Benefit spending: the unmentioned facts

The government has often talked about the large amounts they spend on benefits. They claim that in these times of austerity and deficit reduction there is less money available for welfare, driven by the need to reduce spending. There have been many government measures to achieve this, such as the so-called ‘bedroom tax’, and at the recent Conservative party conference yet more measures were proposed. These include sending the long term unemployed on work programmes as well as stopping benefits altogether for the under twenty fives.

The government and many elements of the media give the impression of benefits being given to unemployed people with often deriding language. Describing the unemployed as lazy and feckless, the government has tried to divide the nation into what they call the ‘strivers’ and the ‘shirkers’. However, to claim the unemployed are the only reason the government spends high amounts on benefits is not the full picture.

It needs to be remembered that many benefits go to people in full time work, the honest, hard working people that the government purports to support. Buy why do we need to pay benefits to people in full time work? The answer is that the minimum wage is too low. Whilst it rises each year it has failed to keep pace with the rising costs of living and is now too low for many people in a full time job to meet basic living costs. As the cost of living rises this will become ever more the case. Whilst there has been some recognition from the political classes that there is a need to tackle the cost of living such as Ed Miliband’s announcement of a freeze on energy prices and George Osborne’s freeze on petrol prices, these are only moderate measures on increasingly squeezed households.

People on the minimum wage therefore require state benefits such as tax credits and housing benefit to meet everyday costs. We are in a situation where government allows employers to pay a wage that is too low to meet the cost of living. Much of benefit spending is therefore in fact the state subsidising employees’ low pay.

Therefore before the government attacks the recipients of benefits, implying that high benefit spending is the result of unemployed people, they must realise the role they have played in creating an economy of low wages that has failed to meet rising living costs, and that many of the benefits they pay out are subsidies for business which they allow to pay wages that fall well below a real living wage.

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