Osborne’s £12bn cuts mainly from those in work will backfire badly

Contrary to incessant Tory propaganda about a pervasive culture of welfare dependency, the evidence actually shows jobless benefits claims are now at a 35 year low, but will be put at risk if Osborne pursues his £12bn welfare cuts at the expense mainly of people in work.   Of the three out-of-work benefits – unemployment benefit and income support mainly for single parents and disabled persons – the proportion of the working age population receiving one of these benefits (according to the Resolution Foundation) peaked in 1993 at 17%.   It now stands at 10%, its lowest level since 1980.   The number of children living in workless families has also dropped from 20% in 1996 to 12.5% now.   There are now fewer than 100,000 workless couples with children (excluding where adults are disabled).   Moreover the UK employment rate for single mothers has risen from under 40% in the early 1990s to 62% now, and has continued to rise through this latest recession.

These statistics point to two important conclusions.   One is that the Tory-promoted stereotype about a welfare class opting for a life of State-funded leisure is utterly wrong.   The other is that the gains that have been achieved by providing significant financial support for working households are in danger of being eradicated if Osborne gets his way by victimising those on in-work benefits.   Because the government regards pension benefits as out of bounds, the welfare cuts will be mainly concentrated on tax credits and disability benefits.   But this will have perverse results.   Reducing the value of tax credits may well make it no longer economically worthwhile for people on the lowest paid margins to work.   Equally, if Osborne curbs Britain’s system of maternity pay and rights which has kept so many young mothers connected to the labour market, the economic incentive to stay connected will simply drain away.

The real answer of course is raising the wages of the depressed bottom third of the working population.  It has been estimated that the saving to the State in tax credits and in-work benefits would actually outweigh the cost of the higher wages.   What is really needed now is a significant rise in the minimum wage, currently £6.50 an hour, to a Living Wage standard of (say) £8 an hour which is then annually increased either in accordance with the national average wag or with inflation, whichever is the higher.

Osborne will certainly not do this.   But what he will do, just as his deficit-cutting machine will choke off growth, his welfare cuts machine will whittle away most of the employment gains of the last 20 years.

9 thoughts on “Osborne’s £12bn cuts mainly from those in work will backfire badly

  1. Single mothers how can these work with young children people unemployed bloody more than whot they say atleast twice whot they state yet universal credit isnt for the masses its to help take benefits away from you how do you ask well the easiest answer you working just keeping your head above water yet they call you into your local jcp and asked whot are you doing to get off benefits yes a master stroke by the tories ohthers other problems to but this one takes the biscuit culling the stock rtu id

  2. “Jobless out of work benefits” may well be “at a 35 year low” but isn’t one of the reasons for this that people on sanctions are not being counted in the jobless figures? I believe that’s the real reason why people are being sanctioned, usually quite unfairly. Someone estimated the figures would show that a further million remain unemployed.

    Meanwhile there are a higher than average number of evictions in Gloucester, many due to people on zero hours contracts not being able to afford to pay their rents. As reported in the local paper, The Citizen, the Tory MP doesn’t accept there’s a problem as he reckons the banks are more understanding these days. So he’s only thinking of people with mortgages and forgets about those renting from the council and housing associations. Out of touch or what!?

  3. The Tories advertised themselves as being the party for hard working people, so it’s a pity this doesn’t come under the jurisdiction of Trading Standards.

  4. You know, I personally doubt that any value exists in discussing Party Political issues any more. People the world over must take note of the highly networked power structure; Including a great many NGO’s that excercise total power over the “show” as represented by National politics, shaped to conform with Global corporate goals. If I may, and I apologise to Mr Meacher for placing these three links all within one comment, I would like to draw attention to two British organisations fighting to draw attention to our “real” reality:




    The first Video: Please forgive me if you already know these groups, deals with the utter corruption extant. The second involves the subversion of our country and the means.

    The third is a Polish Journalist that I follow who demonstrates the building global reality through the lens of our EU Supra Continental Mafia.

    I remember reading that the sums paid (illegally and unlawfully) represent less than 1% of VAT receipts. This is, as Mr Hayes demonstrates with Council Tax, Money Laundering on a global scale.

    George Osborne, our sniffing, bullingdon playboy is irrelevant. He is doing as he is told, as would a Labour “Chancellor” had our faux Labour party won the “Election”.

    I live hand to mouth, but I manage each year to pay a much needed subscription to these groups. It is positive action that is needed. Mr Hayes is struggling; Against the odds to bring a “Lawful Bank” into existence: I signed up for it years ago, and can inform that Mr Hayes is fighting against an implacable resistance to these needed measures.

  5. Excerpt from President Barack Obama’s State of the Union Address, January 28, 2014:

    “Today, after four years of economic growth, corporate profits and stock prices have rarely been higher, and those at the top have never done better. But average wages have barely budged. Inequality has deepened. Upward mobility has stalled. The cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by – let alone get ahead. And too many still aren’t working at all.”

    I also agree with Wanda Lozinska above that the figures for unemployment, (being quoted here and elsewhere,) are bogus and that the real number is probably still somewhere between 3 – 6 million.

  6. Insightful, incisive and intelligent, thank you Mr. Meacher. Unlike our lords and Masters.

  7. Our whole democracy is under threat, what little remains of it that is, we face an uphill struggle to convince ordinary people that hiding in the shadows isn’t going to make the problems go away.

    I believe most people know that something is seriously wrong with our democracy, but can’t quite see it. The confusion comes about when they hear that people they thought were their party, use the same language as the Tories with the same economic outcomes.

    We will only get change in this country when we have sufficient voices giving opposition to the current insane agenda, the Labour Party is not Labour but are Neo-Liberal and in context therefore Tory.

    TTIP is the culmination of the corporate takeover, and people are sleepwalking into it, Lazy politicians that are not involved in the debates and construction of this legislation are just going to accept these binding rules. Clearly having heard Labours pathetic defence of this acceptance as working with rather than rejecting outright, as though they were being responsible, is absurd in the extreme, rather like putting the hang man’s noose around your neck yourself. With the same consequences.

    What we need in the Labour Party if it is to be saved, are people that tell it as it is, it doesn’t matter how few there are still in the party, we need to expose the complicity that is pervade as being responsible.

    There are far too many now in the party that just go along with the flow, either the party splits or people with conviction stand up and be counted, because the challenges outside the party are too great to contemplated and need active resistance.

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