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| Under George Osborne's benefit cuts, it's the strivers who suffer most | Under George Osborne's benefit cuts, it's the strivers who suffer most |
| (about 17 hours later) | |
| There's nothing new about the attempt to divide "benefit claimants" from deserving working people. Tough settlements for the welfare system have long been justified by claims to be cutting largesse from an undeserving poor. But neat categories like these have long been confounded by reality, and changes in the welfare system over the past 20 years have made them all but nonsensical. As Resolution Foundation analysis shows, 60% of the chancellor's benefit squeeze hits working households. Whatever the rhetoric, it's so-called strivers that bear the brunt of the cuts. | |
| Why is the formula of "skivers and strivers" showing signs of age? One reason is Labour's system of tax credits, which changed welfare by supporting low and middle income working households – the group the chancellor claims to be talking to. Tax credits themselves were in part a political move, to change the debate about welfare and poverty. But they also reflected new economic realities: childcare costs had soared, and many parents, particularly women, could not afford to work. Meanwhile, low pay had crept up to epidemic levels. For the one in five working people who now earn below £7.50 an hour, in-work support is vital. | Why is the formula of "skivers and strivers" showing signs of age? One reason is Labour's system of tax credits, which changed welfare by supporting low and middle income working households – the group the chancellor claims to be talking to. Tax credits themselves were in part a political move, to change the debate about welfare and poverty. But they also reflected new economic realities: childcare costs had soared, and many parents, particularly women, could not afford to work. Meanwhile, low pay had crept up to epidemic levels. For the one in five working people who now earn below £7.50 an hour, in-work support is vital. |
| Today these changes mean an uncomfortable truth for pro-work advocates of benefit cuts: much of the welfare system is there to make work pay. Indeed, the government seemed to understand this in its plans for the universal credit. This laudable attempt to simplify welfare brings together support for the unemployed and the low-paid into a single benefit for the first time. That should have helped to undermine lazy distinctions, while smoothing the frequent transitions in work that are the norm. Now, cuts threaten the system before it's even launched. So why sabotage your own welfare reforms with cuts that disincentivise work? | Today these changes mean an uncomfortable truth for pro-work advocates of benefit cuts: much of the welfare system is there to make work pay. Indeed, the government seemed to understand this in its plans for the universal credit. This laudable attempt to simplify welfare brings together support for the unemployed and the low-paid into a single benefit for the first time. That should have helped to undermine lazy distinctions, while smoothing the frequent transitions in work that are the norm. Now, cuts threaten the system before it's even launched. So why sabotage your own welfare reforms with cuts that disincentivise work? |
| When it comes to welfare spending, strategic judgments have driven the agenda. The pace of deficit reduction is part of it, but so is the decision to protect all pensioner households – including the affluent – from cuts. That has left the coalition having to raise big sums from working-age people, sums that can't be found from a few examples of workshy claimants. Spending on pensioners accounts for more than half of all "welfare", and that figure is set to rise sharply. That explains why in-work support for low and middle income households is being hit so hard. Nor should we forget that the squeeze follows a long line of cuts: a freeze to large chunks of working tax credit in George Osborne's first budget, cuts to childcare support for working parents soon after, the freezing of the rest of working tax credit in autumn 2011, and the withdrawal of support for part-time workers. | When it comes to welfare spending, strategic judgments have driven the agenda. The pace of deficit reduction is part of it, but so is the decision to protect all pensioner households – including the affluent – from cuts. That has left the coalition having to raise big sums from working-age people, sums that can't be found from a few examples of workshy claimants. Spending on pensioners accounts for more than half of all "welfare", and that figure is set to rise sharply. That explains why in-work support for low and middle income households is being hit so hard. Nor should we forget that the squeeze follows a long line of cuts: a freeze to large chunks of working tax credit in George Osborne's first budget, cuts to childcare support for working parents soon after, the freezing of the rest of working tax credit in autumn 2011, and the withdrawal of support for part-time workers. |
| It is too early to know how this will play out with the public. Attitudes to welfare have hardened in recent months, unusual in a downturn when images of hardship usually cause views to soften. In the next year, tough times may heighten resentments. Yet one thing is for sure: the chancellor is playing a high-stakes game by wooing working households with benefit cuts that come from their own pockets. | It is too early to know how this will play out with the public. Attitudes to welfare have hardened in recent months, unusual in a downturn when images of hardship usually cause views to soften. In the next year, tough times may heighten resentments. Yet one thing is for sure: the chancellor is playing a high-stakes game by wooing working households with benefit cuts that come from their own pockets. |
| James Plunkett is director of policy at the Resolution Foundation | James Plunkett is director of policy at the Resolution Foundation |
| • This article was amended on Sunday 7 January 2013. |
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