Poverty and a 21st Century Welfare System


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Professor Jonathan Bradshaw. Poverty and a 21st century welfare system. Invited presentation. Involve Yorkshire & Humber Annual Lecture 2013, Alcuin Research Resource Centre, University of York, York , 29 November 2013.

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Poverty and a 21st Century Welfare System

  1. 1. Jonathan Bradshaw Involve Yorkshire & Humber Annual Lecture 2013 Friday 29 November 2013 University of York
  2. 2. The 21st century began before the crisis. So I will remind you of the world before austerity The Coalition austerity strategy The false claims of fairness Consequences The beastly rhetoric and lies Welfare reform The future
  3. 3. Labour did not “throw money at welfare with little effect” Invested in education, health, child care, housing quality and neighbourhoods Social spending as % GDP increased – but only to the middle of the international league table Labour had reduced child and pensioner poverty and stabilized inequality Improvements in almost all outcomes Faced with the banking crisis and deficit Response broadly anti cyclical and redistributive Economy growing in 2010
  4. 4. Aspiration to reduce the deficit (£81 billion) by 2014 – too fast Crucial decision: 20% from increased tax and 80% from cuts in services and benefits. Actually now 15/85 300,000 public sector already jobs gone – plan to reach 1million by 2017 Unemployment 2.5 million – 21% youth unemployed Public sector pay limit £20 billion cut from transfers Working age benefits fall in real terms (CPI and 1% cap - latter takes £3.8billion from poor) Prices rising faster than incomes = falling living standards Real incomes fall by 10%
  5. 5. Cribb, J., Hood, A., Joyce, R. & Phillips, D. (2013) Living Standards, Poverty & Inequality in the UK: 2013, London: Institute for Fiscal Studies: http://www.ifs.org.uk/publications/6759, p 78
  6. 6. Chart 2.D: Overall impact of public service spending, tax, tax credit, and benefit changes on households in 2015-16 (£ per year), in 2010-11 prices 500 0 -500 -390 -1,000 -930 -210 -700 -880 -1,500 -2,000 -2,160 -2,500 Bottom Quintile Q2 Q3 Q4 Top Quintile All Households Change in tax ___________________________Change in tax credits and benefits Change in public service spending Net change Source: HM Treasury estimates based on a range of models and data sources Chart 2.E: Overall impact of public service spending, tax, tax credit and benefit changes on households in 2015-16 as a per cent of 2010-11 net income (including households’ benefits in kind from public services) 2 1 0 1 -0.5 2 -1.2 -2.5 3 -2.6 -4 -3.9 -4.0 5 Bottom Quintile Q2 Q3 Q4 Top Quintile All Households Change in tax ___________________________Change in tax credits and benefits Change in public service spending Net change Source: HM Treasury estimates based on a range of models and data sources
  7. 7. Cuts loaded on poor families with children (Children’s Commissioner 2013) i.e. Educational Maintenance Allowance Future Jobs Fund scrapped Child Benefit frozen Working aged benefits/tax credits increased by CPI and then 1% - unprecedented. Pensioners protected by triple lock 2013 budget - raising the tax threshold does not help the poor with incomes below it That cut+fuel duty, beer and corporation tax cut = £28 billion given away Abolition of 50% tax rate Devastating cuts in services.
  8. 8. No growth, no recovery, nearly triple dip Deficit targets missed, lost AAA rating Fresh round of (unfair) austerity in spending round 2013 Unemployment and youth unemployment 350,000 helped by food banks Falling living standards 2008-2015 Absolute child poverty up 2% points 2011/12. Relative 17% now - 24% in 2020 (IFS) Majority of poor children (67%) now have a working parent Outcomes deteriorating – child subjective well-being, staying on rates, NEET, suicide, relationship breakdown … Waste – the costs of child poverty £ 29 billion
  9. 9. George Osborne speech on welfare David Cameron “doing the right thing” Iain Duncan Smith eliding child poverty with 200,000 “troubled families”/drugs Misuse of statistics and evidence Bizarre attempt to redefine poverty concept Supported by chorus from the gutter press Deeply wrong (about real nature of the Welfare State), unpleasant and unforgiving Influences attitudes and beliefs Heroic churches, NGOs, academics and other “vested interests” ? Labour Party
  10. 10. Three elements Cuts Bedroom tax affecting 600,000 Benefit cap affecting 75,000 Abolition of Social Fund Abolition of Council Tax Benefit Now PIP deliberately designed to save £2.2 billion (20%) Welfare spending cap – gimmick or disaster Work programme and toughened conditionality, seven days waiting and weekly signing. Despite unemployment. Failing. Social Security reform Incompetent and flawed ESA reassessments – 40% win appeals Universal Credit – delayed/suspended
  11. 11. Take it more slowly - £25 billion cuts planned after 2015
  12. 12. Take it more slowly Anti cyclical policies – Australia, USA, Iceland Take more from tax less from benefits/services Priority to poor children not rich pensioners (me) Don’t trade-off expenditure on benefits for services
  13. 13. Continue to be outraged, but stay calm Continue to respond to the needs of the vulnerable Document the evidence Support NGOs that stand up for the poor = CofE, CPAG, Children’s Society Nothing is likely to change in the short-term
  14. 14. Not much of it going on - CPAG ? Back to Beveridge – bigger role for contributory benefits Universality Jobs Youth guarantee Low pay – Living Wage Housing supply – public investment falling! Progressive taxation A new settlement in favour of children