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May 31, 2012

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Nick

"To callibrate this, the chances of winning a lottery prize are one in 54. The belief that benefit claimants are living it large is, therefore, only slightly more rational than the belief that the lottery is a good investment."

People might feel less punitive about it if large benefits were handed out randomly. Rather than, as they see it, as a reward for bad behaviour.

But overall you are right. Its an ideology designed to avoid a proper focus on middle and upper class beneficiaries of government planning and the welfare state, mainly various property price supports.

Jim

If the average person were not paying 33% minimum at the margin of their income in tax, then there would not be such anti welfare feeling. Its the contrast between working hard and having money taken away from you in taxes vs people doing nothing and being given money. If you cannot see why thats particularly unpopular you need to re-examine your thinking.

guthrie

You seem to have missed out that stigmatizing benefits claimants is a way of deligitimising the very idea that the unemployed or poorly paid should get help from everyone else. The aim is to detroy the welfare state, leaving private companies to offer insurance, which would really only be affordable by a few, and the rest desperate to work, thus driving down pay and conditions to the benefit of the bosses.

Hence the mail and others stereotype them all.

chris

@ Jim - but as I say, working age benefits are less than 10% of taxes. If you assume 20% of benefits are overpaid to the "undeserving", such payments account for only 2% of the taxes we pay. The fuss about claimants seems disproportionate to the sums involved.

Jim

You assume 20% of benefits are paid to the 'undeserving'. Given 5.8m claimants, thats over 1m people. That means that everyone has a fairly good chance of personally knowing someone who is swinging the lead, playing the system, actively defrauding it or is undeserving of the money they receive. I certainly do, and I don't move in benefit claiming circles. If you lived in a more financially straightened milieu you'd know dozens.

And as for people being able to work out that its only 2% of their taxes being paid to the undeserving, most people think that if everyone pays tax at 20%, 'the rich' would pay the same amount of tax as 'the poor'. Mathematics may be a basic skill to you, not so much elsewhere. Its a simple comparison that is made - I paid £x amount of tax on my pay last month, and that fat slob down the street got £200/week in benefits for sitting on his ar*e. Why is that such an unsurprising reaction?

Its strange, I never hear the argument 'Don't worry its only a very few people playing the system' when its tax breaks or tax cuts that are being discussed. If I suggested abolishing inheritance tax on the grounds that it only affects very few people and would cost only a couple of billion in revenue would you support it on those grounds?

gastro george

@Jim - I can see the reasoning, it's exactly what is promoted in the right-wing press, but the argument is utterly false. As chris points out, the taxes of the employed are marginal to welfare payments. Much more goes on the NHS, education, pensions, etc., which they will directly benefit from. The argument is just a device to breed resentment between different classes of the poor - as a diversionary tactic.

cityeyrie

Very interesting to see the numbers. It is always worth reminding whomever will listen that even taking all working-age claimants as 'skivvers' they do not represent such a huge proportion as claimed in the press.

I can see both sides of Jim's argument, however - but what hard working people need to do is attack income tax, and demand much higher taxes on unearned income. It doesn't make sense for tangible economic activity to be taxed at a higher rate than speculation and rent-seeking. Or taxed at all.

A basic guaranteed income for all, which would be cheap to administer, fair and help ease the problems most people face these days with such erratic, part-time and otherwise insecure work as is increasingly available. It would also fund the kind of volunteer, community and care work that needs to happen for society to carry on at all but which the market has failed time and time again to monetise.

Here's the satire version of this piece: http://www.thedailymash.co.uk/news/society/benefits-claimant-admits-subsistence-income-scam-2012053029040

Allan

Isn't it also because of something Chris talked about in another post.... Because the pro-austerity right cannot/ don't want to understand why their policies have not worked, the fault must be that people are being idle. Hague pointed the finger at entrepreneurs, but unemployed people are a readier target.

Account Deleted

@Jim, Re "everyone has a fairly good chance of personally knowing someone who is swinging the lead, playing the system, actively defrauding it or is undeserving of the money they receive". Yep, and most of them are in work.

The issue that Chris raises is not about benefits per se, but about the demonisation of those in receipt. Some will be lazy sods, some will be strivers. My personal experience is that the mix is actually constant across both sectors, i.e. the employed and the unemployed, taxpayers and benefit recipients. In other words, circumstance is not as much a product of personal worth as we'd all like to believe.

Funnily enough, the people (in work) who seem most prone to utter harsh judgements on the poor are usually those most prone to passing the buck, skiving and expecting more than their due. The 20% who do 80% of the work tend to be the more compassionate, in my experience.

Bob Dobalina

"This, though, can't be the whole story. There's another group that also gets public support - bankers. The Bank of England estimates that the subsidy to banks could be over £100bn - twice the benefit bill.However, whilst there is public anger at bankers, this is not as well reflected in the media or mainstream politics as anger and benefit recipients."

Come on, Chris. This is at best a misleading argument.

1. Is a subsidy to banks the same thing as a subsidy to bankers?
2. Who, exactly, gets this subsidy? Debt holders? Then it's a subsidy to the wealthy, not to the bankers.
3. To the equity holders? Then it's 2.5x the combined market cap of RBS and LLOY. And I'm not backing out Her Majesty's shares. Seems a bit hard to believe.
4. To the employees? I reckon tellers and IT people get competitive salaries, so the subsidy doesn't go to them. Which means that the "bankers" proportion of the 15B that RBS and LLOY incurred as expenses must be pretty damn high.

Is the 100B a stock (the PV of the subsidy) that you're comparing to a flow (the annual dole)?

I know that RBS+LLOY isn't the entire system and that it's tough to hammer down exact figures for the big five (include Santander, exclude STAN) UK banks because three and a half of them are so international but the figures herein should be enough to chip away at your implication.

Michael

I don't ubderstand why people get stressed out whenever the term 'benefit' appears. There is almost never the talk of cooperate benefit that comes in forrm of tariffs, subsidies, bail outs etc.…They'd rather spend their taxes fighting and killing innocent people than see it spent on beneit to the poor.

I know a man that lives in a government sponsored house but fiercely agaist benefit.

Luis Enrique

this subsidy to the banks, am I right to think that:

1. the £100bn is the estimated value to the banks of the implicit insurance, not the direct cost to the tax payer
2. the direct cost to the tax payer is whatever the net cost of bailouts turns out to be when they occur, something that happens rarely (very different from an annual cost)
3. the indirect cost to the taxpayer is an opportunity cost - if the banks were explicitly charged for insurance, perhaps they'd pay up to this value (which I don't believe for a minute, but that's the idea).
4. but if such insurance was ever made explicit, bank behaviour would change (moral hazard) so that they call upon it more often, meaning that what the taxpayer would actually receive on net would likely differ greatly from £100bn per year.

so it's really not clear it makes sense to talk of a £100bn public subsidy to banks that is comparable to, say, subsidies for green energy, or any other item of public expenditure.

Mike Killingworth

I have long supposed that hostility to welfare claimants is a surrogate for racism.

MRadclyffe

You missed the most important numbers of all: the actual rates of benefit fraud, which are far, far lower than your average person on the street thinks.

Keith

Some of the hostility to the welfare state must arise from the rejection of equality as a ideological goal. The people in other words who gain or think they will gain from inequality are opposed to redistribution as it is a implicit criticism of their own high income or perks. If you pay people a minimum income so they can do things which are useful to them or society generally, but that the market does not value you are rejecting the market mechanism as a moral system. Attacking claimants is a diversion from the question of the legitimacy of the existing wealth distribution and the exchange in the market that under pins it. i.e.

"Undo excess and let each man have enough."

But then you would have to admit that you were the beneficiary of excess. Attacking real or imaginary scroungers is a method of avoiding the debate. So immaginary bad poor people are as good as the real thing. Facts are irrelevant. Hating on the beneficiaries of redistribution is about defending the status quo by attacking ideas that contradict it.

Alki G

According to the Department of work and pensions the 2011-2012 total bill for benefits is £159 billion. Your numbers don't stack up.

Preliminary estimates of Fraud and Error across all benefits in 2011/12
The preliminary estimate of total overpayments due to fraud and error across
all benefits is £3.2bn; this is 2.0% of the total benefit expenditure, which was
£159.0bn in 2011/12.

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