Shift the rhetoric from benefit scroungers to cheating corporations

Undue focus on "scrounging" is draining public support for welfare at a time when a proper safety net is desperately needed by millions of vulnerable people.

If you ask someone in receipt of benefits what their biggest barrier to going to work is, many will say they simply cannot afford to take a job. This may sound ludicrous, but for those moving from unemployment into employment the loss of benefits combined with starting to pay income tax and national insurance can have a very profound impact.

Under the government's new Universal Credit, to be introduced next year, people rejoining the ranks of the relatively low paid will have a proportion of their earnings clawed back in the form of reduced benefit. This reduction in benefits will be equivalent to an effective rate of tax of 65 per cent on their additional earnings, on top of any income tax and national insurance they have to pay, until they are earning enough not to be entitled to any benefits. Faced with the additional cost of childcare and transport, it’s not surprising that many of the poorest, like single parents, decide not to risk being worse off in work.

Compare this debilitating, effective tax rate of 65 per cent, with the amount of tax being paid by some of the biggest multinational companies trading in the UK - some of whom avoid taxation entirely or are paying as little as 2.5 per cent tax on their UK earnings - and it reveals a gross inequality. But are the public seeing this unfairness reflected in our political and public discourse?

Last week Starbucks and Amazon faced a grilling by the Public Accounts Committee, but these cases of high profile multinational companies not paying their fair share are only just starting to get the political and media attention they deserve. For years before the current recession started and the government’s need to balance the books became such a dominant issue, there were many more stories about "scroungers" and "cheats" who have claimed benefits dishonestly than companies dodging their responsibilities. This is despite the fact tax avoidance and evasion costs the economy £32bn a year, nearly 30 times more than the £1.2bn lost through benefit fraud. Austerity means tax dodgers no longer get a free pass but they have still faced nothing like the political and media spotlight focused on benefit "scroungers".

Iain Duncan Smith has been forced to admit that the Department for Work and Pensions has over-egged statistics on benefit fraud, yet the government are treading much more carefully when it comes to chastising corporations. When asked outright by the chair of the Public Accounts committee if Apple, Google, Facebook, eBay and Starbucks were morally wrong for avoiding nearly £900m of tax between them, David Cameron gave no more than a limp rebuke, saying "we do need to make sure we are encouraging these businesses to invest in our country". How about we invest more in the British people who are stuck in the benefit trap, rather than blaming and shaming them for needing government support?  

A casual observer could be forgiven for thinking that putting an end to benefit fraud would be the solution to fixing our battered public finances. Indeed a recent survey YouGov did for Oxfam found people massively overestimate the problem. The poll showed that members of the public, on average, believed the total cost of false benefit claims to be 12 times higher than it actually is (the average estimate of respondents was £15bn, compared to official government figures which put it at £1.2bn).

Whilst the public is right, of course, to be worried about benefit fraud, the poll reinforces Oxfam’s concern that undue focus on this problem is draining public support for welfare in general at a time when a proper safety net is desperately needed by millions of Britain’s most vulnerable citizens who are facing a perfect storm of rising prices and falling incomes.

Our poll showed that despite the extensive media coverage of current welfare reforms, the public had little understanding of where the UK’s welfare bill is spent. Half of respondents believed benefits for unemployment (27 per cent) or sickness and disability (22 per cent) make up the majority of welfare spending, which in reality account for 2.9 per cent and 5 per cent respectively. More than half of the welfare budget is spent on pensions, yet only 17 per cent of respondents identified this as the biggest area of spend.  

Oxfam believes that misconceptions about the welfare system may be contributing towards a hardening of public attitudes towards benefit claimants. The latest survey of British social attitudes found that sympathy for people on welfare benefits has fallen to an all time low, despite the fact that benefits are at their lowest level since the welfare state was founded compared to average earnings. Benefit levels have actually halved compared with incomes since 1980, falling from one-fifth to one-tenth of average earnings. During previous recessions public support actually increased for those on welfare, yet now some of the ingrained myths about the benefit system mean that people who genuinely rely on welfare are being vilified.  

Whilst the public is being told that a crack down on welfare will help balance the books, in reality benefit fraud is small beer compared to the billions in tax that companies and wealthy individuals dodge each year. Eighty three per cent of poll respondents agreed with Oxfam that politicians and the media are giving the issue of tax avoidance and evasion too little attention and just over half thought preventing tax avoidance and evasion should be the government’s top priority to help reduce Britain’s national debt.

The Prime Minister has rightly said that we should not balance Britain’s books on the backs of the world’s poorest people. The same should apply to poor people in the UK. At a time when many people are facing cuts to benefits and services and many more are struggling to get by, the Government’s focus for deficit reduction needs to shift and they need to do much more to make the "scrounging" and "cheating" multinational corporations pay their fair share.

Chris Johnes is Director of UK Poverty for Oxfam

Charity workers hand out food to those in need. Photograph: Getty Images

Chris Johnes is Director of UK Poverty for Oxfam.

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Why Clive Lewis was furious when a Trident pledge went missing from his speech

The shadow defence secretary is carving out his own line on security. 

Clive Lewis’s first conference speech as shadow defence secretary has been overshadowed by a row over a last-minute change to his speech, when a section saying that he “would not seek to change” Labour’s policy on renewing Trident submarines disappeared.

Lewis took the stage expecting to make the announcement and was only notified of the change via a post-it note, having reportedly signed it of with the leader’s office in advance. 

Lewis was, I’m told, “fucking furious”, and according to Kevin Schofield over at PoliticsHome, is said to have “punched a wall” in anger at the change. The finger of blame is being pointed at Jeremy Corbyn’s press chief, Seumas Milne.

What’s going on? The important political context is the finely-balanced struggle for power on Labour’s ruling national executive committee, which has tilted away from Corbyn after conference passed a resolution to give the leaders of the Welsh and Scottish parties the right to appoint a representative each to the body. (Corbyn, as leader, has the right to appoint three.)  

One of Corbyn’s more resolvable headaches on the NEC is the GMB, who are increasingly willing to challenge  the Labour leader, and who represent many of the people employed making the submarines themselves. An added source of tension in all this is that the GMB and Unite compete with one another for members in the nuclear industry, and that being seen to be the louder defender of their workers’ interests has proved a good recruiting agent for the GMB in recent years. 

Strike a deal with the GMB over Trident, and it could make passing wider changes to the party rulebook through party conference significantly easier. (Not least because the GMB also accounts for a large chunk of the trade union delegates on the conference floor.) 

So what happened? My understanding is that Milne was not freelancing but acting on clear instruction. Although Team Corbyn are well aware a nuclear deal could ease the path for the wider project, they also know that trying to get Corbyn to strike a pose he doesn’t agree with is a self-defeating task. 

“Jeremy’s biggest strength,” a senior ally of his told me, “is that you absolutely cannot get him to say something he doesn’t believe, and without that, he wouldn’t be leader. But it can make it harder for him to be the leader.”

Corbyn is also of the generation – as are John McDonnell and Diane Abbott – for whom going soft on Trident was symptomatic of Neil Kinnock’s rightward turn. Going easy on this issue was always going be nothing doing. 

There are three big winners in all this. The first, of course, are Corbyn’s internal opponents, who will continue to feel the benefits of the GMB’s support. The second is Iain McNicol, formerly of the GMB. While he enjoys the protection of the GMB, there simply isn’t a majority on the NEC to be found to get rid of him. Corbyn’s inner circle have been increasingly certain they cannot remove McNicol and will insead have to go around him, but this confirms it.

But the third big winner is Lewis. In his praise for NATO – dubbing it a “socialist” organisation, a reference to the fact the Attlee government were its co-creators – and in his rebuffed attempt to park the nuclear issue, he is making himeslf the natural home for those in Labour who agree with Corbyn on the economics but fear that on security issues he is dead on arrival with the electorate.  That position probably accounts for at least 40 per cent of the party membership and around 100 MPs. 

If tomorrow’s Labour party belongs to a figure who has remained in the trenches with Corbyn – which, in my view, is why Emily Thornberry remains worth a bet too – then Clive Lewis has done his chances after 2020 no small amount of good. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.