State - Wikipedia, the free encyclopedia

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