A Step too Far? What's the Story with Social Welfare?

Everything has a price tag these days, from politicians' expenses to the Olympics' opening ceremony. In any one day, on reading The Guardian alone, we are informed how much Barclay's has been fined (£290m) and how much in bonuses Bob Diamond will now forego as a result of the Barclay's shambles (£2.7m). We also know how much fuel duty Brits will no longer have to pay (3p), as George Osborne does a U-turn, and we're told how much this will cost the government (£550m). We are informed that London bus drivers are striking over Olympic bonuses, and told how much exactly these bonuses are (£500). The list goes on, from the cost of loan companies to how much the M&S Chief Executive is being paid; even how much BT Vision paid for 114 Premier League football matches (£738m).

Never before have people known so well the price of everything. When the cake gets smaller, we all start eyeing the crumbs.

No wonder then, that the welfare system is now being scrutinised under the analytical, economic eye of the public. And yet, how we look at the costs of the welfare system, and what story we pin these costs to, makes a great deal of difference in the world of politics.

Take, for example, the last few months and years, where a story has been slowly building around the welfare state, about how much it costs the UK and whether those who benefit from it actually deserve such benefits. A provocative story, no doubt; yet stories, however moving, can be very misleading. Compare, for example, the story that 'the government will pay out more in social security benefits than it raises from workers in income tax this year (2009)' to the story that 'the UK is ranked significantly below many other European nations in terms of how much it spends on welfare, including France, Germany, and Italy'.

Of course, we've been inundated with figures, the latest eye-watering figure to join this deluge of price tags being how much housing benefit for the under 25s costs the UK every year - coming in at £2bn. Add that to the total UK debt: £1tr (up £2.7bn in a year)

The analogy that's made, then, is of course the image of a family in debt. You can't borrow your way out of debt, you've got to cut back, right? Of course! And to do that, you've got to spend less, right? Duh!!

So, that's what the government is doing. Cutting back to pay off their debts, and the place they've chosen to do this is social welfare; the reason being that there are too many people dependant on the state. Social welfare gives the wrong impression, that you're better off on benefits than working for a living. This from Cameron:

'A couple will say, "We are engaged, we are both living with our parents, we are trying to save before we get married and have children and be good parents. But how does it make us feel, Mr Cameron, when we see someone who goes ahead, has the child, gets the council home, gets the help that isn't available to us?"

One is trapped in a welfare system that discourages them from working, the other is doing the right thing and getting no help.'

It's a provocative, and somehow alluring argument. It does indeed sound incredibly unfair!

In the face of the economic facts and figures, Cameron has focused on cutting back the welfare state in order to help pay off the UK's debts. Dependency on welfare, described here as the "welfare trap," needs to be tackled, and urgently. Cameron is not alone. The Telegraph, along with a great many middle-class couples living at home, not to mention a great many Tory donors, clearly supports the PM's agenda. Here, the story of a whole generation raised on a 'culture of entitlement,' looms large. A very alluring argument: blame it on the feckless young. Just look at them, listening to their terrible music and causing nothing but trouble!

But, let's take a step back for a minute. There is another way to tell this story.

In the hours and days immediately following the news that Cameron was setting his sights on removing housing benefit for the under 25s, a whole swathe of dissenting voices rang out, not least of which was Polly Toynbee's, who described Cameron as "stirring up those on quite low incomes against those on very low incomes". Here, writes Toynbee, Cameron is deliberately setting up a false dichotomy, dividing and ruling, by 'pitting "those who work hard and do the right thing" against those on benefits, all the time ignoring the fact that these are for the most part the very same people'. Polly confronts us with a whole new set of figures that Cameron has chosen to overlook:

For a start, the majority of people claiming benefits are not unemployed at all, they are the low-paid employed, the workers and cleaners, care-assistants and child-care workers, the people who clean our streets and who take care of our elderly loved ones, the people who mind our children. They are the 62% living below the poverty line who are employed but require benefits to survive. And as a counter-narrative for those who mean to suggest that this is a tidal wave of scroungers, 95% of the rise in housing benefits this year is paid to people in work. Only one in eight people who rely on housing benefit are out of work.

So, what the hell is going on then? What kind of story can we tell, if the problem of rapidly rising welfare costs can't be explained away solely by scapegoating a minority? How inconvenient, that we have to think a little harder.

Well, Owen Jones of The Independent, along with Polly Toynbee, attempts to explain the situation, not by blaming the inner psychological workings of the so-called undeserving poor, but by examining three external factors that feed in to this rapidly snowballing situation: low wages, high housing costs, and a dearth of job opportunities.

Regarding low wages, The Living Wage Foundation currently sets the living wage at £7.20/hr. With the national minimum wage set at £6.08 for those over 21 and £4.98 for those 18-20, we can see there's a bit of a deficit between what many are being paid on minimum wage and what is needed to survive in the UK. As such, people are relying on benefits to top-up their wages, not to scrounge. So, in this instance, taxes aren't primarily going to scroungers living off social welfare, they're subsidising big businesses who refuse to pay a living wage. Combine this with the rising cost of living and you might be tempted to think that it's not so much about cutting benefits, but increasing wages.

How about that for a twist in the tale?

The story doesn't end there, however. 95% of the increase in housing benefit is being paid to people in work who can no longer afford to pay their rent because their wages do not cover the costs. Housing costs have been rising far more than the minimum wage, and far more than the rate of inflation, three times more, to be exact. Again, then, instead of singling out a minority, and describing their apparent immoral inner workings, the temptation now might be to focus on reducing rents in the private sector, by, for example, imposing a cap on how much private landlords can charge, or maybe reducing the cost of buying a house, by investing in more social housing. After all, it's not so much that taxes are going towards maintaining feckless teenagers in the lap of luxury; they're going into the pockets of rich landlords who raise rents beyond affordability. Capping rents would mean all those people who are working on minimum wage might be able to afford their rents, or even get a mortgage, without having to rely on benefits in order to survive.

And finally, the elephant in the room, which doesn't require much more of my word count: How can you fit 2.5m unemployed people into 460,000 job vacancies?

In all this it's interesting to note that it is the so-called free-loading chav, the scrounger, who is the one deemed immoral, and not the big businesses who refuse to pay a living wage, or the private landlords who raise rents to impossible heights. Just as Jimmy Carr was scapegoated for the failure of the government to impose a fairer, more water-tight tax system, here too, the unemployed are singled out instead of the wider malaise, a system run by capitalist values, that is so out of control the government needs to subsidise it in order for it to survive, by paying housing benefit to the already employed, for example, not to mention bailing out banks.

Add to all this the final fact that we all intuitively know, that:

As each year passes, and the richest one per cent get richer still, the rest of the best-off ten per cent increasingly have a little more in common with the remaining nine-tenths of society, and less and less in common with those at the very top.

The only people gaining from all this are the richest of the rich, who have seen extraordinary rises in their wealth over the last few years.

[T]here has been a short, sharp entrenchment of inequality in the past two years. Last year, the earnings of FTSE 100 executives went up by 49%, while the annual pay of waiters and waitresses fell by 11% and those of cleaning staff by 3.4%. The average director at Britain's top 100 companies now earns 145 times more than their average worker.

We might note too, that a quarter of these people, the richest of the rich, are Tory donors.

So, now that we know the price of everything, which story do we want to tell?

Has the welfare state taken a step too far, encouraged a generation of entitled scroungers? Are we angry that our taxes are supporting this undeserving free-loader? On the other hand, has capitalism gone too far? Are we not angry that our taxes are subsidising big businesses who won't pay a living wage, and rich landlords who raise rents to unaffordable levels? Is David Cameron taking a step too far, by drawing back the welfare state in the wrong way at the wrong time, when to do so will only leave a rising number of people unable to cope? Is that the way we wish to end the tale? With rising homelessness, increased poverty, and a widening gap between the richest and the rest? Or do we want to create a different ending, by looking at establishing a living wage and investing in social housing, creating jobs, and laying the foundation of a good future for the next generation? Wouldn't that be a nice ending?

So, now that we have the figures, what's the story with social welfare? More to the point: which story do we want to tell?