The recent benefits squabble has been very depressing to watch. The government, of course, won their nasty little vote over capping rises in benefit payments to 1%. This is below the current rate of inflation, and is in effect therefore a benefit cut. Politics is often an area of life which people find tedious, dull, and repetitive. Every so often there are flash-points that connect with people. This deserves to be one of those flash-points. It makes me, at least, extremely angry. It is an appalling betrayal of the very poorest people in society.
Take it, for instance, on a level of pure economics. Working-age benefits will not go up by more than 1% until 2016. For a bit of historical context, the inflation rate in the UK has not been below 1% since the middle of 2002. It is currently hovering between 2-3%. The Bank of England, meanwhile, is obligated to enact measures to ensure that inflation stays at 2%, with a 1% margin of error either way. What this means, then, is that the inflation rate probably won’t get anywhere near as low as 1% for some time. Food prices are rising, as are energy prices, petrol prices, public transport fares, and so on. It is a cut to the incomes of the poorest, plain and simple.
The cap is estimated to save the government £3bn, again until 2016. However, basic economic principles show us that the move will damage the economy, at the very least from a demand perspective. Cutting benefits means, obviously, that poor people have less money. We all know that poor people spend a greater proportion of their income than the more comfortably off do. They have to. They are unable to save money because every penny they earn has to go back out, in order to maintain the running of the household. If you cut the amount of money available to the poor, then they spend less, which means that the providers of goods and services will see falls in trade. This is not good news, then, for the small and medium-sized businesses that the Conservatives are so keen on championing. They will be losing business directly because of these new measures. Taxing the rich, meanwhile, costs the wider economy very little, because their saving-to-spending ratio is much higher. Trickle-down economics is a fallacy. Taxing the rich – obviously not at ridiculous rates, but at economically appropriate levels – benefits the wider economy. Giving the richest a let-off while at the same time hitting the poor reduces the amount of demand in the economy and hampers growth.
We’ve done economics, then. So let’s move to morals. It is immoral to paint people on benefits as ‘shirkers.’ For a start, 60% of the people who are affected by this cut are in work. They don’t seem like ‘shirkers’ to me. It isn’t their fault that wages for most people are stagnant, and it’s a false equivalence to suggest that the government should impose the same restrictions on them that the private sector imposes on the wages of its workforce. Secondly, has anyone bemoaning the something-for-nothing culture tried living on benefits lately? It is no cakewalk. I speak from experience. My mother lived off benefits for around fifteen years. She was a single parent. She did so in order to bring me up properly, instead of palming me off to babysitters and relatives. This move on her part made me, I would wager, better educated, more emotionally aware, less likely to commit a crime and more likely to secure in the future a high-paying job, thanks to my current status as a student at a well-regarded university (not St. Andrews, though – sorry). All this means I’ll probably end up contributing more in taxes over the course of my lifetime than I would have done, had she taken the decision to go back into work and leave me in the hands of others. In Cameron’s Britain, she wouldn’t have had the choice.
It is a common viewpoint in this country that there are a great number of people who mooch off the government, who don’t take responsibility for themselves, who take our taxes and waste them on fripperies. Obviously, there are people who live like that. But the vast majority of benefit claimants do not. At least 60% of them, we know, are in work, contributing to the economy, helping to keep the country running. We also know, thanks to the dire state of our economy, that there are no jobs for the other 40% to fill.
There was a rather nice cartoon doing the rounds on the Internet at the time of the benefits vote. It’s by J.F. Horrabin, and it features four men on a ladder trying to escape a flood – the men’s income rising the further they are up the ladder, with the unemployed man’s head barely above water. The man at the top (who, in a charming sign of the times, is extortionately rich on £10,000 a year) is saying, ‘Equality of sacrifice – that’s the big idea, friends! Let’s all step down one rung!’
That cartoon is very old, but there still couldn’t really be anything more appropriate as a symbol of our current situation. What has happened here, in brief, is that a majority of MPs, all of whom earn at least £65,000 a year, have voted to ensure that the poorest people in this country will, for the foreseeable future, be unable to earn enough money to cover the increases in their basic standard of living. It is economically unjustifiable. It is morally unjustifiable. It is socially unjustifiable. It is a downright disgrace.
Image Credit: DailyMail.com/ Space Brood