Tag Archives: work

Simon Fanshawe tells the truth about benefits on BBC Breakfast

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Simon Fanshawe was a guest on this morning’s BBC Breakfast reviewing the mornings papers.

He started with this article from the Daily Mail – “Rises in welfare will be capped for six years.”

This is a transcript of some of what Simon said. (Audio beneath.)

“Let’s start with Grant Shapps, who I think is my least favourite politician. He says he is going cap to the rise in welfare benefits for six years. And the trouble for the government is that the welfare bill keeps going up, so they mount this attack on what they called the skivers as opposed to the strivers. Here are some facts about this though:

“60% of people who get some kind of benefit are in work. If you are in part-time work, of which there are 6 million in the country, and you can’t get that 24 hours worth of part-time worker week, you’re going to lose £4000 worth of tax credits during the year. People on benefit, 85% of people on housing benefit are in work, but it doesn’t go to them, it goes straight through them to the landlords.

“So the headline here that says, “Make it paid to work,” well the way to make it pay to work is to raise wages. What we doing with the benefits deal is subsidising employers who will not pay decent wages and that’s why people have to claim housing benefit and tax credit.

“And to mount this attack on the poor it seems to me seems unjustifiable.”

Simon went on to talk about the advertising campaign that the Tories are mounting in the areas where there are marginal seats. Other bloggers have covered this in a lot of detail.

, Director of the National Institute of Economic and Social Research and previously Chief Economist at the UK Cabinet Office, explains why Indexing benefits to inflation is not “unsustainable” at all.

“The idea that benefits need to be cut in real terms in order to ensure either fairness to those in work or long-term sustainability is nonsense.”

Are people really better of on benefits than working?

One big lie has dominated the Tory debate on welfare: the claim that both young people or families are “better off on benefits than they would be in work.” And, from what I can work out anyway, it’s not true.

Let’s take an example. Examples are indeed a form of generalisation, but it’s far better using so-called “use cases” rather than vague overarching and faceless generalisations.

A person under 25 working for the minimum wage for 37 hours a week receives a net salary of £204.36. Job Seekers Allowance for those under 25 is £56.25. The maximum available Housing Benefit for someone under 25 in Birmingham (for example) is £55.

This means that a young person in work, in almost all areas of the UK, is almost twice as well off as someone on unemployment benefits.

Even in expensive Kensington & Chelsea the maximum Housing Benefit payment to those under 25 without children is £123.50. This is an exception due to the staggering cost of properties in a London borough which also has its share of children growing up in poverty. However a young person working in this borough (on minimum wage) is entitled to £30.49 a week in Housing Benefit. Or at least they were. George Osborne plans to change this.

The situation for working families with children is equally clear. Sadly even many workers at the lower end of the pay scale have bought into the relentless lies and bemoaned how they would be better off on benefits. They wouldn’t. No-one is. This is another lie and it’s time to nail it once and for all.

A single parent with two children living in Birmingham and renting in the private sector would receive maximum possible benefits of £348.14 (over a third of this in Housing Benefit payments which go to landlords). A single parent working on minimum wage for 37 hours a week, in otherwise the same circumstances would receive a total of £445.86 in net wages and in work benefits.

It’s important to note both these calculation are based on the minimum wage. As wages rise Housing Benefit is reduced at a tapered rate, meaning the difference between a better off earner and someone on benefits becomes even greater.

The idea that these cases I have noted are not the norm, is not sustainable. You cannot claim more benefits than there are available. Only people who have never claimed benefits can make those kind of statements.

As for “having another baby to get more money”, every parent / family gets child allowance. It doesn’t go up or down dependant on benefit income (unless now you earn over £60,000 pa). Every parent knows that this money is hardly a lottery win, the cost of feeding and clothing a child far outweighs the sums you get in this support allowance. Sure someone out of work would be entitled to a 2 bedroom rate as opposed to a 1 bedroom or shared rate, but as rents exceed benefits in most cases, this is no profit at all.

It’s far too easy to tell these kind of lies without ever looking up the details. When the figures are on a screen on official government websites and a spreadsheet tells you the real evidence, a life on benefits looks lame, even on the highest levels of income.

I would recommend that if you doubt me, do a check for yourself: go to Direct Gov website and find out the benefit rates for your area. Oh, and remember under 35s only get the shared rate.