Cumulative effect of welfare reform revealed – deprived areas hit much harder than the rich

Tags

allowance, austerity, BBC, business, Centre, close, commission, communities, community, cost, cumulative impact assessment, David Cameron, demonstration, deprivation, deprived, disability, Disability Living Allowance, disability news service, disabled, DLA, DNS, economic, EHRC, employment, equalities, ESA, esther mcvey, financial loss, human rights, IB, Incapacity, Landman Economics, mark hoban, Mike Penning, National Institute, NIESR, Personal Independence Payment, PIP, Reform, Regional Economic, report, Revenue, rich, Sheffield Hallam University, shop, Social Research, social security, spending, support, tax, transparent, travel, viability, welfare

Deprived parts of Glasgow were worst-affected by ‘welfare reform’ according to The Courier [Image: thecourier.co.uk].

The headline should not come as a surprise – of course changes that cut benefits for the poor are going to harm them more than rich people.

But do you remember David Cameron’s claim that his government would be the most transparent ever?

Isn’t it interesting, then, that the independent Equalities and Human Rights Commission (EHRC) has found a way to compile information on the effects of tax, social security and other spending changes on disabled people, after the government repeatedly claimed it could not be done?

It seems Mr Cameron has something to hide, after all.

We already have a taste of what we can expect, courtesy of our friends in Scotland, who commissioned the Centre for Regional Economic and Social Research at Sheffield Hallam University to study the relationship between deprivation and financial loss caused by “welfare reform”.

The study shows that more than £1.6 billion a year will be removed from the Scottish economy, with the biggest losses based in changes to incapacity benefits. The Scottish average loss, per adult of working age, is £460 per year (compared with a British average of £470) but the hardest hit area was impoverished Glasgow Carlton, where adults lost an average of £880 per year.

In affluent St Andrews, the average hit was just £180 per year.

Of course, the cumulative effect will hit the poorest communities much harder – with an average of £460 being taken out of these communities it is not only households that will struggle to make ends meet; as families make cutbacks, local shops and businesses will lose revenue and viability. If they close, then residents will have to travel further for groceries and to find work, meaning extra travel costs will remove even more much-needed cash from their budget.

For a nationwide picture, the EHRC commissioned the National Institute of Economic and Social Research (NIESR) and the consultancy Landman Economics to develop a way of assessing the cumulative impact of “welfare reform”.

The report will be published in the summer, but Landman Economics has already told Disability News Service that the work was “not actually that difficult”.

Why, then have Mark Hoban, Esther McVey and Mike Penning, the current minister for the disabled, all claimed that a cumulative assessment is impossible?

Some might say they have a vested interest in keeping the public ignorant of the true devastation being wreaked on Britain’s most vulnerable people by Coalition austerity policies that will ultimately harm everybody except the very rich.

Some might say this is why the BBC – under the influence of a Conservative chairman – failed to report a mass demonstration against austerity by at least 50,000 people that started on its very doorstep.

Misguided conspiracy theorists, all!

Or are they?

Follow me on Twitter: @MidWalesMike

Join the Vox Political Facebook page.

Vox Political needs your help!
This independent blog’s only funding comes from readers’ contributions.
Without YOUR help, we cannot keep going.
You can make a one-off donation here:

Alternatively, you can buy Vox Political books!
The second – Health Warning: Government! is now available
in either print or eBook format here:

The first, Strong Words and Hard Times
is still available in either print or eBook format here:

Place your bets on Osborne’s next excuse for economic failure

Tags

America, Any Questions, Baroness, BBC, benefit, bill, business, cambridge, Coalition, cold, Conservative, cut, debt, deficit, duchess, duke, economy, electricity, exeter, fiscal, food, forecast, francis maude, gas, George Osborne, government, heat, Japan, jonathan dimbleby, kate middleton, Liberal Democrat, light, loss, Margaret, Mike Sivier, mikesivier, Mrs, multiplier, people, policy, politics, poor, prince william, rent, repair, rich, share, shop, social security, tax, Thatcher, Tories, Tory, unemployment, United States, utility, Vox Political, water, weather, welfare

This is not a good time to run a retail business – the effect of the Coalition’s benefit cuts will trickle up and bite our rich retailers and industrialists hard.

According to the BBC website, business activity was hit hard by last month’s exceptionally cold weather, with the number of people visiting shops down by more than five per cent.

For one person, this will have been an extremely pleasant piece of news, because for once he won’t have to explain himself.

That person is, of course, Gideon George Osborne.

For one month, he hasn’t been in the unenviable position of having to root around in the political undergrowth for a reason the economy has tanked – that isn’t related to his own hopelessly inadequate economic policies.

For one month only!

He will not have an excuse when the figures come in for April, worse than for March, as sane economic forecasters should expect.

Instinct says he will tell us the funeral of Margaret Thatcher will have something to do with it. He used the wedding of the Duke and Duchess of Cambridge as a shield – what goes for ‘matches’ must surely apply also to ‘dispatches’.

The real reason will be the effect of the huge benefit cuts, that will take £19 billion out of the economy over the next year, if commentators are to be believed.

That’s just in money terms. Add in a conservative estimate of the fiscal multiplier (the effect on the economy) and we’re staring into the black pit of a £30.4 billion loss. That would be £500 for every person in the UK, if we were all affected.

But the richest among us won’t be. It is on the poorest and least able to defend themselves that this hammer blow has fallen. The government has been giving money back to the richest, as we all know.

In fact, this show of support for his cosseted buddies might protect them from the storm that’s coming, and may therefore prove to be a shrewd move – but we must all remember that Osborne is not an intelligent man and good fortune coming to anyone as a result of his policies is pure chance.

Because the rich will be affected by the benefit cuts. Poor people have no choice but to spend the money they receive. They have to buy things they need and pay the bills, so it goes on food, heat, light, water, the rent, repairs and other necessaries. With less money available to them, they will not be spending as much in the shops, and will be more careful about how much gas, electricity and water they use, as well.

Who owns and runs the shops? Who owns the shares in the utility companies (now that the bulk of shares have been bought up from the middle-class speculators who bought them in the 1980s)?

The rich.

After a few months of this, we’ll see what happens to their profit margins. My guess is that a £100,000 tax rebate won’t help very much.

The propaganda machine keeps spewing out nonsense, of course. Only last weekend we heard Francis Maude telling Jonathan Dimbleby and the Any Questions audience in Exeter: “The Coalition government, which is two parties which have come together from a different place, in the national interest, to do something quite big and difficult, which is to address the biggest budget deficit any country in the west had.”

It wasn’t the largest budget deficit of any western country – either by size or percentage of GDP. That was a flat-out lie and I wish Jimbles would pull him up on it.

The deficit in the United States is greater than ours in percentage terms; in money terms, it dwarfs the UK.

Across the whole world, Japan has the biggest deficit.

Strangely, you don’t hear the Japanese making a big fuss about it.

New benefit plan has no heroes – only zeroes

Tags

average, benefit, benefits, budget, business, Coalition, Conservative, Conservative Party, cut, debt, deficit, earnings, economy, False Economy, fiscal, George Osborne, Gideon, government, hindrance, inflation, Liberal, Liberal Democrats, linking mechanism, Mike Sivier, mikesivier, Nasty Party, NatCen, Parliament, people, politics, poll, private sector, public sector, recession, regional pay, regional settlement, salaries, shop, supplier, survey, tax, taxes, Tories, Tory, unemployment, uprating, VAT, Vox Political, wages, welfare

Shall we play a game? This one’s called join-the-dots. I didn’t really like it when I was younger and I doubt that you will, after you see the picture we’ll be creating.

We’ll start here: The government wants to cut another £10 billion from the welfare budget – that’s the bit of public spending that keeps millions of people off the streets, if only on the breadline. The government could, alternatively, try stimulating the economy to make that money in taxes, but policy seems to be pushing hard the other way, as we’ll see shortly.

So: cuts are coming. How to perform them? Draw a line to where the government announces it wants to break the link between benefits and inflation, and link them to average earnings instead.

George Osborne thinks this is a good idea because inflation hit 5.2 per cent last September, much higher than rises in earnings – remember, the man who won’t do what his initials demand (GO) has kept public sector wages frozen for the last few years and private sector wages are also stagnant. As a result, Gideon has been paying out more than he thinks he should to people who, honestly, deserve a break from his miserly administration.

Now draw a line to the results of the NatCen survey that came out earlier this week, stating that people do not want to see more money being spent on welfare than is being spent already. This is the excuse that Mr Osborne wants to use – he can say there is polling evidence that puts significant numbers in support of an end to so-called benefits uprating. Never mind that only 3,000 people were asked or that none of the main parties ever intended to increase the proportion of government spending that goes on welfare; this is his justification and he’s sticking to it.

I wonder what will happen if wages start to rise faster than inflation? Will the Nasty Party write a new clause into the contract, that benefits should rise along with inflation or wages, depending on which is lower? Officials have already stated that they do not want a huge increase in benefits if wages start to climb sharply, so they are already working on ways to ‘fix’ the linking mechanism. Evil, isn’t it?

Never mind; the current plan uses wages, so now draw a line to this: The government still wants to introduce regional pay settlements for the public sector. The Tories – sorry, the Coalition – believe that national pay settlements inflate public sector wages in certain parts of the country far beyond what their private sector counterparts can manage. They also believe that forcing regional settlements on us will save them a fortune in salaries.

Think what this will achieve: The ghettoisation of much of the UK. With regional pay deals, people will have less money available for things other than necessities, meaning fewer trips to the shops (which have already suffered thanks to the idiotic VAT increase to 20 per cent, which cut a large chunk of growth out of the economy). What happens then? The shops shut and their suppliers go out of business too. More people end up on benefits and looking for work.

You see, this right-wing government does not accept the simple fact that welfare benefits help keep the economy stable. Yes, government spending increases as payments are made, but businesses keep their customers, the economy stays afloat and the country as a whole avoids a terminal spiral of decline.

Cutting welfare, thereby reducing the incomes of society’s poorest, creates fiscal hindrance. As billions of pounds (£10 billion in this case) are taken from the active economy, businesses lose customers and lay off staff.

In a recession, increased welfare spending benefits national income so that each pound is worth £1.60 when it has worked its way through shop tills and paycheques. When welfare is cut, this works in reverse, so cutting £10 billion from benefits will increase the UK’s recession by more than one per cent.

This means a longer recession, a larger deficit and more debt. (The above information courtesy of the False Economy website, which has produced a handy factsheet for you to download, keep, and show to anyone spouting Tory propoganda)

Now draw a line to: The government wants to cut more money from the welfare budget.

Look at what you’ve drawn. A big, fat zero.

This is what the government’s plan will achieve for the people, and economy, of Britain.