Welfare cuts

I was speaking at an Edinburgh Trades Union Council event last night on the impact of welfare cuts. Part of a series of meetings to take forward the STUC's 'A Just Scotland' initiative.


For the decade up to the 2008 crash there were measurable improvements in welfare support for children and pensioners. Child poverty in particular was reduced, even faster in Scotland than in England as the recent Rowntree report on poverty in Scotland highlighted. This did not, as the Tories would have you believe, result in a welfare budget that was spiralling out of control. In fact as a percentage of public spending, welfare spend had reduced compared to 1997.

However, this was not a sufficient response to poverty in Scotland or across the UK, certainly for the working poor. It still leaves today;

• 780,000 (15%) of Scots in relative poverty and 490,000 (10%) absolute poverty;

• 658,000 households (28%) living in fuel poverty;

• 90,000 under 25 year olds unemployed. That’s doubled since 2008;

• for the rest part-time and self-employment is masking the true levels of unemployment;

• The number of low-income, working families has increased from 125,000 to 150,000

The consequence of this is growing inequality with a 14 year life expectancy gap between those living in the most deprived and least deprived areas of Scotland.

Putting the wider impact of austerity economics aside, it is about to get much worse. Major welfare cuts are to be imposed at time of weak job prospects and underemployment, especially for young people.

The main driver is the introduction of Universal Credit. Seven in and out of work benefits are to be combined including; Income Support, Job Seekers Allowance, Employment Support Allowance, Housing Benefit, Child Tax Credit, Working Tax Credit, Support for Mortgage Interest.

The UK government claims this will simplify the benefit system. In my view sticking benefits together is not simplifying. This is an all or nothing reform. If something goes wrong it could cut the sole source of income to vulnerable people and the complexity of the IT systems makes that distinct possibility. To that you can add:

• monthly payment in arrears;

• A household payment not individuals that will leave vulnerable women particularly exposed;

• Digital by default for groups that have limited computer access.

And all that’s before straight cash cuts by:

• increasing benefits in line with CPI, a lower measure that will impact on 200,000 children, 300,000 adults;

• uprating by only 1% a measure that alone will drive a further 200,000 children into poverty across the UK;

• switch from DLA to Personal Independence Payments with 20% budget cut;

• 60,000 Scots will lose some of current DLA mobility component;

• families with two children will lose £1079 by the end of 2015. The Labour Party has also added up cuts to child tax credits, the three-year freeze on child benefit, the 1% cap on the rise in statutory maternity pay and the abolition of the maternity grant - into a £1700 'Toddlers Tax'.

Let's also not forget the economic consequences. There are 570,000 benefit recipients in Scotland. These cuts mean £2.5bn taken out of Scottish economy. Money that would be spent locally supporting businesses and jobs.

Then we have the rhetoric – strivers and skivers.

This seeks to play to a perception of public opinion. As recent NatCen research shows the public is sceptical about impact on recipients, believing that some are more deserving than others. Many of these perceptions are actually wrong. For example most people support welfare for children although 68% think they are in poverty because their parents are addicts. More worrying for the ConDem's they still see the Government, not individuals, as being responsible for welfare. These perceptions appear to apply to the company delivering the Welfare to Work programme. According to a piece on GMS recently they described clients as ‘lying and thieving’.

The reality is somewhat different from public perception:

• the biggest losers from the 1% uprating are people who are employed;

• benefits for unemployed constitute only 4% of the welfare budget. Only 8% claim for more than a year;

• 60% of the welfare budget goes on pensioners.

Then we have that other myth, welfare fraud. That actually costs only 70p out of every £100. Compare that to the £120bn tax dodging by the rich.

It is also argued that we have a culture of worklessness that welfare reform will tackle. This is another myth the JRF Study in Glasgow & Middlesborough shows. There was no evidence at all as two generations of claimants are rare (0.3%) and not surprising children don’t want to follow their parents down this route. Oh and by the way, only one-third of incapacity benefit claimants were long term.

The architect of all this is Ian Duncan Smith. Some will remember him coming to Easterhouse eleven years when he was the Tory Party leader to meet Bob Holman and learn about poverty. He said and did some interesting things for a Tory, driving compassionate Conservatism. I would recommend Bob's interview in Holyrood Magazine to see what he thinks of IDS today!

Poverty is as real for those in work and if this is the route out of poverty then work has to pay. However, real wages are falling while the combined worth of the country's 1,000 wealthiest people is £414bn, up 4.7%.

I have focused in this post on the impact of UK Government policy, because I believe the impact is not fully understood. One in four Scots could be in poverty by end of decade. However, finally I will look forward.

The Scottish Government has done some small and useful things to mitigate the worst effects including; passported benefits, covered the Council Tax Benefit cuts for one year, the Scottish Welfare Fund and extra funding for advice agencies. Perhaps more worrying for them is that two-thirds of Scots think they are responsible for welfare benefits! But we need a more radical approach at all levels. At its basic level it's simply about raising incomes creating the sort of fairer and more equal society that underpins the Just Scotland approach to constitutional change.

The problem is not devising a constitutional arrangement. You could envisage an independent or devolved set of powers and then produce a wonderful vision of the sort of welfare system many of us would wish to see - largely on the Nordic model. The problem is political will. There is no indication that any of our political parties are yet ready to have the necessary conversation with the voters about the taxation system needed to sustain a Nordic model of welfare.

To be positive all is not lost on this issue in Scotland or even in the UK. The Scottish Government has taken some small actions as I have set out above. I will also pay credit to Ed Miliband for challenging the Tories on welfare cuts when there were those in the Party, armed with polls and focus groups, arguing that Labour should duck the issue. As TUC research has indicated public opinion is also changing and that can only move in our direction as the cuts bite. Remember, there is much worse to come as Cameron and Osborne seek to dismantle the state and reduce welfare to the most basic of safety nets.

There will be no quick fixes, no vanguard actions by trade unions or others. Instead we need to steadily build support for a better way.