Cutting in-work benefits: right-wingers think it’s a bad idea too

It now seems to have dawned on just about everyone that, if the government really does cut £12 billion from the social security budget, most of the pain will be felt by those in work. There have been some interesting reactions to this from right-of-centre think-tanks. The Institute of Economic Affairs said the cuts would be “extremely unfair on the working-age population” while the Adam Smith Institute warned that cutting tax credits would remove incentives to work and make the working poor worse off. The Centre for Policy Studies argued for an increase in the minimum wage to reduce the cost of tax credits.

It’s not just those on the left who think cutting in-work benefits is a really bad idea. In fact, it’s quite difficult to find anyone outside the government and its media cheerleaders who thinks this will do anything other than cause a lot of misery for a lot of people.

As Michael O’Connor pointed out earlier this week, close to half the UK’s families with children are receiving welfare support in addition to child benefit.

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A combination of a chronically low-wage labour market and rising housing costs means that people with jobs and children, the archetypal hardworking families the government keeps telling us about, can’t make ends meet without support from the state. People are already looking for better paying jobs and more hours. Cutting benefits isn’t going to magic up any more of them.

Compared to most European countries, the UK’s benefits system does a lot of heavy lifting, especially for those in work, reducing poverty levels from well above to just below EU and OECD averages. Unless there is a significant rise in pay over the next few years, cutting in-work benefits will see this country rising up the international poverty league tables.

Our labour market still isn’t creating jobs that enable people to look after their children and pay for their housing costs without help from the state. Both lefties and righties can see that cutting people’s tax credits isn’t going to change any of that. As one of my lecturers used to say, you can stop a dog from scratching by cutting its leg off but afterwards the dog will still have fleas.

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8 Responses to Cutting in-work benefits: right-wingers think it’s a bad idea too

  1. sdbast says:

    Reblogged this on sdbast.

  2. OliverD says:

    The Daily Mail ran an article earlier in the week with a pie chart of welfare spending showing that it is mostly pensions, child tax credits or in work benefits and asking ‘What would you cut?’, which suggests that even the right wing press are starting to wonder about it.

    Predictably, the top comment said something like ‘The state pension is not benefits! I have paid into the system for 50 years; it is just what I am owed.’ – Sigh

    • Bill Kruse says:

      No doubt the Mail failed to point out that corporate welfare, in the tens of billions, doesn’t appear in any pie chart pretending to illustrate welfare spending. It probably doesn’t mention the big bucks editor Paul Dacre has received in grants for his Scottish estate either. Frankly, if details like these were included, a very, very different picture might be drawn.

    • mrkemail2 says:

      We don’t need to cut anything. So it’s total nonsense.

  3. GrumpyLecturer says:

    The current problem of UK wages and working conditions can be traced back to the Thatcher Government of the 1980s. In an attempt to put working class people back in their box and return to employers ‘their prerogative to manage’ employees as they saw fit has had counterintuitive repercussions thirty years on.

    The removal of vast sways of stable industries that provided well paid work for millions, a philosophy that high unemployment would teach working people a lesson and the introduction of an individualistic rather than collectivist approach to Industrial Relations have all conspired to present us with the situation we now find ourselves in.

    The cynic would argue that since Thatcher successive Governments have engendered a UK Labour Market of low skilled, low paid and flexible (casual) workers. This seems the cost working people have to pay so that successive governments can reduce unemployment which in many instances, particularly in the Midlands and the North, finds its roots in the 1980s.

    The problem Rick is how is any rise in wages going to happen? Where will the pressure come from to initiate employers to pay more?

    Trade Union influence is now concentrated in the Public Sector and we all know that when these employees demand better wages or working conditions they are slammed left, right and centre by various groups claiming they are inconvenienced. In fact the individualist nature of the UK Labour Market encourages workers to confront workers when comments are heard from none Trade Unionist ‘that they have not had a pay rise for years so why should they (Trade Union Members) get one’.

    So if we rancour about collective action what can the vast majority of the Labour Market who believe in individualism do to elicit a pay rise? Well the rhetoric would have us believe that the individualised nature of today’s Employment Relationship works on the premise that the harder an individual works the better they will be rewarded. Ask any Human Resource Management ‘expert’ this mantra is stencilled on their foreheads. Does this cracked-pot philosophy actual work in reality? The evidence countrywide would appear to be a resounding no! As ‘hard working’ peoples wages have to be topped up from government coffers.

    In fact the movement of ‘cheap labour’ across both Europe and from the rest of world ensure that employers have continuous access to this ‘cheap labour’. Of course the employer’s argument is that UK citizens are not prepared to do this kind of work or worst still that UK employees are less productive.

    So that leaves the Government. Somehow it is presumed that they can become the Trade Union of the people working for low pay in poor working conditions. Even I cannot get my head round that one.

    Historically the wage/effort bargain works fairly simply within every occupation. The higher the skill level and the shortage of people with those skills provide an edge to employees when negotiating wages and conditions of work. However, in a low skilled, low paid and flexible (casual) Labour Market employees find they have little if no edge to influence their pay and working conditions.

    Employers wanting, where possible, to minimize wages & conditions of work but
    maximize effort

    V

    Employees wanting to maximize wages & conditions of work but with the least effort

    (A system within which conflict at some stage is inevitable)

    So the only answer would appear to be in a system where the majority of employees have no real voice or power that employers have pity and pay fair and equitable wages with proper working conditions to everyone working in the UK. (If pigs could fly?)

    So social unrest in the near future seems more likely than not as the present situation has no clear resolution.

  4. Dave Timoney says:

    Excuse me for being ever so slightly cynical, but I think you misunderstand the rationale of right-wing scepticism about cuts to tax credits. Their focus is on the “unfairness” of protecting pensioners over “strivers”, which obviously doesn’t mean criticising the privileges of the well-off (e.g. tax-breaks on contributions and reductions in tax on property and inheritance) so much as “wasting” tax-payers’ money on poor pensioners who failed to sufficiently “strive” during their working lives. All this trope indicates is that we’ve passed another tooth on the ratchet.

  5. lallygag26 says:

    The overt attack on the social benefit of pensions began with the active encouragement to draw down lump sums at 55. This is nothing to do with the good of the people, all about short term consumer boost. Just like inflating house prices meant that people could take ‘housing equity withdrawal’ (aka turning your life’s investment and savings back into debt again). Of course the covert attack has been going on for decades.
    I agree with Dave Timoney. A graph contrasting the pension spend with benefits for workers…it’s a no brainer. Pensioners lose.
    I also think the right wingers are panicking that they might find pressure is on them to pay slightly higher wages. They must be having kittens at the thought.

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