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".

The Budget - Bad for the Poor but Good for Donkeys.

As expected the Chancellor did almost nothing in the budget. The July 2010 budget plotted the course and we all wait to see where it will take us. Already the statistics show that where we will end up is a place where the poorest are much worse off, where the services which the poorest rely on are also much worse off, and the standard of living of the wealthiest is left largely unaffected.

The two great hopes for the poorest are that public services can be provided to the same standard for much less money (hmmm....we’ve heard that before) and that the charitable sector will step in and provide more help. To this end the Chancellor changed Gift Aid and Inheritance Tax rules so that people will be able to reduce their tax bill by giving instead to charity. The inheritance tax change is a straight forward 1 to 1 shift of money from the public purse to the charitable sector.

Sounds good? Well for churches it maybe but for the poorest definitely not. Tax money is much more likely to be spent on the needs of the poorest than money collected by charities in general. As only the wealthiest 2% of estates pay any inheritance tax at the moment, it is the charities preferred by the wealthiest that will benefit – we know these disproportionately relate to arts and education (usually universities and individual public schools).

The government raises around £550Bn a year in taxes; it spends around £350Bn on services which directly help the poorest and most vulnerable (e.g. welfare, health and social services). The charitable sector raises around £10Bn in donations from the public each year but because the charitable sector includes things ranging from medical research, through churches, arts and culture, and on to public schools the proportion of money that goes to the poorest in society is considerably less.

The figures for the proportion of charitable giving going to particular causes are very difficult to get hold of, but it is clear that services to the poor and the vulnerable form less than 10% of donations; not surprisingly animal charities appear to receive more. The majority of expenditure by charities providing services to the poorest in the UK comes in the form of government grants. Last year these totalled £12bn which was more than public donations. This year such grants have been slashed dramatically by hard-hit local authorities.

In short charities providing help to the poor have been devastated by the cuts from the last budget. The charitable giving tax breaks will over a long time benefit the poor a little and the arts, private education and animals more.

It has long been true that should you want UK public sympathy in the form of cash you are better off being a sick donkey than mentally ill – it appears the Chancellor may yet be a man of the people!