The government says it must balance its books and benefits cost too much, so they must be cut. Nothing could be further from the truth.
This is the audio version:
This is the transcript:
Do we need benefit cuts?
According to Keir Starmer, we do.
According to Rachel Reeves, her books might not balance next year.
As a consequence, she's trying to find £5 billion of cuts from the benefits budget because that's where she thinks there's the greatest excess in government spending that needs to go in order for, as I say, her books to balance.
But is that necessary? Well, I'll put forward a straightforward answer to that, which is, of course it is not. I think that the benefit cuts that the government is promoting are highly abusive, and what is more, they are completely unnecessary.
Now, there are a number of reasons for that.
The abuse comes from the fact that the government is picking on the most vulnerable people in society - those who are long-term sick, unable to work in many cases, or if they can work, can only work in a reduced manner - to pick up the biggest hit with regard to the cuts that are to be imposed upon our society when other options are available. By my definition, that straightforward callousness.
Now, the government won't agree with that, of course, but I'm entitled to my opinion that if you pick on the vulnerable when there are other options, you're just being a bully. And I see Keir Starmer, Rachel Reeves, Liz Kendall - the Secretary of State, responsible for these cuts - I see all of them as bullies.
When we talk about why it's unnecessary, let's be clear.
First of all, we don't need cuts. There is no reason for the government to balance its books. The idea that book balancing is a necessary part of government is just a myth. It's a fictional creation put forward by neoliberal economists who want to shrink the size of the government.
They hate government. The whole ethos of neoliberal thinking is that:
- The market is always right
- The government is always wrong
- You can always spend more effectively by exercising your choice in the marketplace than the government can by deciding where money should be allocated.
And as a consequence, they argue that every form of cut to government spending must be of net benefit to society at large.
And that's complete nonsense because it assumes that everyone has access to the market.
The whole point of benefits is to support the most vulnerable members of our society, and we pay them because we create a social safety net to ensure that everyone can be included in the benefits of living in this country in a way that they will not suffer from exclusion when the market fails to provide them with an income - a point that neoliberal economists never think about because they presume that markets are perfect and therefore everyone will have the income that they need. But where markets fail to provide people with an income, then benefits make good the deficit.
But if you're a pure neoliberal, you don't believe that is really necessary. You believe, as it is very clear that Starmer and Reeves and Kendall do, that those who are out of work are skiving, in essence.
Maybe they've never met a person with a disability.
Maybe they've never met a person with mental ill health.
Maybe they've never met a person with autism so severe that they really can't function inside a normal workplace, and jobs aren't available for them.
Maybe they just don't understand.
But I find that very hard to believe because there are simply too many people with disabilities in our communities for them not to know about them.
There are too many people suffering ill health, including mental ill health, for them not to know about them. They must come across these people, for example, in their MP surgeries, and so their actions are almost inexplicable.
And at the same time, I know that there are other options available to them if they really insist - although I don't agree that they'd need to - they must balance the books.
For example, the cuts that they plan will, it is said, save £5 billion a year.
Let's put that in context. The UK government will next year spend at least £1,300 billion, and so £5 billion is just neither here nor there in the total scheme of things when it comes to government spending, under a half a per cent of total government spending is what we're talking about, to impose this cruelty on upon people.
But if you did need another £5 billion, there are ample ways to find it.
For example, the government could tell the Bank of England to cut the interest rate that it charges at base rate, and if it did, it would save well over £7 billion a year on its interest cost. It's entirely within its right to do that.
It could equalize the tax rate on capital gains and income in the UK and raise more than £5 billion a year as a consequence. In fact, somewhat more than that sum.
It could charge national insurance on all earned income in the UK at the same rate instead of cutting it down from 8% to 2%, as happens now when a person goes above about £50,000 a year in income. By doing so, we could raise well over the sum required, and we would have a fairer society.
As a consequence, these and many other options are available, including one which I'd rather like in this situation, which is charging VAT on financial services, which currently are exempt. And remember, the only people who buy financial services are the wealthy because, let's be blunt, those without money don't need to buy financial services. That could raise over £8 billion a year - more than enough, of course, to cover this cost. But we don't want to punish the rich, do we?
And that is the whole problem that I'm looking at here.
We have a government that is deliberately not taxing the wealthy.
I'm not talking about a wealth tax. I'm simply talking about increasing some of the taxes that are most likely to be paid by the wealthy to ensure that the most vulnerable members of our community get the support they need.
I could easily achieve that goal. It is so straightforward. I explain how in the Taxing Wealth report. There are, in fact, nearly 30 recommendations to achieve that outcome in that report, all of which are technically possible, and all of which I have tested and all of which I have costed. The point is, therefore, that the government does not need to do this.
So why is it doing so?
Does it want to increase poverty?
Does it want to increase inequality?
Does it want to actually cut our national income because take £5 billion out of the money available to people who are on low incomes, and that amount of spending will automatically disappear from the economy, in other words, harming Labour's growth agenda as a consequence, which makes no sense at all.
Does it want to increase the climate of fear in which people live? Because let's be clear about it there, but for the grace of God go many of us when it comes to disability.
We do not know whether we might get cancer and need support as a consequence.
We do not know when or if we might get mental ill health, and one in four of us will at some time in our life suffer serious mental ill health.
We do not know when such things might happen.
We could simply suffer an accident and, therefore, be unable to work in the same way that we once did and require support.
But all of these things are being ignored by Labour, and yet they do increase, as I say, the climate to fear and the consequence is that we end up with a worse society.
And for Labour, that has a further knock-on consequence because the credibility of their MPs, who are all supposedly elected by a party that puts equality at the centre of its supposed thinking, is shattered by a change like this because you can't pick on those with disabilities and at the same time, support those with wealth with favourable tax regimes and claim that you are in favour of equality when very clearly you are promoting inequality.
So, there are things that you could do about this.
You could, and I often suggest this, write to your MP. They do notice how much correspondence they get on every issue. They're easy to find. Just go onto the Parliament website and ask, who is your MP and they will give you all the contact details. You just put in your postcode to find them.
Write to your local newspaper.
Talk to your local radio station.
Take whatever actions you need to support people.
Share media that is critical of these cuts.
Share stories if you are one of those who benefits: anonymise it if necessary, but make sure that people know because that is vital.
There's a massive narrative going around, which I hear too much of, where it is said that those on benefits, and disability benefits in particular, are skivers and shirkers - something so heavily promoted by George Osborne a decade ago.
He'd obviously never met somebody who was ill.
He'd obviously never met somebody who needed financial support.
He'd obviously never met somebody who struggled to make ends meet because they were literally suffering the excess costs which disabilities normally impose upon people.
But, he created this narrative, this abusive narrative, which we hear around us.
Have the courage to speak out is what I suggest, because we need to on behalf of those of whom we might be one, one day, and we have no way of knowing.
My point is keep coming back here to get updates.
Subscribe if you are interested.
But more importantly, share material that is supporting those who need help.
And tell your Labour MPs, in particular, that what they're doing is wrong because that's essential if we are to change the way that they think about this critical issue, which is going to create so much unfairness in our society.
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Odd how after World War II, when Britain was effectively broke, that it could afford to create the NHS and welfare state. and how health security benefited so many until Thatcher and neoliberalism came along, and they started selling off anything that was profitable. Many can’t afford to have their teeth fixed, and getting a GP appointment is designed to be difficult.
My recent blood test was only for cholesterol (so they could prescribe statins); not basic metabolic panel of tests, not tests for vitamins and essential minerals, so I am unable to anticipate possible chronic disease. The nurse told me to wait until I had symptoms (and disease would already be present).
The question for people is how they would cope if they lost thousands a year at the stroke of a pen.
Then how they think those with more challenges in their daily lives are supposed to do the same.
It’s not just who it targets it, it’s how hard it hits those affected, because for those affected this will be a huge hit.
We could this in perspective. If we hit the highest 2% of earners for a c few thousand a year you’d expect the media would be up in arms about it, more than this. Yet this is hitting just as many people by that amount much lower down on the income scale.
There is an excellent website avaioable for free which can provide all sorts of information on your local representation
https://www.theyworkforyou.com/
I highly recommend it
I assume that, since those in receipt of benefits will be among the least well off, virtually all of what they receive will be spent back into the economy, thus generating tax receipts for the treasury. So the overall cost is surely much less than the headline figures?
Correct
McFadden was asked on R4 if there wasn’t somewhere else to find the money – richer people for example.
He said ‘we are already doing that’ -‘ the top 1% pay 30% of income tax etc’ – as if that answered the question – obviously there was no follow up question to ask why the top 1% pay a lower rate of tax on their income than those purely on earned income.
Talk about an easy ride . No wonder they are so arrogant and complacent.
That is because they have so much of the income….
I thought I heard him say the top 1% pay 30% of tax, making the elision from income tax which is about a quarter of the total tax revenue. So that is only 8% of the total revenue. And they have 15% or more of total national income.
As Richard says, they pay a lot of income tax because they have so much income, but also pay tax at less than 45% on much of their annual receipts – notably on dividends with a top rate of 39.35%, but more importantly on capital gains taxed at up to 28% (carried interest) but otherwise 24%. As I recall the research shows many pay around 45% but a sizeable number pay much less.
And it completely ignores the regressive impact of NICs, with lower rates on higher earners, or council tax and its very low caps, or VAT, paid disproportionately by the poor. The tax system as a whole is much less progressive than it appears.
Agreed
You ask whether these MP’s have ever met someone with disabilities, and you mention George Osborne. Let’s not forget that David Cameron’s son had cerebral palsy and epilepsy, and sadly died while Cameron was in opposition. I assume Osborne met Cameron’s son. He and Osborne then went on to implement austerity. Either Cameron and Osborne allowed ideology to override their own personal knowledge and experience, or they were so lacking in empathy that they couldn’t imagine another person dealing with disability outside the cushion of wealth. I believe in many things, but I don’t believe in anything so much that I allow it to push aside my sense of fairness and right and wrong.
Dealing with a tragedy like that as a wealthy person, means that you are completely isolated from all of the stresses that relate to finances.
Transport to hospital? not a problem.
Time off work? You can afford it.
Extra costs such as heating, and disability equipment/consumables? You can afford them.
Extra labour required for care (or for the housework while YOU do the caring) – you hire it in.
The emotional personal loss is still awful.
But those other pressures? You don’t experience them and you don’t even have the ability to imagine someone else suffering them – after all – can’t EVERYONE hire in extra help, afford the taxi, or afford the health costs?
Richard – I wrote again to my MP today about Ms Kendall’s rant yesterday and included a section on where £5bn might be found other than dragging it from the hands of the poor. I challenged her to resign her ministerial post if she still had principles. I will probably be ignored. But then maybe 70,000 other constituents will also write to her….
Thanks
And I agree – money helps
It did nit stop what happened, but it made managing it easier.
Robert – you may already know this but it’s worth repeating: if you write a letter to a minister and send it to your MP asking them to forward it, they have to do it. And the minister is required to reply. Of course, most replies are drafted by civil servants, but it goes out with the minister’s signature, so she would have to be quite brave not to at least glance at the correspondence. So, this way, you can be sure that she will have read your suggestions.
Thanks
Just sent this to my MP:
Dear Sir,
I am concerned at the muddled conservative-like reasoning for the recent announcement of £5bn cut to the welfare budget. Now is £5bn a lot? For you or I yes, but for the country, it is a rounding error of the total £1300bn the Government spends each year.
So why target the vulnerable for a rounding error? Not only that, but that £5bn given out by the Government is almost entirely spent into the economy by the recipients – I thought we wanted the economy to grow? I am not aware of any claims that the recipients are saving their welfare payments.
There are numerous options for getting £5bn without actually harming vulnerable people, or impacting on the growth of the economy. For example, perhaps you are unaware, but according to Government statistics (https://www.gov.uk/government/statistics/personal-and-stakeholder-pensions-statistics/private-pension-statistics-commentary), £70bn of tax relief was given for pension contributions in 22/23. 63% of that (roughly £44bn) was to higher rate tax payers, claiming an additional 20 or 25% ontop of the basic 20% that most people get on their pension contributions. Does that sound fair to you? Obviously removing the option to claim on your tax return the extra 20 or 25% for higher rate taxpayers, would generate about 8 times the savings of the welfare budget cut just announced. Which approach sounds more sensible? Which approach sounds more like a Labour policy?
Many thanks
As a basic rate taxpayer, if I GiftAid to charity, the charity gets the refund of the tax I paid. I use this to “take back control” of my income because I don’t like the way government spends the money it creates.
But higher rate taxpayers are assumed by government to be unable to give money to charity unless they themselves receive the higher rate rebate.
https://www.taxrebateservices.co.uk/gift-aid-higher-rate-taxpayers/
I’ve never understood that. I don’t need that bribe to persuade me to give. Why do they?
Maybe gov’t want to incentivise giving to right wing think tank “charities” in 55 Tufton St to finance their political propaganda – sorry that should read “educational research”.
I have argued against this for many years.
I get the feeling we’re only one step away from Reeves using assisting dying as a means of helping to balance the books by cutting the cost of healthcare for the elderly or chronically ill.
You are not alone
One wonders when people will begin to work out that the daily living component of pip is one of the benefits that make it possible for carers to claim carers allowance which also pays the carers national insurance stamp.
It follows now if the 4 point requirements is not meet that both the person with disability’s and the people that provide care for them both lose. Thus many carers will be faced the choice of returning to work to maintain some form of fiscal stability and pension contributions or to continue to provide support with little in the way of help and in more challenging situation. I am sure many will be told seek a care assessment before they make the final choice, many councils will shoulder the burden, others may not be so able. I believe it’s called the law of unintended circumstances.
For a government that repeatedly claims it is prioritising economic growth, this cut in government spending makes no sense. The marginal propensity to consume of the disabled is high and very often 100%. The positive multiplier effect on economic growth created by increasing the income of this group would be considerably higher than any multiplier effect on economic growth created by prioritising the wealth of high income groups with their notoriously high marginal propensity to save. Call me cynical, but I suspect when Reeves speaks about growth she means increasing asset values of the wealthy like her, Reeves, Starmer et al. She does not mean reducing income and wealth disparities. Thatcherism has never gone away.
@peter L
https://www.taxresearch.org.uk/Blog/2025/03/19/the-government-says-it-must-cut-benefits-for-the-disabled-they-are-completely-wrong/comment-page-1/#comment-1011635
Thx, yes I did know. My MP is herself a Junior Minister in DHSC and it was her I was referring to, rather than Liz “the shout” Kendall. She was a good local MP in our deprived constituency, & did good local work that made a difference She used to work in NHS Admin – so unusually, has relevant experience in her area of ministerial responsibility.
But now she works for that newly qualified psychiatrist Dr Wes Streeting. If she stays in post, then it becomes clear where her priorities are nowadays, and I have lost patience.
It’s now or never for Labour MPs. If this week’s combination of DWP cuts and Israeli war crimes doesn’t persuade them to call it a day with their loyalty to Starmer’s government, then as far as I am concerned its too late. They can try the “we were only obeying orders” excuse, and I’ll give it the same credence it was given at the Nuremberg tribunal.
Talking about war crimes, I haven’t heard any resolution to the clear rebuke that Downing St. issued yestetday to For. Sec. David Lammy’s assertion that Israel had broken international law with its latest murderous assault on Gazan residents with the deaths of over 180 children. I wonder what Attorney General Hermer had to say on that? We will never know. He hasn’t resigned either so presumably he agrees with Downing St.?
I don’t see how Lammy can remain in office after such a clear public snub. Time for him to go, maybe Starmer could give the job to that nice unofficial overseas asset, Luke Akehurst? At least we’d all know where we stood.
Remember Robin Cooke?
Remember Lord Carrington?
Another century, another universe,
In the FT this morning (Alphaville)….. “Everyone is entitled to their own views on whether that is good or bad thing, but hopefully we can agree on this: it’s not a great thing to be in effect forced to do so by made-up rules.”
Just e-mailed my MP r.e this; parliamentary under-secretary for the Scotland Office Kirsty McNeill, part of that Labour cohort who dethroned their SNP counterparts in July. Might be useless to do so, though, as she’s recently been in the Herald defending the benefit cuts (mind you, before they were fully announced) … while claiming in her newsletter that the last budget heralded the “end of austerity”.
Thanks
And she was talking drivel re austerity
For those blinded by numbers (which is what Starmer er al hope), £5bn is 0.38% of what the government plans to spend next year. That’s less than a penny on the pound.
It’s such an significant amount when expressed in that manner.
The media should be reporting it this way.
I know if you asked britons to stump up even a ha’penny to help the needy, they’d probably raise £15bn.
It really is horrendous, callous politics stating the cuts are necessary.
All correct