Cuts to Welfare, Subsidies to Corporations – The hidden welfare state

The Black Triangle Campaign was founded to support the human rights of disabled people and to oppose the Government’s “Work Capability Assessments”, which re-classify sick and disabled people as “fit for work”.

 

The hidden welfare state that the U.K. government dares not speak of

The UK has two welfare states. There is one that is reported and endlessly discussed, and another, which is rarely mentioned. Whilst the first is suffering enormous cuts under the Tory/LD coalition, the other just keeps expanding.

Governments on the left and the right can always justify welfare cuts by pitting, for example, mobility scooters against needle exchanges, or the soft-play area in children’s playgrounds against an old people’s home. Who deserves it most, they say, students or cleaners? Old or young? But when we’re running not one, but two welfare states, that’s a totally fake scenario. The real choice is between playgrounds or gas rigs; between Meals on Wheels or The City of London Currency Speculators’ Maintenance Allowance.

There’s a connection – never mentioned – between, let’s say, Britain’s eight new deep-water gas rigs and its new food banks. The connection is that the $4.5 billion subsidy package being doled out to transnational gas corporations is a very big slice of the welfare pie. And to keep the gas transnationals on the benefits to which they are addicted, hungry humans have to queue for tinned food that is too close to its sell-by date to be kept on the shelves of supermarkets, many of which are themselves massive recipients of corporate welfare.

Not only does the UK pay out unemployment benefits less generous than Romania, Albania and the US, but the wages of the employed have simply not kept pace with productivity over the last 30 yrs. Tory Ideology is all about Handouts to the Wealthy paid for by the Poor.George Osborne has cut £18bn from benefits plus a further £81bn from public services in the name of unavoidable austerity, whilst at the same time providing huge subsidies, tax cuts and removing regulation for the hidden ‘welfare’ system that benefits the private sector.

No goods or services are directly returned to the government in exchange for these expenditures, although of course, politicians will argue that they’re stimulating the economy, helping struggling industries, creating jobs or funding important research but actually this is just a corporate welfare system.

The Cato Institute, for example, estimated that in the US, $93 billion were devoted to corporate welfare in 2002. This was about 5% of the federal budget, and nearly twice the amount spent on social welfare ie. feeding people, housing the homeless, raising children out of poverty etc.

There is no reason to think the situation is different in the UK. However, overall statistics for the UK corporate welfare budget are hard to discover, and the variety of different subsidies are staggering. Needless to say, the Tories focus their attention on fraud and waste in the social welfare budget.

Welfare fraud and waste is never far from the top of the UK’s news agenda – but the real figures often bear almost no resemblance to popular belief. The British public, for example, think around 27% of the welfare budget is lost of fraud, according to TUC research.

The Department for Work and Pensions’ latest data on fraud and error in the benefit system shows a very different reality: fraud exists, but at a far lower level than the public believes – and is outweighed by errors from claimants and officials alike. The DWP estimates £3.5bn has been overpaid due to errors and fraud in the system; 2.1 per cent of the overall benefit expenditure.

The corporate welfare budget arises from four main sources: Paying little or no tax – Tax havens; tax breaks; enjoying huge subsidies and the removal of employment and environmental protection regulations.

Tax Havens
 The UK’s 100 biggest public companies are running more than 8,000 subsidiaries or joint ventures in onshore and offshore tax havens, according to research. The figures, published by the charity Action Aid, show that only two of the companies listed on the UK’s FTSE 100 have no subsidiaries in tax havens – while companies such as Barclays and Tesco own hundreds. http://www.guardian.co.uk. The UK Crown Dependencies and Overseas Territories constitute half of the world’s most frequently used tax havens.

Tax Breaks
Almost one in four of Britain’s biggest listed companies paid no corporation tax in this country last year – and almost half fail to disclose their tax payments to the UK at all, according to research by The Mail on Sunday.  According to the annual reports and accounts of all the companies in the FTSE 100, 47 companies gave no obvious figures for tax paid in Britain.  Of the 53 who did, 12 showed they paid no tax at all and, six actually received a tax credit.Tax Avoidance
 Treasury minister, David Gauke, admitted in reply to a parliamentary written question that only four employees of HMRC are working to capture 124 tax fugitives. The amount of uncollected tax rose again last year. A Labour MP pointed out that the four officials dedicated to the tax fugitives compares with the 450 HMRC staff involved in administering the withdrawal of child benefit from higher-rate taxpayers.

Subsidies
Currently, it is estimated that the government has already provided £43.5bn in various subsidies including the National Infrastructure Plan, the Equity Loan and Help to Buy schemes, the Enterprise Finance Guarantee and the Regional Growth Fund, with nothing to show for it. Far greater sums are in the pipeline, up to £310bn.

Meanwhile supermarkets get an enormous subsidy to help with one of their major overheads, staffing costs. This is because many employees in these large and successful companies are paid only the minimum wage. And because the current minimum wage is not a living wage, nearly everyone on it has to claim tax credits to be able to make ends meet. Those tax credits are funded by the taxpayer. The supermarkets are effectively state subsidised industries.

In addition to the recent unprecedented public support for the financial sector The NEF (New Economics Foundation) identified at least three significant hidden subsidies:

* The ‘Too Big to Fail’ subsidy: The government now provides a public guarantee, effectively insurance against banks going bust. This gives banks a huge commercial advantage over other firms in a market system. It means banks are able to borrow money much more cheaply than if they were not ultimately underwritten by the public. Exchanges with leading auditors in front of the House of Lords Select Committee on Economic Affairs in January 2011 confirm this. A conservative analysis reveals that this hidden subsidy could be worth £30 billion annually. It means that bonuses to senior staff for ‘performance’ and dividends to institutional investors are at least in part a straight transfer from the taxpayer.
* The quantitative easing windfall subsidy: When it was decided that the economy needed more liquidity, the Bank of England pumped money in using the technique called ‘quantitative easing’. To meet various, and sometimes self-imposed, requirements, it did by purchasing government bonds through investment banks. Merely for being passive conduits for this ‘risk free’ arrangement the banks took a cut of every trade. Here nef analysts found that banks enjoyed a significant windfall, but that lack of transparency keeps the likely amount hidden.
* The ‘make the customer pay’ subsidy: Since the baking crisis of 2008, the banks have been increased the gap between what they have to pay to borrow money, and what they charge people to borrow from them. This is the so-called interest rate ‘spread’. This is because they can borow money from the Bank of England at virtually 0%. As it is, the taxpayer is subsidising the banks twice over: once through taxpayer funded public support to the banks, and secondly through paying much higher interest to borrow than the banks do. This hidden subsidy amounts to at least another £2.5 billion each year.

Focus On Benefit Cuts and Sanctions

Benefit claimants Assessed as ‘fit for work’ are dying within six weeks of assessment
Thousands of sick benefit claimants are dying within six weeks of being wrongly assessed as “fit to work”, a North-East MP claimed yesterday, during a commons debate  in which he called for an independent assessment of the Coalition’s welfare policy.

Ian Mearns, Labour MP for Gateshead, blamed the Government for the misdiagnosis at least 10,600 sick and disabled people in just ten months, who then quickly died. He said: “Four people a day are dying within six weeks of being declared fit for work under the work capability assessments. It is scandalous.

Mr Mearns said the figure of 10,600 deaths, after unsuccessful claims for Employment and Support Allowance (ESA), covered the period January to November 2011. And he added: “This Government has repeatedly refused to release updated 2013 figures for deaths within six weeks of an end of an ESA claim.”Stop the benefits cuts and sanctions says Citizens Advice Bureau Punishing Poverty is a report published last week by Citizens Advice and which is based on a national survey of those who have had benefits stopped or sanctioned for not meeting the endless ‘work related activity’ conditions imposed by Jobcentres.  Hundreds of thousands of claimants have faced sanctions varying in length between four weeks and up to three years.  These sanctions are often imposed for the most trivial of reasons and as this report exposes, quite often for circumstances that are entirely beyond the claimant’s control.  It is not just unemployed claimants who face sanctions, but increasingly sick and disabled people and single parents with children over the age of five.

The results of the survey portray a truly horrific account of the destitution and human misery that this regime has inflicted on people.  Stories of families ripped apart, pregnant women left without food, those with dietary needs due to health conditions becoming sick, mental health deteriorating, suicide attempts and people forced to beg or go through bins to find food.

These stories are not the inevitable consequence of economic crisis, the UK is still one of the richest countries in the world. Benefit sanctions barely save the tax payer a penny such is the cost of policing and administering the system. 

As the Citizens Advice report reveals there are countless tales of benefits being stopped due to a mistake by the Jobcentre, or because a claimant faced unavoidable circumstances such as travel delays, hospital appointments and even job interviews which caused them to be late to an appointment with their advisor.  It is the widespread, seemingly haphazard nature of the regime which forces all claimants into a state of perpetual fear.  The threat of the dreaded brown envelope through the door from the DWP is a feature of life on all benefits, a daily reminder that you are only ever a heartbeat away from complete destitution.

The welfare state is not a political weapon to stigmatise  or scapegoat people, force down wages and pursue a work makes you free ideology. It should exist as the opposite, to empower, provide dignity and even act as a force against poverty pay – saying to grasping employers that there is an alternative for people if all you’ve got to offer is shit wages. Benefit sanctions must be brought to an immediate end with no exceptions. The full report can be downloaded at: http://sdrv.ms/1c48ECq10 Facts About Benefits Britain
1) A TUC survey showed that people think around 41% of benefits go to the unemployed, the real figure is 2.6%. (1)

2) 42% of the Welfare Bill goes to pensioners, 21% goes to people in low paid work. (2)

3) Nearly 80% of JSA claimants stop claiming within 6 months. (3)

4) Of the 7.8 million families receiving child benefit, 1.2 million have more than two children. (4)

5) A TUC survey found that people think around 27% of welfare is lost to fraud – the real figure is only 0.7%, around £1.2 billion. (5)

6) Around £17 billion of benefits that people are entitled to goes unclaimed every year. (6)

7) Immigrants are 60% less likely to claim benefits than a British-born person. (7)

8) 64% of families receive benefits – that’s 20.3 million families. (8)

9) The UK spends 12% less on benefits per head than France does, and 19% less compared to Germany. (9)

10) 93% of new Housing Benefit claimants in 2010 and 2011 came from working people, as UK housing costs are the 3^rd highest in Europe. (10)

SEVEN MORE REASONS WHY WE ALL SHOULD BE MARCHING FOR THE ALTERNATIVE ON MARCH 26TH

Disabled Housing Benefit Slashed
Government figures show about 450,000 disabled people will see their incomes cut under one of the changes planned to housing benefit. From April 2013, housing benefit for working age people in social rented homes will be linked to the size of property councils ‘believe they need’.

An assessment from the Department for Work and Pensions shows the change will leave 450,000 disabled people an average of £13 a week worse off. Many disabled people will have to leave their current home. The government will not even guarantee an alternative.

The government’s Communities Department has announced a review of councils’ statutory duties. Under the reviews proposals, councils would be allowed to decide not to provide any services to disabled people, including residential care and respite for families and carers. This is a very real threat to the lives, security and future of disabled people.

Disability Alliance policy director Neil Coyle said: “We’ve been contacted by people who’ve said that if they lose the kind of support that helps them get to work for example, if they’re no longer entitled to that support, they’ll lose the ability to be independent”.

The Great Pensions Robbery
The Hutton Report into pensions was published on 11^th March. Hutton wants to raise the retirement age to 66 by 2020. Hutton claims that retiring early, say at 55, is no longer acceptable when people are living longer.

Hutton wants to do away with “generous final salary” pension schemes. Instead they will be set at the average salary across a person’s career. Thirdly, Hutton says workers should up their contribution to the pension scheme from 6.4% to 9.4%: i.e. a 3% pay cut or, with inflation running at over 5%, an 8% real pay cut. Scandalously, many unions have already agreed to this increase.

There isn’t anything generous about public sector pensions. The average pension is about £4,200 a year. The Coalition has already linked pension increases to the lower, CPI rate of inflation, so they will depreciate – by as much as £10,000 over the average retirement. http://www.workerspower.com/index.php?id=47,2797,0,0,1,0

As Unemployment Rises – Job Centre Cuts
Around 7, 000 staff in Jobcentre Plus (JCP) call centres have begun voting this week in a strike ballot over intolerable working conditions. The ballot widens a dispute which led to two days of strike action in January by more than 2, 000 workers in the seven newest contact centres, who have been forcibly moved from processing benefit claims to handling enquiries by phone.

The union says managers have “an obsession” with hitting call centre targets at the expense of providing a good quality public service. The oppressive conditions are resulting in high levels of stress and sickness, and staff are leaving at an alarming rate. Since April 2010, more than 2,700 staff have left – over 20% of the total call centre workforce of 12,800.

The ballot also follows an announcement by senior managers that they want to close more of the department’s benefit processing offices and call centres. JCP is planning to reduce staff from its current 73,000 to 65,600 by 31 March 2012. This is down from a peak of 84,000 at the end of 2009.

HSE Health And Safety Visits May Be Cut By A Third
A leaked letter from the Health and Safety Executive outlines plans to withdraw inspections from entire sectors of industry, including some where “significant risk” remains. Unannounced workplace safety inspector visits may be cut by up to a third. The possibility of an unexpected visit from either an HSE or a local authority safety inspector helps keep employers on their toes; even now, workplaces can go decades without ever seeing an inspector.

 NHS Job Cuts
50,000 NHS staff posts are set for the axe, destroying government claims that the NHS is in safe hands. The news was reported by the Anti-Cuts website False Economy, from information obtained through the Freedom of Information Act.

David Cameron famously claimed before the election that he would “cut the deficit, not the NHS”. However 10 months into the coalition government, the reality couldn’t be more different, with NHS cuts across the country as local health trusts struggle to save £20bn from their budgets.

The total confirmed NHS staff cuts across the country currently stands at just over 53,150 posts – and that’s before a host of trusts are expected to announce staff cuts over the next four months. The national total is already twice the previous estimate of 27,000 job cuts, published by the Royal College of Nursing (RCN) last November.

Here in Guildford, the Royal Surrey has already seen four hundred job losses, together with a reduction of beds per ward. Many NHS trusts are seeing job losses of around 20% of the workforce. http://falseeconomy.org.uk/blog/more-than-50k-nhs-job-losses

Unemployment
It was reported in the guardian last week that the IMF held a conference about the financial crisis. The policy to emerge from the conference was “internal devaluation”

The idea is that countries with high labour costs relative to its trading partners will get its costs in line by lowering wages. The way they lower their wages is to force workers to take pay cuts under the pressure of high rates of unemployment.

An alternative, argued some would be to promote higher inflation in surplus countries. A higher rate of inflation would have the effect of eroding debt in real terms. A higher inflation rate will also increase the costs of the surplus countries relative to the costs of the deficit countries. It would allow the deficit countries to regain competitiveness.

The IMF and the central banks however have reaffirmed their programme of austerity and mass unemployment. Under our Capitalist system no government or bank is going to compromise its own competitiveness –however short term – for the common good.

Here in Britain, the unemployment rate is now 8%, with youth unemployment running at 20.6%. There are 2.54million presently unemployed according to the ONS, (Office of National Statistics) and another 1.19 million in part-time work because they can not find a full-time job. https://suacs.wordpress.com/2011/03/08/voice-of-anticapitalism-in-guildford-unemployment/  Unemployment is at a 17year high and is set to rise much further once the cuts proposed by the Government’s Comprehensive Spending Review are implemented.

Apart from the threat of unemployment and the cuts to pensions and wages, a further attack on wages comes from the government’s plans referred to as the big society. Legions of volunteers, the government hopes will take over the running of public services where skilled workers were previously employed. The unemployed are also to be dragooned into working for their unemployment benefits, to take over the jobs once performed by fellow workers.

Families Could Lose Over £2,700 A Year Despite The ‘No Losers’ Welfare Pledge
Low and middle income families will suffer annual benefit cuts of over £2,700 a year by 2013, despite the government’s pledge that there are to be ‘no losers’ in the setting up of the new universal credit system, the TUC warned last week.

The government has said that no worker will be financially worse off when universal credits replace the current system of tax credits and benefits in April 2013. But in order to fulfil the ‘no losers’ pledge the government will have to reduce benefits before the changes take place in 2013, and so is making swingeing cuts to tax credits and benefits that will leave families thousands of pounds worse off in the run up to the April 2013 changeover.

Between April 2011 and April 2013, the government is introducing a series of welfare cuts which include reducing the amount of childcare costs that can be met by tax credits, freezing elements of working tax credit and child benefit, ending government payments to the child trust fund, and ending child benefit for higher rate taxpayers.

In addition, switching the measure for rating benefits from RPI (Retail Price Index) to CPI (Consumer Price Index) will reduce the value of key benefits over time, saving the Treasury £5.8 billion by April 2015, says the TUC. Housing benefit cuts will also lead to significant reductions in family incomes, including those of many working households. A TUC analysis shows that changes to the tax credit and benefits system alone could leave working families £2,700 a year worse off by April 2013.

Join the TUC demonstration against cuts in London, March 26th. There are coaches leaving from Guildford, subsidised by Unison. Only £2.00RTN. Click on the link at the top of the page for details.