Daily Mail Welfare Story - Untrue and Dangerously Misleading

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".

Housing worthy of the Olympics?

The London Borough of Newham has been in the news for various reasons in recent weeks. Newham Council’s plans to move social tenants into housing association properties in Stoke-on-Trent (170 miles away) were widely condemned. As stated in the Guardian Newham Council’s justification was that ‘rent rises linked to the Olympics and the demand for housing from young professionals has caused rents to rocket in east London'. This follows predictions that the Government’s Housing Benefit cuts and caps would inevitably lead to displacement of the large numbers of people who will be unable to pay their rent, particularly in cities like London with disproportionately crowded and expensive private rental sectors.

In the wake of Newham Council’s proposals, the now re-elected Mayor of London, Boris Johnson, reiterated his previous opposition to housing policies leading to ‘Kosovo-style social cleansing’. One of the few areas of agreement between Mayoral candidates was the need for much more affordable housing. Yet experts in the housing sector point to a housing crisis and suggest a response that goes beyond measures envisaged by Government or the Opposition. The Government’s Housing Strategy promises 170,000 new affordable homes by 2015, an increase on its previous target of 150,000. Many housing experts see this as far too little. The National Housing Federation recommends 'A public investment of £1bn - matched by £8bn from housing associations - would build 66,000 shared ownership homes for people on low to middle incomes, create 400,000 jobs and in doing so save the taxpayer £700m in job seekers not to mention the added savings from housing benefit and increased tax revenues.’

Boris Johnson has supported Shelter’s new Homes for London campaign – an attempt to create a body equivalent to Transport for London, focusing on housing. The first priority is “Homes Londoners can afford” and the key target is 33,400 affordable homes per year: this shows how far short of the ideal current Government plans are falling. The other objectives are ‘family-friendly rental contracts’, the creation of a ‘rogue-landlord prosecution team’ and a ‘London-lettings service’.

The tragic need for these measures is shown by another story relevant to housing in Newham: “The woman who lives in a shed: how London landlords are cashing in”. In view of the scale of low quality and often illegal housing being offered at often extortionate prices by rogue landlords (frequently to illegal immigrants), housing minister Grant Shapps announced the creation of a ‘beds in sheds taskforce’. Yet without a substantially-increased building programme on the scale of Homes for London’s targets, there simply will not be enough accommodation to meet demand.

This is not just a London-centred issue. People need to live where they can work and any tenants relocated under Newham’s plans would have been faced by the employment shortage in Staffordshire. The concept of a ‘choice’ in where to live is meaningless when jobs are concentrated in particular places e.g. London and as the population of major cities rises beyond the capacity of social housing and benefits, there seems little hope of avoiding  the ‘social cleansing’ and its consequences for people’s wellbeing and livelihood that Boris Johnson has criticised.

A recent report by the IPPR recommends that the Mayor of London’s new housing powers be matched by be given additional powers related to Welfare Reform. This could lead to an augmented Local Housing Allowance in London. If the Mayor gained devolved Housing Benefit powers, this could be followed by a broader devolution of Housing Benefit powers. The challenge here will be to develop the case for devolved Housing Benefit against the standardising direction of the Universal Credit.

Yet there is a broader issue.  It is sometimes argued that the expense and upheaval involved in large-scale development, like that associated with the Olympic Park, is that it can bring affluence and opportunity to poorer areas. In reality it often leads to rising prices and an inexorable increase in the value of land, rendering places permanently unaffordable to their previous inhabitants. As the few remaining affordable homes in London in areas like Newham are bought up by ‘young professionals’, tenants are priced out due to the Olympics and homeless people cleared away, the opportunity to remedy the social problems of a poor area has been missed.

Without a much deeper understanding of the relationships between the economy, housing and commercial property – grounded in land value – we will increasingly see paradoxes like residents being relocated 170 miles away in the name of initiatives supposedly meant to benefit the local community.