Friday, 6 July 2012

Explaining the benefit system to John Humphrys..


I was on the Today programme this morning to discuss a report, written by Howard Reed of Landman Economics for a group of childrens' charities, called "In the Eye of the Storm", about the impact of tax and spending change on "vulnerable children and families".
John Humphrys began by asking me what the report showed. I said that it showed that, not surprisingly, tax rises and benefit cuts, combined with cuts to public services, were likely to disproportionately affect the poorest.    I expected - evidently naively - that to be a prelude to a more detailed discussion of the analysis in the report and the implications. We never got to the report itself; instead, Humphrydd asked:
“surely it isn't the case that benefits are being cut for the poorest? There are benefit cuts yes, but mostly they’re caps on the higher limits, on the top limits”
You can listen to it all (only three minutes) here. [begins at 2h 57min].  It is clear that Humphries really is under the impression that cuts to welfare benefits will not impact the poorest or genuinely disabled people.


But, as everyone who has ever worked on or researched welfare or social security policy knows, this is complete fantasy. Of course benefit cuts disproportionately affect the poorest, because, by and large, benefits go to poor people.  ONS figures here show that for non-retired households, benefits make up more than 45% of the gross income of the lowest quintile (the poorest fifth); but only about 1.5% of the income of the top quintile.  So the fact that benefit cuts will hit the poorest hardest is not because those cutting the welfare budget have chosen to pick on the poor; it is simply an inevitable result of cutting working-age benefits (pensioner benefits, of course, have largely been left unscathed).  

As for the household benefits cap, the DWP Impact Assessment estimates it will save a little under £300 million a year. This is simply lost in the rounding when you look at the £18 billion a year that the government plans to cut from the working age welfare bill. The main items are set out in a helpful summary by Inclusion
"The main savings announced in the 2010 Budget (June) and Spending Review (November) were:
  • £5.8bn by linking benefit increases to the Consumer Prices Index, rather than the Retail Prices Index
  • £3.6bn from a freeze on Child Benefit and removing the entitlement for higher-rate tax payers
  • £2.6bn from changes to Tax Credits
  • £1.9bn from Housing Benefit reforms
  • £1.2bn from Disability Living Allowance reforms
  • £1.2bn from time-limiting contributory Employment and Support Allowance"

Of these, only the child benefit changes will disproportionately hit the better off.  The rest will mostly hit those at the lower end of the income distribution; by and large families with children, either out of work or in low paid work, and/or disabled people.  This simply isn't news: there are more IFS analyses than I can remember showing variants of this story. Here's a slide from the most recent one:


Note that this looks at benefit and tax changes; since the tax changes hit the rich, and the benefit ones mostly the poor, the benefit changes on their own would look far more targeted on the poor. Again, that's not because the government has chosen to target the poor for benefit cuts; it's mostly just an arithmetic consequence of the fact that it's mostly the poor who get benefits. 

Let me be clear that I am not making a specific argument about policy here. Any government undertaking a fiscal consolidation on the current scale would have had to look at spending on welfare benefits. And, as I've set out, any substantial reduction in welfare benefits for people of working age will hit the poorest hard. John Humphries and I should have discussed the consequences of this unpleasant reality on Today.  I shouldn't have had to explain the facts and the arithmetic to him.  

9 comments:

  1. Maybe the BBC fired all their researchers? Very interesting to me, thanks. Pity about that grey vote promise.

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  2. If only Humphries was prepared to read around the news he comments on. If he talked to staff at the special school I visit he'd hear about parents who are losing the transport to get their kids to school, who find it hard to manage the extra heating and laundry costs that come with having a severely disabled person in the house and who, when the new Housing Benefit rules come in, may lose homes with enough rooms for the hoists and special equipment they need to keep their children living at home.

    Or maybe Humphries was just being disingenuous and he knows that his sub-Daily Mail opinions are based on shameful stereotyping. Or maybe it could be that he's not quite as smart and on the ball as he thinks he is...

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  3. Hi! The importance the BBC places on stories like this was underlined by the position/time the piece was slotted into. I was just waiting for the dismissive "We've run out of time" and along it came. I would request a return visit, as the BBC is failing spectacularly to show the country the devastating effect of the benefit cuts - and the wholesale sell off of the NHS.

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  4. There needs to be some serious questions asked with regard to the proposed 'bedroom tax'. Targeted, in their own words,'at working age claimants because they are in a better position to take up work and fund the shortfall themselves', the recent impact assessment reveals (surprise!) that those most badly affected will be the sick and disabled. Of the 660,000 households affected a massive 420,000 of those contain a disabled claimant or partner. So, a policy meant to be a stick for the working poor is now one to beat the disabled. Horrifying.

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  5. I'm afraid John Humphrys has form on this: http://www.leftfootforward.org/2011/10/john-humphrys-is-wrong-on-social-security/

    And he is not alone who can forget Allegra Stratton on Newsnight portraying a single mum as a benefit scrounger and asking her why she had children she couldn't afford -- but neglecting to mention that she was employed: http://www.youtube.com/watch?v=2b83rSqBLfw

    I'm getting really angry about the way that the BBC constantly misrepresents benefits as if it was all paid to unemployed never worked families with 8 children.

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    Replies
    1. Well quite. But you must remember we live in a world where people are bad: children and the elderly in particular are nothing more than a drain on society. Who cares if she works, she's had the audacity to breed!
      I'm afraid I still hold to the rather outdated idea that people are basically a good thing. How shameful of me.

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  6. The 8.55 slot on Today is often v.tokenistic. I find it increasingly difficult to listen to the Today Programme these days. In particular John Humphries seems to be in competition with the tabloid media in a race to the journalistic bottom of the barrel. He's incredibly ill-informed.
    Despite this, having listened to the piece, I thought the key messages you were trying to convey came survived the Today Programme's default reporting prism. From a PR point of view it was effective to a degree. It's probably too much to expect Humphries to properly engage with the research (shame Jim Naughty wasn't the interviewer), but to get some key messages across about the reality of contemporary benefit policy is worthwhile in itself.

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