Cutting Tax Credits Will Throw People Off the ‘Welfare Merry-Go-Round’ Without Providing a Crash Mat

Since the Conservatives’ surprise election victory, much of the nation has been on tenterhooks waiting to find out exactly where their proposed £12 billion of welfare cuts will hit. Having already committed to protecting pensioner and child benefits, David Cameron has now hinted that a sizeable chunk of the £12 billion will come from a reduction in tax credits.

In a speech this week, Cameron pledged to put a stop to the ‘welfare merry-go-round’ that sees low earners paying taxes only to receive the money back in tax credits. He is right in recognising the self-defeating nature of this system; it’s almost as self-defeating as complaining about the size of the tax credit bill without pushing companies to pay decent salaries.

Cameron’s proposed alternative of a ‘high wage, low welfare’ society makes sense on paper. Pay fairer wages and avoid using up money on benefits – it could have been lifted straight from the pages of Economics for Dummies. Quite how he plans to increase wages after presiding over five years of stagnating pay and widening inequality wasn’t specified. Nevertheless, I found myself feeling strangely hopeful. Was Cameron finally about to tackle the huge pay discrepancies that lock so many people into poverty?

Of course he wasn’t. Instead, as he is wont to do, Cameron shifted course and started postulating about what he considers the real ‘causes of stalled social mobility’ - family breakdown, debt, addiction and so on. Deal with these, and apparently economic opportunity will come flooding in.

Cameron has fallen for the misconception that welfare encourages social ills, rather than alleviating themIt was a typically blinkered approach from the man who coined ‘Broken Britain’, and one that was more than a little patronising. Things like family breakdown and addiction might hold people back, but they are not the causes of Britain’s ever-diminishing social mobility. If anything, they are the symptoms of it. In their ground-breaking book The Spirit Level, Richard Wilkinson and Kate Pickett draw on a wealth of evidence to argue that poor social mobility worsens such issues. The more unequal a society is, the more frequent they become. Consequently, making any dent upon them whilst simultaneously slashing investment in welfare and services seems like a doomed move.

Once again, it appears that Cameron has fallen for the misconception that welfare encourages social ills, rather than alleviating them. He spoke of creating a ‘welfare state that encourages work,’ still labouring under the illusion that withdrawing state assistance is all it takes to push people into employment (even if employment isn’t there or they are physically incapable of carrying it out).

This illusion forms part of a disturbing rhetoric, where terms like ‘hard work’ and ‘aspiration’ have been co-opted to justify an assault on the worst-off in society. If you look up these terms in the dictionary, they are positives. However, in modern political discourse they come loaded with veiled, accusatory implications. Take, for instance, Cameron’s assertion that he is on the side of ‘people who work hard and do the right thing’. It is a positive statement, but one which implies that there are many out there who do not work hard and do not do whatever ‘the right thing’ might be. Similarly, those struggling to find skilled, well-paid work are lacking ‘aspiration’ and ‘initiative,’ while punishing the vulnerable with measures like the bedroom tax is branded as ‘living within our means’.

This is essentially a sanitised version of the ‘scum’ and ‘scrounger’ rhetoric we hear whenever anything benefits-related hits the headlines. It all works towards propping up the myth that the welfare state exists to indulge the bone idle, never mind that fewer than 1% of benefit claims are made fraudulently. Cameron himself even alluded in his speech to people being ‘written off to a lifetime on benefits’, oblivious to the fact that the majority of claimants prefer to work, and only make use of unemployment benefit for a brief period of time as they move in and out of jobs. Where so-called ‘entrenched worklessness’ occurs, it is more likely to be a result of poverty than laziness.

A man who has shown himself to be utterly ignorant of the perils of austerity hardly seems qualified to diagnose the causes of Britain’s social ills. If he then clamps down on tax credits without any feasible strategy for raising wages or increasing social mobility, Cameron will prove himself equally ill-equipped to solve these ills.

 

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About the author

Harry Mason likes to call himself a freelance writer, even if his tax forms say he's technically a waiter. He graduated last year from the University of East Anglia, and writes predominantly about social politics and film. He looks forward to the day when he's able to grow a beard; until then, you'll just have to blame his so-called 'bleeding heart lefty views' on youthful naivety.

Follow Harry on Twitter.

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