Benefit cuts open UK welfare state debate

London, England – Large spending cuts proposed by Chancellor George Osborne have provoked anger among anti-poverty campaigners and opened divisions within the country’s ruling party. The cuts attempt to “balance the books”, essentially predicting a positive outcome to the call for more austerity measures.

Osborne said earlier this week that the next government must cut welfare by a further £12bn ($19.78bn) after years of tough austerity policies, a move that is widely seen as a bid to set the agenda for elections in 16 months’ time.

His comments are fuelling disagreements between members of his Conservative party keen to slash the benefits burden and opponents who point to the crucial role welfare plays in Britain’s low-wage economy.

The cuts have also put austerity policies under new scrutiny as the Trussell Trust – which runs the UK’s largest network of foodbanks – is predicting that the country is poised to pass a bleak landmark in 2014 when one million people request food handouts.

“In 2013 our foodbank network provided support for 561,000 people and if things go on the way they are we could find ourselves providing food aid for one million people in 2014 – and that is a very challenging figure,” said Chris Mould, Trussell Trust chairman.

Deficit strategy

Osborne’s strategy – which aims to balance the government’s books by eliminating Britain’s deficit by 2018 – is focused mostly on slashing public spending. While the deficit is down by a third since 2010, the chancellor insists that the UK is still borrowing too much. As a result, he says a further £25bn ($41.21bn) in cuts is needed in the first two years of the next government, with £12bn ($19.78bn) coming from social security alone.

Industry groups seemingly support the strategy and point to signs of economic recovery, although some economists say this is based on flaky consumer borrowing. However, it will not be easy to find a further £12bn ($19.78bn) of welfare savings and many commentators warn that vulnerable groups could suffer disproportionately.

Osborne’s comments that 2014 will be a “year of hard truths” also angered his coalition partner Deputy Prime Minister Nick Clegg, who said that penalising the “working poor who are dependent on welfare” was unrealistic and unfair.

The opposition Labour Party and trade unions argue that austerity has held back the country’s economic recovery and have sought to shift the debate to what shadow chancellor Ed Balls calls the “cost-of-living crisis” facing working people, who have seen pay remain stagnant as costs, particularly of food and fuel, have soared.

The Trussell Trust said that by 2017 the proportion of disposable income spent on food by low-income groups will rise towards an unviable 25 percent, and is demanding an inquiry into rising food poverty. In December, senior health experts wrote to the British Medical Journal describing food poverty in the country as a “public health emergency”.

Trussell Trust Chairman Chris Mould said, “One in five people in the country who are in work at the moment don’t have sufficient to make ends meet on a regular basis. If you cut welfare then it’s inevitable there will be more people who need the support of foodbanks.”

Anti-poverty groups are warning about the effect of further cuts on the 13 million people who live below the poverty line and there is growing concern about the effects of austerity on children. The Child Poverty Action group (CPAG) predicts the number of children living in poverty in the UK will rise from 2.3 million today to 3.4 million by 2020.

“We’ve seen the consequences of what’s happened already as a result of cuts – poverty is going up,” said Moussa Haddad, CPAG senior policy officer. “Our estimates suggested that child poverty cost the country £29bn ($47.8bn) in 2013, and if the rate increases to 2020 as predicted, then that will go up to £35bn ($61bn).”

Matthew Reed, chief executive of The Children’s Society, said, “Further cuts to welfare spending in the next parliament could pile further pain on families struggling to put food on the table and keep their children warm”.

Hostility to welfare

Many commentators suggest the chancellor’s proposals are political, tapping into a reflex among many Conservative supporters hostile to the welfare state who are inclined to see the benefits claimants as work-shy. 

The chancellor sees welfare as a defining election issue that can pose a calculated challenge to Labour – which has proposed no welfare cuts – and is also poised to announce a “cap” on welfare spending that would become politically difficult to breach. But his strategy is not without risks: Evidence that welfare cuts resonate with the wider public is unclear, and Osborne also faces unease within his own party.

Moreover, the Scottish National Party – which is campaigning to win a referendum on whether Scotland should become independent later this year – has said Osborne’s call for further cuts will disproportionately hit welfare spending in Scotland.

Jamie Burton, chairman of Just Fair, which campaigns for UK policies to comply with the country’s international human rights obligations, remarked, “The very real risk here is that political imperatives are being prioritised over issues which relate to the government’s international obligations to ensure that everybody has a decent standard of living”.

Cutting welfare could also be politically counterproductive for the Conservatives if it shifts attention to the key reason for the size of the country’s welfare budget – low wages. In December, the Joseph Rowntree Foundation reported that just over half of the 13 million British people in poverty are in working households.

Recent reports suggest that Prime Minister David Cameron is now looking carefully at rates of pay in the UK and may be considering a hefty increase in the minimum wage. “The dogma that this is all about trying to force people who are lazy or some way reluctant to work back into jobs is misguided and not in accordance with the facts,” Burton said.  

Supporters of the welfare state are also going on the offensive. Siobhan Tate, Labour’s parliamentary candidate in the relatively affluent London suburb of Carshalton and Wallington, sees herself as proof of the positive social role welfare can play. “We all benefit from welfare. During the five years I cared for my terminally ill son, I received income support and disability living allowance,” Tate said. “Without welfare, frankly, I’d have been ruined. Instead, I was able to train as a teacher and, later, I was able to assist my husband in setting up his business which now employs 10 people.”

“From personal experience I know that tax credits, disability and housing benefits are not hand-outs. Cutting welfare is a cut on fairness.”