It was 2am, I was drunk and in the back of a taxi heading home after a punk gig. None of these things are particularly remarkable. While I ranted, probably incoherently, to the driver I remember saying:
"What is important is that we look after the people who need help, the least fortunate in society."
"Yeah, you're right." The taxi driver agreed. "But what's also important is that we stop helping those who don’t need it."
My memory of this exchange is hazy but I got the sense that the driver agreed with me in the need for there to be a safety net but that she was concerned that is was currently being taken advantage of. Benefit fraud is not something that especially concerns me. The tiny amount claimed fraudulently is nothing compared to the amount of tax that is avoided and it seems ridiculous that we are so concerned about one and not about the other. Social obligations seem to only apply to the poor.
Benefit reforms will end the “something-for-nothing culture,” Work and Pensions Secretary Iain Duncan Smith has claimed in the past. Variations on this statement are constantly being uttered by top Tory politicians. It is a popular line, no one believes that the government you should give you something for nothing, especially in the age of austerity. The Tories claim they are ending the “something-for-nothing culture”, then they cut benefits. Then later they are claim the same again and cut further. It is as if the “something-for-nothing culture” cannot be ended while we still have a welfare state.
July's emergency budget is likely to contain £12bn in further cuts to the Duncan Smith’s DWP budget which means further cuts to welfare. As always the justification for this is that it will encourage the workshy to finally turn off daytime TV, get off their sofa and find a job. Apparently, the billion in welfare cuts so far have not achieved this but this time it will be different.
There is only one slight flaw in this argument, most people claiming benefits are in work. This will not encourage the lazy to be productive, but will instead punish millions of cleaners, check out staff, call centre workers and other low earners. Some of the country’s hardest grafters are about to be punished for having a low paid job.
The reason why most people claiming benefits are in work is that wages are low and the cost of living is high. This is mainly due to our lack of regulation of the energy, housing and labour market. State subsidies are needed to top up millions of low paid workers' basic income. How will cutting benefits encourages these people to reduce their energy bills, be paid more or have cheaper housing remains to be explained.
David Cameron publicly admitted that low wages and high cost of living are the main cause for the large benefits bill. Cameron identified the problem but his motivation in solving it is to reduce the national debt and not to raise living standards for low earners. He said we need to move from a "low wage, high tax, high welfare society to a higher wage, low tax, low welfare society".
Cameron's proposed solution will not improve the situations for those with low wages. His plan is to remove the tax subsidies which top up low earners income but not put any pressure on employers to pay more. There is no plan to raise wages, for example by raising the minimum wage to be the living wage. In fact is removal of the tax subsides means that the target living wage will increase, as wages will have to rise to cover the income lost from benefit cuts. No one expects a Tory government to put pressure on big business to pay their staff more.
I want to know the logic behind how this will make people better off? How will cutting tax subsidies to low earners when wages are stagnant and the cost of living is high help anyone? This cut will hurt Cameron's precious “hard working families” the most. The people in work, on low wages, who work hard but still do not earn a living wage. These people will be made worse off.
Many of these people want to earn more but cannot because wage growth is low and because underemployment is a major economic barrier. Many of these people want to work more hours to raise their income but the jobs are not available for them to go it. They are trapped in low paying jobs and now their living standards will fall. The only effect this will have is to drive some people to work harder and be exploited more by their employers who are still not paying them a living wage.
This is the devil takes the hindmost approach to capitalism, taking away the safety net from those who fall behind. These reforms serve only to punish people in low paid work for being in low paid work. It is a policy conceived by the wealthy and it says: “I am okay. What is the problem? Surely anyone can earn more money if they want to”. The simple truth is that many people cannot earn more and now will be worse off.
The sad thing is that these reforms will be greeted with cheers in the press and in the streets. Many of those who support the cuts will be on low wages because the Tories are once again bringing an end to the “something-for-nothing culture” of benefits and encouraging people to work harder.
If we are worried about the benefits bill then we need higher wages and lower cost of living. We needs laws to ensure employees pay their staff a living wage. We need better regulation of the energy and private property market to reduce costs of living for those on low wages. We also need to understand that people claiming benefits are not getting “something-for-nothing” they are exercising a human right. They need compassion, not jibes.
Many people still believe that welfare is paid to the people who can work but simply choose not to and that the only solution is to cut benefits so that these people will finally get off the sofa and get a job. It will be a difficult journey to change this attitude but we can start by focusing on one basic fact: most people claiming benefits are already in work. If we approach the benefits bill from this angle then then government's policy makes no sense and will clearly hurt the working poor.