If I blogged every time
the Daily Mail printed an untruth about people on benefits I wouldn't get away from my laptop very often. But today’s untruth is designed to soften up public opinion for benefit
cuts to be announced on Wednesday – and as such it deserves some examination.
The argument from Government
which is supported by this erroneous article is that the UK cannot afford the
current welfare system and that its costs have spiralled out of control. Affordability
is a value judgement – is the benefit of our Welfare system worth the price.
The price however is a matter of fact. A useful understanding of the price is can
be informed by data and is all too easily misinformed by distortions and
untruths.
The key line in the
article is “In 1948 spending on benefits
accounted for 10.4% of Britain’s total income, against 24.2% this year.” This
is under no circumstances true.
National Income is a term that
generally refers to the Gross National Product* (GNP). “Benefits” is a
difficult term to define but to illustrate I have produced a graph showing both
the Office of National Statistics and the Department of Work and Pensions
figures at their very largest. They include, in size order, pensions (over half
of total spending), sickness and disability, Tax credits (ONS only) income
support, unemployment (under 5% of total spending) and various other money
transfers. It is a graph of Welfare spending as a proportion of GDP over time
from 1979 to 2012/13. These are the numbers I have to hand – but the point is clear – Welfare spending is a lot less than 24.2%
 |
| Graph of Welfare spending as a proportion of GDP data available Data |
You may notice something
else – that using the very sensible measure of Welfare spending as
proportion of GDP welfare spending is still lower than the mid-1990s.
Not something you will hear Government spokespeople saying. Indeed the article
quotes an increase in 60% of benefits under Labour – I am sure there is a way
of defining the terms such that this is true – I am equally certain it is at
best a small fraction of the truth.
Other points made in the
article are that the state pension has trebled since 1948 and unemployment
benefit has doubled. I wouldn’t take the numbers at face value as the make up
of the benefits has changed markedly eg. Pension credit, contributory pension,
housing benefit, winter fuel allowance and other transfers may or may not be
included in the comparison. It is important to realise that neither the state pension
nor unemployment benefits have kept pace with the average wage for over 30 years.
Recipients of only these basic benefits are in reality a great deal poorer than
the 1980s.
Can we afford the current Welfare Budget?
In cash terms and real
terms (where the numbers are adjusted for inflation) Welfare expenditure has
increased – a great deal. Our personal incomes and national income has also
increased a great deal – in recent years faster than the welfare budget.
The question is do we
think the old, the sick and the vulnerable (who make up the vast majority of
welfare recipients) should share in our increased national wealth? The
alternative is that these groups become increasingly disadvantaged relative to
the rest of the population. If, as I do, you think these people should not be
gradually disadvantaged the comparison of national income to welfare spending
is the most important measure to use. In which case we have afforded greater
than the current welfare levels in the past and should not accept the argument that
we are unable to afford it now.
Link to the data – workbook include graphs of the groups receiving
benefits over time, essentially working age families decreasing as a proportion
of spending and retired age families increasing.
*The term “total income”
might mean the UK Govt’s tax take but that doesn't get to
24.2%. My best guess is that the number is derived from the ONS welfare expenditure, which is the largest measure available, and projected to be 24.17% of the Total Govt's managed expenditure in 2013/14 - nothing like "Britians Total Income".
