Who benefits?

TORY Chancellor George Osborne last Monday delivered a sound kick in the teeth to some of his core supporters when he cut child benefit for households where at least one person is earning more than £42,000-a-year. Many falling into this category consider themselves not rich but middle income and the backbone of the mythical Middle England.

Clearly he is gearing up for harsher attacks on the working class but has to start the thin end of the wedge somewhere with a cut that many will see as relatively harmless. But it is not harmless because it undermines the principle of universal benefits that people in certain circumstances get automatically, without having to fill in complicated and demeaning forms — benefits that are a right.

Once that principle is gone all benefits will become linked to income — will become means tested — and thousands of people who desperately need them will not get them. This will apply to sickness and invalidity benefits, travel passes for the over-60s, winter fuel allowances for the elderly and even the basic state pension.

The Coalition government will make the case that people on high incomes do not need them and pay them only to the poor. It will widen the social barrier between those who receive benefits and those who perceive that they are paying for them — and resenting it. It is far more rational and simple to raise taxes on the very rich to claw back the money from those who do not need it.

A high proportion of the administration of welfare benefits is taken up with detailed examination of claimants’ incomes before paying them.

Osborne’s measure will add to the number of civil servants needed to do this. But since he is planning to cut thousands of civil service jobs we can expect huge backlogs in processing claims and a vast increase in the number of errors from overworked and over-stressed civil servants.

Furthermore his proposed cuts continue to have a far deeper impact on women than men. The reason that child benefits were, from the start, always paid to the mother — at a time when most women did not work outside the home — was that it ensured she had some money to spend on food for the children, even if her husband spent all his wages on drink and gambling. And that applied just as much to rich households as poor.

Osborne has also put a cap of £26,000 on the total amount of all benefits that a family can claim — including housing benefit — so that families will no longer find themselves worse off in low paid jobs than on benefits. He is attacking the wrong part of the equation. The problem is that wages are too low and rents — especially in the private sector — are too high. We need a new Rent Act and we need better wages. When a family claims hundreds of pounds in housing benefit the money does not end up in their pocket but in their landlord’s.

Low wages in this country can just about allow a young single immigrant living in a multi-occupation flat and working very long hours to exist and no more. You cannot live decently and raise a family on the minimum wage. This is why the state has to subsidise the wages of so many families with tax credits, housing benefits and so on. The real benefits of these subsidies go to the cheapskate bosses and landlords and enable them to continue paying rubbish wages and/or charging outrageous rents.

But of course these same bosses and landlords are the mainstay of the Tory party — and a good proportion of the Liberal Democrats — so there will be no measures against them under this government.

Osborne is aiming to drive a wedge between those who claim benefits and those who think they pay for them through taxes. But we all pay taxes, including the very poor, every time we shop and VAT now accounts for a rising proportion of Government revenue compared to income tax. We all pay towards the benefits system — and towards Trident and the war in Afghanistan. In January VAT will be even higher.

We must resist these divisive policies and continue to campaign for higher wages, lower rents and higher direct taxes on the very wealthy.