We just can't afford the social security system?

[David Johnson]

Misconceptions Number God Know What

For the last two and half years, the coalition government has been putting their case endlessly for reductions in social security benefits. Their main arguments are:

1. Social security benefits have spiralled totally out of control under Labour.
2. The country cannot afford these benefits.

Many who post on this forum appear to buy into these arguments.

This is the backdrop to the bill being voted on today which limits increases in a whole range of benefits such as jobseekers allowance, housing benefit, child tax benefits, maternity benefits, sick pay, tax credits to 1% rather than link them to inflation. So in short these are real terms cuts in benefits until 2016 unless inflation is going to be incredibly low compared to recent history.

More than 60% of the people that are going to be hit by the above are working, not unemployed.

So the question is Can we really not afford the social security system?.

First look at page 19 in this independent Institute of Fiscal Studies report and graphs Figures 4.2 (a) and 4.2 (b)



These graphs show you that although spending on social security (pensions, other working benefits etc) has gone up in real terms, in 2010 for example, social security spending as a percentage of national income was no more than it was under Thatcher in the early 90's. In addition, that percentage spend was less under Labour prior the global banking collapse that it was under much of Thatcher's time.

So has social security spiralled out of control under Labour as a percentage of national income spend?

Bollocks.

Can we afford the social security system?

As the 7th biggest economy in the world, yes we can.

So why are the Tories lying? THey want to dismantle the welfare state.

[Essex Lad]

People who work should not be receiving any benefits and those not in work should not be receiving benefits equal to even the lowest salary or what is the incentive to find a job?

Mrs Dr Vince Cable recently wrote an open letter to the media saying that we need mass immigration because of the skills that they bring. We have more than one and a half million people not working in this country at a conservative estimate - might it not be worthwhile to train them to work rather than paying them benefits?

Scrap all of Gordon Brown's ridiculous benefits - working tax credits, family tax credits etc etc (which no one understands and which cost a fortune to administer anyway) and lower the tax threshold to say ?12,000 a year. So you pay nothing in tax on the first twelve grand you earn and then introduce a tax of say 20p up to ?40k and then 30p for everything over and above that. You take the poorest out of the tax system completely and allow people more say in what they want to spend their own money on - rather than taxing them and making them apply for their own money back...

[max_tranmere]

I recall many years ago someone saying the Welfare State cost about one pound in twenty of Government expenditure. This was in the 1980's boom-time. When the recession started at the end of that decade, and this recession went on for a good five years or more, it became one pound in three. This is from memory, I've no read up online prior to writing this. As far as I'm aware the NHS costs about the same.

I can't see them really doing anything about those people who are on Benefits. Iain Duncan Smith ("the quiet man" as he called himself when he was leader of the Tory Party) said recently there have been vast numbers of people "parked" on Incapacity Benefit for over a decade with no one helping them. If he is going to help them back into work now then that's a good thing.

I suspect though that they'll never actually force people off Benefit, as some will literally end up on the streets and there will probably be riots if they did that, so this so-called plan of his will likely come to nothing. Many people have got very used to being on it and see it as a way of life. I would like to see programmes in place to assist people who want to work but may have difficulties doing so, I suspect (if the government does really go for this) these people will just be sent a letter saying your Benefit is coming to an end, here is the name of a person we've put you in touch with at you local Job Centre, and basically "get on with it".

There will be a lot less care and understanding from the millionaire ivory-tower merchants in the Cabinet. Some areas of London have more than half of their residents on Benefit. It will take a revolution in British society to get those off Benefit and into work.

[David Johnson]

"People who work should not be receiving any benefits and those not in work should not be receiving benefits equal to even the lowest salary or what is the incentive to find a job?"

"You take the poorest out of the tax system completely and allow people more say in what they want to spend their own money on - rather than taxing them and making them apply for their own money back...

This is an ill-informed argument, lacking in understanding. The question you should be asking yourself is why did Thatcher and subsequent governments introduce benefits for workers?

The reasons for this are clear:

1. Millions of well paid jobs in the private sector have disappeared over the last 20 years as a result of the demise of much of the car industry, coal mining, shipbuilding, docks, the steel industry etc.

2. Generally, minimum wage jobs are the standard in many parts of Britain. And there has been an enormous squeeze on living standards of workers so that increasingly people running food banks are seeing people in work being referred for help.

The solution to this as I have explained elsewhere, is partly to increase the minimum wage so that companies are no longer scrounging off the state and to introduce rent controls.

It is entirely obvious that taking people out of tax for the first ?12,000 will not solve the problem of how a porter or a cleaner working in central London can afford to rent anywhere in London and work in London simply based on their wage without the help of housing benefit.

"those not in work should not be receiving benefits equal to even the lowest salary or what is the incentive to find a job?"

Yuu need to think about this statement more clearly. Person A lives with their mum and works in Tesco. Person B's parents are dead and is unemployed and claims housing benefit to pay for a one room bedsit. Person B gets a higher income as a result of this.

What do you want? Person B to sleep in a cardboard box?

[David Johnson]

I repeat the percentage of national income taken up by by the spend on the social security budget e.g. pensions, benefits etc was no higher in 2010 than it was under Thatcher in the early 90's.

[David Johnson]

Add "and the public sector" to the phrase "Millions of well pad jobs in the private sector"

[Gentleman]

The classic I'm all right jack argument so someone gets to save a few pennies in the pound meanwhile there s a lot less going into the tax system which is used for NHS and all the other stuff so something's would have to be chopped which would have to be something individuals can buy and private companies can make hefty profits on.

So the NHS would go leaving you to have to buy healthcare. Which would cost you a hell of a lot more than what you would be saving from your tax savings.

And this is taking just one tax paid service as a example.

[Arginald Valleywater]

No DJ we can't. Or the NHS. But we could if we got out of Europe, got really hard on illegal immigration and stopped fighting America's so called war on terror aka a myth from Foggy Bottom to keep the US armaments companies in profit. That should free up a few billion before we stop foreign aid to warlords and dictators in the third world.

[David Johnson]

"No DJ we can't'"

That is your opinion. You give no evidence to support this. I can say I saw a pig flying at 500 metres above my head this morning, but without any evidence, my statement is fairly useless, isn't it in terms of convincing people that it happened?

As I have already pointed out, the proportion of the national income spent on social security in 2010 was no higher than what Thatcher spent in the recession of the early 90s and I have provided a link to that evidence.

[sparky]

David Johnson wrote:


>
> The solution to this as I have explained elsewhere, is partly
> to increase the minimum wage so that companies are no longer
> scrounging off the state and to introduce rent controls.
>

Ummmm ...

To give a basic standard of living to more households without benefit top-ups or at least substantial reduction in the amount paid out would require a significant increase from the current rate.
The higher rate would also make it worthwhile to take a job rather than remain unemployed, assuming of course a job is available.

However the employers costs would be increased and passed on as higher prices for their products or services.
Hence potentially
a) inflation would rise.
b) the business would become fold because of uncompetitive prices for products / reduced demand for services.

Hence IMO overall a risky strategy.