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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Can Nicola Sturgeon keep Scotland in the EU?

For Sturgeon, Scotland's rightful place is in the EU. If that means independence, so be it.

In the aftermath of the EU referendum, when Remain voters were still nursing their hangovers, a meme began to circulate on Scottish Facebook pages. It was an image of Nicola Sturgeon, the First Minister, her arms outspread, with a simple message: “F***in’ calm doon. Am oan it.”

At a time when British politicians are mired in the kind of chaos seen once in a generation, Sturgeon has emerged as a figure of calm. While her fellow Remain campaigners were speaking tearfully to news cameras, she addressed EU citizens, telling them: “You remain welcome here. Scotland is your home and your contribution is valued.”

When Boris Johnson declared, “Project Fear is over,” she retorted on Twitter, “Project Farce has now begun.” Her message has been retweeted more than 6,000 times. Faisal Islam, the political editor of Sky News, remarked on air that she seemed to be “the person with the most thought-through plan”.

Sturgeon now presents herself as Scotland’s anchor to Europe. Yet critics view her actions as those of a veteran independence campaigner seizing a chance denied to her by the Scottish referendum two years ago. In reality, she is working for both objectives.

It is hard to imagine now but the Scottish National Party was once suspicious of the idea of an independent Scotland in Europe. The idea took hold thanks to Jim Sillars, the Labour MP who led the 1976 breakaway that formed the Scottish Labour Party. He defected to the SNP in the early 1980s and became one of its strongest pro-EU advocates. The promise of an independent state within a larger framework was soon a mainstay of the party’s campaigns. The 1997 manifesto promised voters “the restoration of self-confidence and the creation of a modern democracy in the mainstream of European life”.

In the early years of the Scottish Parliament, Sturgeon’s approach to the EU was one of a negotiator, not an idealist. In 2003, she put forward a motion that the Scottish Executive should oppose the reduction of Scottish seats in the European Parliament from eight to seven. “Scotland, with no seat on the Council of Europe, no commissioners and fewer MEPs than comparably sized independent member states, has little enough influence in the EU,” she argued.

Her interest in representation emerged again in 2005 when she described an EU proposal on software patents as “a serious threat” to developers. She noted that: “There was apparently no Scottish minister at the Council to represent Scottish interests, the UK instead being represented by an unelected member of the House of Lords.”

Sturgeon’s commitment to work with the EU has not always been reciprocated. In the Scottish referendum, as deputy first minister, she promised the continuity of EU membership. Yet José Manuel Barroso, the then president of the European Commission, said it would be “extremely difficult, if not impossible”, for an independent Scotland to join. Some consider his statement to have been crucial to the success of the No campaign.

When the EU referendum arrived, Sillars, the architect of the SNP’s Europhile agenda, criticised the “love affair” that he believed his party was indulging in and joined the campaign for Brexit. Sturgeon made a different calculation. She threw herself into the Remain campaign, though she was careful not to stand alongside David Cameron. She played down the Scottish independence line – when asked, in the run-up to the vote, if she was a unionist, she described herself as “an enthusiastic European”.

She turned her reputation as a “nippie sweetie” to her advantage. Once viewed as a dour machine politician, now Sturgeon was warm to voters while cutting Boris Johnson down to size. There was no need to scaremonger over Europe, she said. A positive campaign was enough. There is no doubt that she tapped in to the popular feeling: 62 per cent of voters in Scotland opted to remain in the EU, compared to 48 per cent in the UK as a whole. Every local authority area north of the border voted Remain.

As the referendum results rolled in, she prepared to go it alone. “There are no rules,” Sturgeon told Andrew Marr. “The status quo we voted for doesn’t exist.” To her, Scotland’s rightful place is in the EU and if that requires independence, so be it.

She offered to meet Brussels diplomats. She contacted EU institutions. She put forward a motion in the Scottish Parliament demanding “the Scottish government to have discussions” in pursuit of “protecting Scotland’s relationship with the EU”.

Yet Barroso’s warnings may come back to haunt Sturgeon. She has always painted a picture of an independent Scotland in Europe as one that is nevertheless tied to the British Isles. Its currency is the pound; Scots and the English move freely between Glasgow and Carlisle. EU member states may seize on her proposal, or use it as a way of repeating the rebuff of 2014. Sturgeon the nippie sweetie negotiator has her plan for a European Scotland. Now she must wait for Europe to answer. 

This article first appeared in the 30 June 2016 issue of the New Statesman, The Brexit lies