Simon Duffy, Director of the Centre for Welfare Reform, gave this talk on the demise of the welfare state under the leadership of the UK's Conservative Party at the University of Vasaa in May 2014.

1. Farewell to
Welfare
Threats to the welfare state
Talk by Simon Duffy
at the University of Vaasa
on 23rd May 2014

2. “The last assessment reduced me to floods of tears. I couldn't stop
crying all the way home and spent a week hidden away in a dark room,
not letting anyone see me out of shame. I stopped medications because
I felt like a fraud. (This did not help. Unsurprisingly.) I am depressed and
socially isolated, the latter partly due to total unilateral deafness, which
went undiagnosed at birth. I try my absolute hardest to get well, but life
& progress ripped apart by constant forms and worry. 3 weeks ago got
latest form, lost my grip totally and also became seriously physically ill
because of the stress (tonsillitis 1 wk on followed by viral meningitis 2
wks). My Doctor said - ‘I think Atos [assessment organisation] is making
you very ill. You need to relax and not do anything.'(!) I have no social life
and dream of having a job, but a mental illness does not improve when
the media is full of comments about how worthless you are. The
weakest people have been systematically targeted by the Government
and few people speak up. People might not like that, but it's the truth. I
only hope one day we'll have the space to look back and understand
how utterly cruel and unnecessary this has been.”
2

3. ‘Austerity’ in theory
In 2010 the UK Government
began an ‘austerity’ programme
in order to cut public spending.
This was a response to a
financial crisis caused by:
• A house price bubble
• Mounting personal debt and
mortgages
• Excessive lending by the
banks
• Poor governance by the
Government and the Bank of
England
• The Government’s own efforts
to bail out or renationalise the
banks.
In theory the cuts were to be
introduced fairly.
1

5. “But it’s fair that
those with broader
shoulders should
bear a greater load.”
David Cameron,
Speech, October 2010

6. Austerity in practice
In reality the Government’s plans
have had the opposite effect. In
particular:
• Increased VAT to 20% - a tax
that hits the poor hardest
• A wide-range of cuts to the
benefit system - so-called
‘welfare reforms’
• Cuts to Housing Benefit and
Mortgage Interest Relief
• Cuts local government, which
is responsible for social care
for adults and children
• Cuts to legal aid and systems
used to defend rights
• Significant increases in the
cost of basic needs, e.g.
utilities, housing
• Regressive subsidy to better
off via low interest rates
4

7. Targeting of disabled people
Especially worrying has been the
government’s unwillingness to
carry out a ‘cumulative impact
assessment’ in order to
calculate the way in which many
of these policies - at the same
time - seem to target disabled
people or other disadvantaged
groups.
In general the public don’t
understand the reality of
disability. There are 11.3 million
people with a disability in UK.
Of these 4.5 million have a
significant disability that entitles
them to a disability benefit like
Disability Living Allowance or
Attendance Allowance.
2.7 million disabled people live in
poverty.
Most disabled people are not
born with a disability, anyone of
us can acquire a disability in
later life, through accident or
illness.
6

10. The depth of the cuts
The Government’s cuts programme is
the most radical in the post-war era.
But to understand the size of the cuts
you must do two things:
1. Adjust for inflation: If prices
increase faster than spending then
this is a cut. (I have adjusted by
using 2012-13 prices.)
2. Adjust for growth: If the economy
grows faster than spending then
this is also a cut, because it will
lead to loss of support or an
increase in relative poverty.
When we only adjust for inflation the
total level of cuts is £5 billion. If we
adjust for growth the cuts amount to
£91 billion. But somethings are not cut,
so the overall cut is £78 billion -
12.24%
It is noticeable that the biggest of all
cuts - £28 billion is the cut to English
local government and housing (this
includes social care for children and
adults). This is a cut of 38.23%. This is
a very deep cut indeed.
Cutting somethings more than others
means targeting the cuts.
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12. Where the cuts fall
The details of the planned cuts
were first set out in the Treasury’s
2010 Spending Review and then
in a series of announcements over
the following years.
At the end of 2013 new reports
were released that described:
• Expenditure from 2008-09 to
2012-13
• Expected expenditure up to
2015-16
By working through these reports
it’s possible to see where the cuts,
have already fallen and where
they are likely to fall in the future.
In short, Pensions, Foreign Aid
and Central Government will all
grow. The NHS will stay the same,
and everything else will be cut -
although to different degrees.
Together local government and
benefits bear nearly 50% of cuts.
10

14. Social care cuts
The biggest cut is to local government.
This is probably because:
• Local government finance is organised
in a very complex way
• Most of its funding comes from central
government, but some of this funding
is ring-fenced (e.g. education) and
some comes from Council Tax
• The public neither understands nor
highly values local government
• Local government can take the blame
for any cuts that it is forced to make.
From the data it is clear that local
government has often tried to protect
social care from the worst of the cuts;
but also that it cannot fully protect social
care.
Between 2007-08 and 2012-13
services had already been cut by
25%. Further pressure on social care is
inevitable and it is likely to lead to a cut
of £7.5 billion by 2015-16. This is a cut
of 33%.
The government hopes to use funding
from the NHS to fill the gap in social care
funding; however this would mean
reversing its promise to protect NHS
spending and seems unlikely to deliver.
12

16. Benefit cuts
The second biggest cut in spending
is to benefits, which will be cut by
£15.6 billion by 2015-16.
However this cut is smaller than the
target of £22 billion declared by the
Chancellor of the Exchequer in
Autumn 2013, and which included
cuts in several specific disability
benefits, for example, saving £1.2
billion by introduction of the
Personal Independence Payment
(PIP).
To date I have found no explanation
for such a large disparity, between
the official figures and the
Chancellor’s statement. It may just
a reflect the DWP’s failure to deliver
cuts on schedule.
The official figures don’t target
disabled people as much as the
Chancellor seemed to intend. But
they do further target people in
poverty - particularly people on low
incomes or needing support with
housing. This also has a significant
impact on disabled people.
14

17. Child Benefit freeze Abolition of Sure Start Maternity for second child
Changes to CPI indexation of benefits Reductions in support for carers
Replacing DLA with PIP Child Benefit clawback from higher rate taxpayers
Time-limiting of contributory ESA Transfer of Social Fund to local government
Council Tax Benefit: 10% reduction and localisation Changes for JSA lone parents
Bedroom Tax: ‘under-occupancy’ Household Benefit cap
Abolition of the Independent Living Fund Continued use of Atos or others
Universal Credit Reductions in ‘Access to Work’ funding
Closure of Remploy services Abolition of the Child Trust Fund
Tax credit reductions Abolition of the Health in Pregnancy Grant
Abolition of the Child Trust Fund Abolition of the ESA youth rules
Housing Benefit: Non-dependant deductions Reductions in Supporting People funding
Welfare ‘reform’ means

18. At the end of December 2013 there were 4,120 council tenants
affected by Under-occupancy. Of those approximately 85% were
assessed as having 1 bedroom too many, losing an average of £10.21
pw; and approximately 15% were assessed as having 2 or more
bedrooms too many, losing an average of £19.77
Of the 4,120 tenants affected by Under-occupancy, at the end of
December 2013: 241 (6%) had not made any payment towards the
Under- occupancy cut in their benefit. This figure compares to 10%
of tenants who had paid nothing towards the Under-occupancy cut in
their benefit at the end of October 2013. 1,874 (45%) had paid in full
the amount of the Under-occupancy cut in their benefit. However, of
those tenants who had paid in full, 649 have received a Discretionary
Housing Payment (DHP) which has paid some or all of their Under-
occupancy charge. Therefore 1,225 tenants (30% of all tenants
affected by the ‘bedroom tax’) have paid the shortfall in full without
receiving a DHP. This figure has increased from 18% at the end of
October 2013. 2,005 (49%) had paid something but not all. At the
end of October 2013 this figure was 55%.
Since April 2013, 336 tenants have been awarded a rehousing priority
to move to a smaller property. Of the tenants awarded a priority 262
tenants have stated this is due to the impact of welfare reforms.
87 tenants have had agreement to move, despite them having rent
arrears that would normally have stopped them from being rehoused.
So far 153 council housing tenants have downsized already since
April. There are approximately a further 2,000 tenants in Sheffield
affected by Under-occupancy who are living in other social housing.
Example 1: Bedroom Tax

19. Example 2: Sanctions

20. Example 3: New disability assessments

21. “Britain is the world’s seventh largest economy and yet people are
going hungry. Half a million people have visited foodbanks in the UK
since last Easter and 5,500 people were admitted to hospital in the UK
for malnutrition last year. One in five mothers report regularly skipping
meals to better feed their children, and even more families are just one
unexpected bill away from waking up with empty cupboards…
“Yet beyond even this we must, as a society, face up to the fact that
over half of people using foodbanks have been put in that situation by
cut backs to and failures in the benefit system, whether it be payment
delays or punitive sanctions. On March 5th Lent will begin. The
Christian tradition has long been at this time to fast, and by doing so
draw closer to our neighbour and closer to God…”
from the Bishop’s Letter
Example 4: Foodbanks

22. Who the cuts target
a) People in poverty (20% of the population) bear 37% of all cuts.
b) Disabled people in poverty (4% of population) bear 14% of
cuts.
c) People using social care (3% of population) bear 14% of cuts.

24. The impact on individuals
a) People in poverty will lose an average of £2,689 per year
b) Disabled people in poverty will lose an average of £4,605 per year
c) People using social care will lose an average of £6,354 per year

26. The unfairness of the cuts
a) People in poverty bear 2.5 the burden of cuts compared to most
citizens.
b) Disabled people in poverty bear a burden which more than 4 times
the (modal) average.
c) People using social care bear a burden that is 6 times the burden
on the average citizen.

28. Consequences
The impact of these cuts is already
being experienced.
In particular, we already see:
• Growing numbers forced to use
food banks
• Rapid (25%) reduction in social
care services
• Growing crises in health care
services as social care diminishes.
• Increased personal debt
• Increased mental illness
• Increased family breakdown
• Growing inequality
Paradoxically many of the
consequences of these cuts will be
perverse - creating new social costs
and leading to unnecessary spending
in other areas (e.g. A&E).
As things stands these problems are
only just beginning. The benefit cuts
and the social care cuts are set to
continue for many years.

29. “I worry about the future
as I have been told that
my funding may not be
enough for me to have the
right amount of support to
enable me to live my life.”
Nadia Clarke
My Rights, 2013

30. Myths and confusions
There are many myths and
confusions about the welfare system
which contribute to our problems. In
actual fact, the truth is
• We have high employment levels
- scroungers are not a problem
• Benefit fraud is very low - under-
claiming of benefits and tax fraud
are much bigger problems
• Government spending has been
largely stable for a long period
and is not unsustainable.
• The poorest 10% pay the most
tax of any group and pay
excessive marginal taxes.
• Benefits - after tax - are very low -
hence, we are the 3rd most
unequal developed country in
the world.
• The welfare system benefits the
better-off, not the poor, but the
truth of this is often disguised, e.g.
interest rate subsidy

32. Benefit fraud is only 6% of tax fraud, yet it is
covered by the news 600% more.
The “Benefit Thieves”
campaign was
established by the
previous Labour
Government.

33. Public expenditure has changed little

40. Real explanation
The reason that cuts have been
targeted in these areas is not
moral or economic - it is political:
• It’s easier to scapegoat
disabled people and people in
poverty.
• Few people use or understand
social care or local government.
• Benefits and social care are
highly means-tested and
stigmatised.
• Most people are scared at the
size of their own mortgage and
fearful of another banking crisis
or a drop in house prices.
• Fairer options (e.g. tax
increases, or salary controls)
are not popular with swing
voters.
• Disabled people and people in
poverty have no effective
political representation.

41. The use of stigma, shame and
scapegoating is distracting us
from the real issues.

42. There are real problems in the welfare system

43. The UK is the most centralised welfare state in world

44. There are lots of services, but they don’t always work well
for the people who need them most

45. The money tends to be locked within institutional and
professional services, not in hands of citizens or
communities

46. It’s time to explore a new settlement for the welfare state

47. Farewell to Welfare © Simon Duffy 2014
Published by The Centre for Welfare Reform
http://www.www.centreforwelfarereform.org
On Twitter follow:
@simonjduffy and @cforwr
For more information about citizenship join our
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48. We fell asleep. We forgot that they don’t take care of
us, we take care of each other. We forgot that it’s the
rich who need the poor, not the poor who need the
rich. We forgot that politicians work for us, we don’t
work for them. We forgot that government doesn’t
innovate, people do. We forgot that government
doesn’t create wealth, people do. We forgot that
government doesn’t know best, people do. We forgot
about citizenship, we forgot about families, we forgot
about community. We confused good with big. We
confused achievement with wealth. We confused love
with control. We forgot that the welfare state was
made by us, that it belongs to us and it needs to work
for us. It’s time to wake up.