Osborne squeezes benefits again
Benefits will not be raised in line with September inflation in order to cut fuel duty.
By George Eaton Published 18 November 2011 10:26
It is indicative of George Osborne's political beliefs that when forced to choose between squeezing the rich and squeezing the poor, he squeezes the poor. Having already cut welfare payments by uprating benefits in line with the Consumer Price Index rather than the (generally higher) Retail Price Index (see James Plunkett's Staggers blog on the coalition's "£11bn stealth cut"), a move that cost families hundreds of pounds a year, he has changed the rules again.
I speculated last month that higher-than-expected inflation meant benefit payments would not be uprated in line with September's figures (when CPI inflation stood at 5.2 per cent) but a lower set of figures. Today's Times (£) confirms that Osborne is planning to do just this. Rather than increasing benefits in line with September inflation (as is traditional), he will increase them in line with a six month average (currently 4.5 per cent). Osborne has wisely exempted pensioners' benefits from the move - no government can afford to alienate the grey vote - but the policy change will still save the government around £1bn a year.
The money will reportedly be used to scrap the planned 3p rise in fuel duty this January, a populist measure that makes a mockery of the government's claim to be the "greenest ever". Moreover, it will do nothing to help the poorest, many of whom cannot afford to use a car. It is they who will suffer most from a real-terms cut in benefits. Those receiving disability benefits, carer's allowance, income support and jobseeker's allowance, will lose £50 to £100 a year. As Alison Graham, the chief executive of the Child Poverty Action Group, points out:
Increasing benefits below inflation will mean even more poor families having to choose between heating and eating. The costs of heating and electricity have gone up well ahead of inflation, with electricity up by around 10 per cent and gas up by around 15 per cent, so the Government should consider above-inflation increases to protect the health and well-being of children.
With unemployment at a 17-year high, the government should be increasing, not reducing benefits, a policy for which there is an economic as well as a moral case. Low earners spend a greater proportion of their disposable income than high earners and stimulate growth as a result. Once again, Osborne has adopted a policy that is neither economically wise nor socially just.
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46 comments
@Awake!
What the hell are you on?
Is this going to apply to public sector pension increases as well ... it did last year when the move was made from RPI to CPI.Disgraceful and dishonest.
Gideo can squeeze as much as he likes.
But, some of us have nowhere else to go for our income - hence we will continue to scrounge !
Osborne and his ancestors have been milking our feudal economy for centuries. What's new?
When George tires digging the bankers remind him of how he will look to the historian and provide him with a new shovel.
Gravedigger
Luddite asking someone to think, the height of irony.
matthew fox: Hello 1% finished your Lancashire hot-pot already.. NOW!! what are you going to do for your creature comforts now dollies inside you and you can longer get inside dolly, so to speak... Look here 1% welfare needs reforming those that can work should work. Gormless Gordon should of allowed Frank field, to do the unthinkable. besides what are you so terrified about someone may asked you to get a job?
Slapping another tax increase on fuel effects people across society. It's not a 'rich' issue.
George obviously thinks there is a bit of slack in the benefits handouts, so he's tightening things in that area. But I'm still with Dennis Healey when he said of the stinking rich: 'Squeeze them till their pips squeak'.
The fact is we need another round of Wealth Tax, and a FTT, and an Aviation Fuel Tax by international agreement.
And somebody needs to nail these speculators who are doing the economy down.
I'm with Swatantra on nailing down the speculators - preferably to the floor.
On the matter of reducing benefits so as to be able to not stick yet another robber tax on petrol - shocking, truly shocking.
Gideon is clearly out of his depth both politically and economically.
Taking the tough decisions translates into hitting the easy target.
If he really was taking tough decisions he would look at tax avoidance, FTT and wealth taxes. But he doesn't.
Benefit squeeze is a vote winner too. If he folds in a bit of stigmatisation of the unemployed "scroungers" he can really get middle-england baying.
All in this together.
its a shame for the people whose benefits aren't going to increase in line with inflation, but on the other hand benefits have an important multiplier effect, and by not increasing them enough it will push us further into recession and get the nasty party out of power even quicker.
Even at 4.5% benefit increase is huge! Who in the working part of the economy is getting 4.5% pay rises.
I'm all for this, at the end of the day, the fuel increase affects everyone as it pushes up the price of transport for people and goods. By not increasing fuel duty he is really helping everyone.
I can't believe i am defending Osborne by the way!
Trouble is there are plans to reform taxation, crack down on tax avoidance, reform the benefits system however all these are not short term solutions, necessary though. They will benefit most people in the long run but the Tories have few ideas of what to do and worse still we are running out of time.
it's a disgrace the way he's helping the owners of 29 million rich vehicle owners out there. assuming that each car owner sometimes someone else around, that's 60 million rich people and there (presumably rich mates) being driven around the UK.. tut tut osborne, what about the poor????
@Dave
How in the hell is 4.5% a HUGE pay increase, it is simply keeping benefits in line with inflation, otherwise it is a real terms cut.
Get an elementary economics textbook....
@Stu
Re: plans to reform taxation, crack down on tax avoidance
What measures are being introduced? I must have missed it.
With Food inflation running at 5% and Energy bills raising by double digits, how on earth is 4.5% is excessive?
I take it people on benefits dont eat or have access to gas and electricity.
I can't believe i am saying this but i think i am with the Tories on this, "puke".
End of the day i am not getting a pay increase and alot of people are in the same boat as me. So i tighten my belt and keep going. Someone on benefits will have to do the same i am afraid.
HOWEVER i still think the whole approach is wrong. The average person is paying the price for the mistakes of the financial system. The FTT is what needs to happen, Get the G20 to agree every country has to enforce the FTT and we are sorted. From my understanding its that simple and the world could be saved within a year or two. Let the people who caused this mess pay the price not the average joe public.
I seem to recall some ONS statistics regarding overpayment of benefits: 0.7% were deliberately fraudulent, 0.7% were those not reporting a change in circumstances, and 0.7% administrative error.
Bear in mind that JSA is currently under £60/wk, and Housing Benefit shouldn't include the cost of utility bills. Ideally, the benefits package should be set at a level where it's possible for claimants to survive by using minimal heating and buying own brand "Value" products - but not to get by with heating up full blast, buying branded products, and spending Friday and Saturday nights clubbing.
@Livers
Last time I heard they were planning to simplify the tax codes and bring in a bunch of quangoes to investigate people who avoid tax with offshore account etc... have they been fully implemented, I don't know but it's got to be better than what we have now.
@Gas And your income is what multiple of JSA? What have you had to cut back on? Luxuries no doubt, things the poor can't even contemplate buying. Bet you don't go without food so you can keep warm instead, or vice versa.
@Richy
I meant relatively speaking it is HUGE compared to what most people are experiencing in terms of pay rises, most of the public sector aren't even getting a pay rise this year...if you asked most of them if they wanted a 4.5% payrise they would bite your hand off.
I agree that in real terms, it is a benefit cut, but then most of us that are economically active are in the same boat, are we not?
It is widely accepted that Osborne isn't much of an economist. He is though a shrewd political strategist, he knows that by targeting so called "benefit scourgers" that that has resonance with voters.
He couldn't give a flying f**k about anyone on benefits, he doesn't need them for anything- they don't tend to vote tory. F**k em. That's his mantra.
Metaphorically speaking of course!
Very pleased with this decision and 4.5% is still a massive increase when many people are getting nothing and have had nothing for years. As for the tories not looking green, v pleased about that too but they do not go far enough.
This government is not being run by self made men who understand real world economics nor it would seem supply and demand.
The problem here is that they are governing by ideology, a failed one at that given it is in many parts what Bush did in America in his 2 terms. Over that whole time not 1 single job was created ( obviously some were created and some lost so overall its 0 any many of those were Army jobs).
We won't get out of these issues without the following.
1. Regain control of banking sector, including international. Stop them attacking small countries and continuing the instability of world markets.
2. A proper works program, building infrastructure, industry and housing for the next 50 years. To be borrowed on 10 year bonds at very low interest rates.
3. Stop attacking the poor and those who the gov seems to want to make poorer. Its only causing more unease while making many more people unemployed and taking demand out of the market.
The poor did not create this mess but it would seem some would like them to pay for it while also moaning about their 50% tax rate.
4. A nationalisation ( into non profit ) program for corrupt and failing businesses. Any business, from BP to HP who operates in a corrupt manner loses all assets, savings and property. News International would be one for instance, a complete lack of governance and accountability and then firing a lot of innocent staff. Staff get jobs back, company loses company / building etc... and business can operate as a new entity. This may also include the business being transferred to the staff, especially if, like many big businesses they have spent the whole pension pot ( BA ) and can never hope to replace what their staff have contributed.
@Fraziel1
4.5% of fuck all is still pretty much fuck all. You don't seem to get it that people on benefits are in the main not there because they want to be. Any reduction in real terms in benefits has a massive effect on their ability to eat and keep warm.
Your empathy I suppose is in keeping with your political views.
The ignorance of many comments is truly shocking.Benefits are paid to millions that work,Carers,people with disabilities,low paid etc.
I suppose you are too young to know, but Denis Healey really did try squeezing the rich till the pips squeaked. He confessed that he failed completely. What makes you think that Balls could do better? Or anybody.
Something wrong with your caps lock button Luddite, why don't you ring the Tomy technical helpline?
With welfare spending up by 5% and more unemployment on the way, the welfare bill will only be heading one way.
Don't forget unemployment is a double-edged sword, less tax revenue, or is that an hard concept to pick up.
Once you have finished your pot noodle, you can respond Luddite.
matthew fox...
Are you getting upset about dolly... never-mind 1% you've always got your five fingered widowed friend... pot noodle... 30 minutes.. I will be fine dining. Greek Turkish tonight with family and friends.. When 'one' works all week, it's nice to treat oneself.. Matthew enjoy your white lighting...
Simple answer make NI universal, Its the purpose of it after all is it not.
Those supposedly high over taxed earners in fact get a fantastic NI discount to compensate. No need to alter employer contributions, as that could affect jobs. Abolish the upper earnings limit. Its a 10% tax rebate for the rich.
Flat rate across the board to meet those needs covered by NI.
@des demona, firstly if you knew anything about benefits, as i do as i work for DWP, you would know that many people receive a lot of money, far more than is necessary and in many cases they get it far too easily. Secondly, 4.5% is a MASSIVE increase. I have not had a 4.5% increase in my working life EVER! I have also had a 3% increase in wages over the last 5 years as i am constantly told there is no money for a pay rise despite there being enough to pay immigrants billions in benefits.Everyone has to pay just now, whether we like it or not, and people on benfits, many of which receive huge sums, are no different. 4.5% is a massive incresae no matter how much the barmy left try to say it is not.I would have given them 2.5% and told them to lump it.And my political views come from living in the real world and not being some elitist liberal clown in an ivory tower.
Many carers, like myself, are living below the poverty line on an the abysmal £55 per week Carer's Allowance. It's been calculated that carers save the taxpayer over £100 billion annually be keeping their loved ones out of the care home sector, where basic weekly charges are on average £500 a week.
If we all refused to do this and dumped our relatives into homes, the UK would be financially bankrupted. But we won't, of course, and governments of all shades know this only too well. Let them eat cake is their motto.
Despicable creatures without any redeeming features (to quote a certain Tory MP) is how I regard the political class. This callous decision just reinforces that perception.
Nice one Gideon!!, yet again you punish the most needy in society, with a vindictive populist vendetta against anyone on benefits!!, you really are a petty, nasty, odious, shameless person!, you play into peoples prejudices that says people on benefits are worthless!, you treat people on benefits like vermin!, Gideon can take heart by his usual selfish, ignorant, vindictive, groupie apoligists on here!!, most, by the way, are probably hypocrites who are, or have claimed some sort of benefit in the past?, and under the Tories are more then likely to be claiming unemployment benefit in the future?, you all won`t be screaming for benefit cuts then, Will You??.
@ hindle-a
18 November 2011 at 13:37
The most sensible remark made on this or any other today.
Can you imagine how much more it would cost the Treasury if there was no Carers?
Those that think other-wise have a lot to learn, when disability or accident comes knocking at their door.
And it can happen to the strongest in the space of seconds!
Think before you wish to deprive those less fortunate than yourselves, they are not all scroungers!!
You have family and friends Luddite, are you quite sure.
Come on Luddite, can't go get anything right? White Lighting doesn't exist, your referring to White Lightning, which was discontinued in 2009.
If your going to insult, take the time to get it right.
I have no idea what a Greek Turkish is, it sounds odd, then again, your very odd.
They said 'we're all in it together'
Some of us more then others, however, people like Osborne, Clegg and Cameron are barely effected at all, at the other end of the spectrum, their are hundreds of thousands milking the system claiming a fortune who aren't in it either.
Luddite
19 November 2011 at 11:19
Has no one informed you Gordon Brown is no longer the Prime Minister, David Cameron is.
When are people like you going to realise that after being in government for 18 months the conservatives cannot keep using "It was all Labour's fault guv and nowt to do with us"
Those less fortunate than you did not create this crisis, greedy bankers did.
@ Trevor
18 November 2011 at 14:30
No matter how much you try, you will never make some Conservatives understand, the only thing they understand is "Money, Money, money" it is there God, they worship it, and not until trouble strikes them do they realise that there is more to this life than their uncontrolled greed and complete lack of sympathy or understanding of the very needy and those who cannot help themselves.
@ Robert Taggart
20 November 2011 at 13:48
It is idiots like you who makes things worse for those people who cannot work due to accidents, severe illness or born with disabilities. It is they who are going to suffer under these cuts along with their carers who devote their lives to them!
Cruel and thoughtless words have a bad habit of backfiring. It could be your turn next or someone you care about!
I wonder if you will be such a senseless, vindictive, smart Alec then?
p j wall: selfish' ignorant' vindictive. You mean folks such as myself!! "people on benefits are worthless" In the sense of wealth creating they are.. but who put them there!! More's to the point, who kept them there. Before you go on your usual rant think about it?
@Trevor-agreed.Also,many Carers attend to medical treatments otherwise done in hospitals(eg haemodialysis);their carees,receiving DLA may well be in the same household .Doing the "responsible thing" for us is vastly different to this Government;both in words and action.
@ Jimminy wicket
'No matter how much you try, you will never make some Conservatives understand, the only thing they understand is "Money, Money, money" it is there God, they worship it, and not until trouble strikes them do they realise that there is more to this life than their uncontrolled greed and complete lack of sympathy or understanding of the very needy and those who cannot help themselves'
You actually believe that?? greed is the defining chracteristic of a conservative.
U are consumed by hate- the most appropriate religion u might care to follow now is a christian based one, focusing on a key central tenet to this faith of forginess- clearly u've had a negative psychological experience and your head needs some work.
Once u 'get' the point of forgiveness, try something a little ore from the East. Sri buddha a good place to start, as long as it's from the East, subject and object were collpased into the one long ago there.
You can ignore and laugh, ure miserable life though...
Silence from Labour as usual. Couldn't be other since these attacks on people on benefits are just following Purnell's template.
A one-party state, with three management structures in "competition". That's where the fourth estate is so necessary. It's not just the back pages that are sport.