Cutting edge: Chopping £12bn off welfare won’t be easy – and is likely to widen the already yawning divide in our society

 

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The Independent Online

Parties have a tradition of vowing to slash spending on bureaucracy and benefits in election campaigns before quietly sheathing their swords once the heat of battle is behind them. It is a tradition that our would-be Iron Chancellor, George Osborne, seems determined not to follow. Having signed up the sometimes prickly Work and Pensions Secretary, Iain Duncan Smith, Mr Osborne has made it clear that the plan to cut another £12bn from welfare is going ahead, in order to restore what the two of them call “sanity” in the budget and “ensure the welfare system promotes work”.

No one can deny that the Conservatives have a mandate to proceed in this direction. It is not as if they kept their intention to make these cuts under wraps, in an electoral equivalent to the Schlieffen Plan. But the claim that the cuts are justified by the fact that Britain accounts for 7 per cent of the world’s welfare spending while accounting for only 1 per cent of its population is tautological twaddle. Are the Chancellor and the Pensions Secretary suggesting that one of the world’s most economically advanced states should lower its welfare spending simply to reach some international average? This non-argument is a misuse of statistics. For all the blather about our supposedly bloated welfare state, we spend about 25 per cent of our GDP on welfare, far below France and several percentage points below most of our EU neighbours.

Those on the receiving end of the proposed cuts, meanwhile, have a right to know where the axe will fall. Much is being made of the proposal to cut the welfare cap from £26,000 to £23,000 a year. But this sop to popular opinion will make little difference to the Chancellor’s target. Lowering the cap will save about £135m annually, which is little more than 1 per cent of £12bn. At the same time, the new threshold will push thousands of families out of the South-east and the Midlands, where rents are highest. Many will not be sorry to see greedy London landlords lose out, although before they start cheering, they should remember that one consequence of the exodus will be the creation of de facto ghettos of the poor.

As pensions are excluded from the cuts regime, and as pensions make up the lion’s share of the UK welfare bill, we are left with that opaque, catch-all phrase, “working-age benefits”, which in ordinary language means disability and carers’ payments, jobseekers’ allowances and child benefits among others. Jobseekers’ allowance, at just over £72 a week, is already set below what anyone in a city, where transport is pricey, can live on with any decency, so cuts there would be grotesque unless the intention is to effectively imprison claimants in their homes, which will not facilitate their search for work. As for child benefit, David Cameron made a pledge not to touch it, just one week before the election. “With me as Prime Minister, it stays,” he said, so not much room for manoeuvre there.

No one, except those who completely reject  any argument about the need for balanced budgets, denies that Britain has to reduce the deficit. “Out of control” or not, an annual deficit of 5 per cent of GDP is unquestionably high. What seems to be becoming forgotten, however, is that there are other ways to balance budgets,  including more taxes on the rich. Squeezing the poor and the jobless under the argument that this will “force them into work” is a bogus strategy in a post-industrial economy like ours, where you cannot just sign on at the local factory gate. The Chancellor may get a standing ovation for his cuts at the next Conservative Party conference – but if all he has done is deepen the huge chasm between winners and losers, he won’t deserve the cheers.

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