The myth of welfare UK

22 Apr 2013

The debate surrounding welfare in this country, which was brought to the fore once again by the Philpott case, is one in which opinion seems to be relatively unanimous. Polling shows that it is taken as read that Britain has a deplorable ‘dependency culture’ created by over-generous benefits. What strikes me as odd about the welfare debate is that the fundamental assumptions are almost entirely without foundation. You would be hard pressed to find any other area of political contention littered with so many myths.

 

Let’s start with an easy one. Everyone knows that there are thousands of households out there with two or even three generations of the same family who have never worked. Except there aren’t. Last December, the Joseph Rowntree Foundation produced the report of its comprehensive study of benefits in Britain. They found precisely zero households where there were three workless generations. Furthermore, less than 1% of workless households (around 15,000) contained two unemployed generations and of them, 91% had worked at some point. Interestingly, the study found no evidence whatsoever of a “culture of worklessness” within these families. In other words, even in the exceptional cases of homes with two generations out of work simultaneously, people were still committed to finding a job and weren’t happy to live on benefits. The majority of adults who have never worked are under 25, suggesting that youth employment rather than ‘dependency culture’ is to blame for the existence of these workless households.

The tabloid press regularly flags up the issue of large families on benefits, the Philpotts being the most recent example. These families are exceptional and are by no means symptomatic of benefits claimants as a whole. I also found the insinuation that people had more children to get more money bizarre given that it surely costs more to raise a child than you get from child benefit. The Rowntree study seems to confirm that suspicion, given that only 8% of benefits claimants had more than two children. And when it is remembered that 64% of all families claim benefits of some kind, the number of large families that are actually dependent on welfare must be very small indeed. In fact, out of over 1.3 million families where at least one member is on out-of-work benefits, only 170 consist of ten or more children. The study concluded that it is not at all clear that benefits are a significant incentive to have children.

If there is no culture of worklessness and people aren’t having lots of children to get benefits, why is welfare spending so high then? The simple answer is that it isn’t. Welfare spending as a proportion of overall government spending was lower when the coalition came to power than it had been at any time since the 1970s. Where does all the money go then? Well only 3% of the welfare budget goes to the unemployed, with the vast majority going to pensioners and the working poor. Indeed it is the ageing population that is mostly responsible for the real terms rise in welfare budgets over recent decades. Given that the government has generally protected pensioner’s benefits, welfare cuts are mostly hitting the lowest paid workers, as the Institute for Fiscal Studies found in January. To say that high welfare spending is the cause of the country’s economic problems and in some way chokes off dynamism is untrue. The Scandinavian countries have, relatively speaking, weathered the economic storm but have more generous welfare systems. Even Germany spends 19% more per head on benefits than we do. There is no link between low welfare and strong economic performance. 

Of course, the welfare system is not perfect and there are instances where you can get more on benefits than on a minimum wage job. However ‘making work pay’ would be better achieved by introducing the living wage than cutting benefits. The welfare debate should be held in the realm of fact, not fiction, if we are to come up with fair and effective policy. This is incredibly important given that 20.3 million families are part of Welfare UK.

By Alex Clifford

 

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