The "better off on benefits than in work" claim is a complete fallacy - where's the evidence?

The real issue for the government is not making work pay, but making work exist, says the PCS union's Mark Serwotka.

 

Earlier this month work and pensions secretary Iain Duncan Smith and chancellor George Osborne claimed their changes to our welfare system mean, "no longer will it be possible to be better off on benefits than in work". The prime minister wrote the same in the Sun, calling it a "crazy situation".

The government's line, as it very gradually rolls out Universal Credit from today, that it is "making work pay" has cross-party support. "We would make work pay," promises Duncan Smith's mini-me Liam Byrne, while shadow chancellor Ed Balls affirms that "it must pay more to be in work than live on benefits."

My union's members, tens of thousands of whom work on the benefits and tax credits system, are confused. A jobcentre worker told me: "All the calculators that we use in jobcentres are designed to show that you would be better off in work."

So if politicians are telling us all that you can be better off on benefits, and jobcentre advisers are telling claimants that they would be better off in work, someone is being lied to. But who? Iain Duncan Smith should come clean. But not being one to look for pots of gold at the end of rainbows, I asked my union researchers to look into it.

They found the DWP’s "tax benefit model" – data which showed how much better off people out of work, in a range of circumstances, would be by moving into employment. Publication of this data was, intriguingly, abandoned in 2010 – just after the coalition government was elected, but a similar calculator is still used by DWP staff. It shows what would happen if someone moves into work for 30 hours per week. Even on the minimum wage, the legal minimum, benefits only deliver 79 per cent of what you would be paid in work.

We looked again to see if the same was true for only 16 hours of work – after all there are 1.4 million people working part time because they can’t find full-time work. This time benefits were only worth 81 per cent of a working income. Jobcentre advisers tell me these figures closely match the ones they use today.

For verification, we checked against data collected by the Organisation for Economic Co-operation and Development on all major countries’ welfare systems, including the UK’s. Like the DWP calculator, it factors in housing costs and benefits, and it assesses what is called the "replacement rate" for moving from benefits into work for 30 different household types – and in not one single case would a household be better off on benefits.

It does not feature in either the DWP's or OECD's models, but work might not pay for those who work very few hours in low paid jobs. But the irony here is that Duncan Smith has himself actually made this more likely by increasing the number of hours people need to work before they receive working tax credits.

The "better off on benefits" fallacy has become common. In truth, there has always been a clue that it is an urban myth: no one who claims it exists has ever actually given up work to live the benefits high life. And why not? Probably because deep down they do not believe it, but it is also true that even when the benefit of working is highly marginal, most people want to work. As unemployment climbs above 2.5 million, and 6.8 million counting as underemployed, the reality is there are fewer than half a million job vacancies. The real issue for the government is not making work pay, but making work exist.

PCS members working in jobcentres face a bullying management driving down their own living standards and setting targets that staff are told to deny exist. Low pay is so endemic that up to 40 per cent of the DWP’s own staff will be eligible for Universal Credit themselves. It is grim, far worse than when I started working for the DHSS in the early 1980s. Back then we helped claimants and took as long as was necessary to get them the benefits to which they were entitled.

On the other side of the counter (or more likely now on the other end of a phone) it is even worse, with claimants subject to more and harsher sanctions, unprecedented demonisation from ministers and a Pavlovian press trained to foam at the mouth at the mention of scroungers and skivers.

As well as challenging ministers’ myths, we have a duty to challenge their hatred-inciting rhetoric. So the next time Iain Duncan Smith – or anyone else for that matter – claims people are better off on benefits, hand him a pen and paper and ask him to show you how.

Mark Serwotka is the General Secretary of the Public and Commercial Services Union 

Work and Pensions Secretary Iain Duncan Smith. Photograph: Getty Images
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Find the EU renegotiation demands dull? Me too – but they are important

It's an old trick: smother anything in enough jargon and you can avoid being held accountable for it.

I don’t know about you, but I found the details of Britain’s European Union renegotiation demands quite hard to read. Literally. My eye kept gliding past them, in an endless quest for something more interesting in the paragraph ahead. It was as if the word “subsidiarity” had been smeared in grease. I haven’t felt tedium quite like this since I read The Lord of the Rings and found I slid straight past anything written in italics, reasoning that it was probably another interminable Elvish poem. (“The wind was in his flowing hair/The foam about him shone;/Afar they saw him strong and fair/Go riding like a swan.”)

Anyone who writes about politics encounters this; I call it Subclause Syndrome. Smother anything in enough jargon, whirr enough footnotes into the air, and you have a very effective shield for protecting yourself from accountability – better even than gutting the Freedom of Information laws, although the government seems quite keen on that, too. No wonder so much of our political conversation ends up being about personality: if we can’t hope to master all the technicalities, the next best thing is to trust the person to whom we have delegated that job.

Anyway, after 15 cups of coffee, three ice-bucket challenges and a bottle of poppers I borrowed from a Tory MP, I finally made it through. I didn’t feel much more enlightened, though, because there were notable omissions – no mention, thankfully, of rolling back employment protections – and elsewhere there was a touching faith in the power of adding “language” to official documents.

One thing did stand out, however. For months, we have been told that it is a terrible problem that migrants from Europe are sending child benefit to their families back home. In future, the amount that can be claimed will start at zero and it will reach full whack only after four years of working in Britain. Even better, to reduce the alleged “pull factor” of our generous in-work benefits regime, the child benefit rate will be paid on a ratio calculated according to average wages in the home country.

What a waste of time. At the moment, only £30m in child benefit is sent out of the country each year: quite a large sum if you’re doing a whip round for a retirement gift for a colleague, but basically a rounding error in the Department for Work and Pensions budget.

Only 20,000 workers, and 34,000 children, are involved. And yet, apparently, this makes it worth introducing 28 different rates of child benefit to be administered by the DWP. We are given to understand that Iain Duncan Smith thinks this is barmy – and this is a man optimistic enough about his department’s computer systems to predict in 2013 that 4.46 million people would be claiming Universal Credit by now*.

David Cameron’s renegotiation package was comprised exclusively of what Doctor Who fans call handwavium – a magic substance with no obvious physical attributes, which nonetheless helpfully advances the plot. In this case, the renegotiation covers up the fact that the Prime Minister always wanted to argue to stay in Europe, but needed a handy fig leaf to do so.

Brace yourself for a sentence you might not read again in the New Statesman, but this makes me feel sorry for Chris Grayling. He and other Outers in the cabinet have to wait at least two weeks for Cameron to get the demands signed off; all the while, Cameron can subtly make the case for staying in Europe, while they are bound to keep quiet because of collective responsibility.

When that stricture lifts, the high-ranking Eurosceptics will at last be free to make the case they have been sitting on for years. I have three strong beliefs about what will happen next. First, that everyone confidently predicting a paralysing civil war in the Tory ranks is doing so more in hope than expectation. Some on the left feel that if Labour is going to be divided over Trident, it is only fair that the Tories be split down the middle, too. They forget that power, and patronage, are strong solvents: there has already been much muttering about low-level blackmail from the high command, with MPs warned about the dire influence of disloyalty on their career prospects.

Second, the Europe campaign will feature large doses of both sides solemnly advising the other that they need to make “a positive case”. This will be roundly ignored. The Remain team will run a fear campaign based on job losses, access to the single market and “losing our seat at the table”; Leave will run a fear campaign based on the steady advance of whatever collective noun for migrants sounds just the right side of racist. (Current favourite: “hordes”.)

Third, the number of Britons making a decision based on a complete understanding of the renegotiation, and the future terms of our membership, will be vanishingly small. It is simply impossible to read about subsidiarity for more than an hour without lapsing into a coma.

Yet, funnily enough, this isn’t necessarily a bad thing. Just as the absurd complexity of policy frees us to talk instead about character, so the onset of Subclause Syndrome in the EU debate will allow us to ask ourselves a more profound, defining question: what kind of country do we want Britain to be? Polling suggests that very few of us see ourselves as “European” rather than Scottish, or British, but are we a country that feels open and looks outwards, or one that thinks this is the best it’s going to get, and we need to protect what we have? That’s more vital than any subclause. l

* For those of you keeping score at home, Universal Credit is now allegedly going to be implemented by 2021. Incidentally, George Osborne has recently discovered that it’s a great source of handwavium; tax credit cuts have been postponed because UC will render such huge savings that they aren’t needed.

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

This article first appeared in the 11 February 2016 issue of the New Statesman, The legacy of Europe's worst battle