Tories miscalculate welfare savings. No rich people affected

[Image: Institute for Fiscal Studies.]

[Image: Institute for Fiscal Studies.]

Public spending on benefits has fallen by just £2.5 billion, despite cuts aimed at saving nearly eight times as much (£19bn) – because the silly unqualified Conservative career politicians who dreamed them up had no idea of the knock-on effects of their plans.

The miscalculations have not affected any Tory donors or rich people likely to vote Conservative, so it seems unlikely the government will care.

The BBC reported that the Institute for Fiscal Studies (IFS) has said the reasons for the increased spending included a rise in the cost of pensioner benefits (yet another BBC inaccuracy – the rise was in the cost of state pension payments) and an increase in housing benefit spending.

Let’s look at that.

The IFS said the £5 billion increase in state pensions was due to the “more generous” entitlements of a new generation of pensioners who had recently retired. This is entirely predictable and should have been included in the Conservative Party’s calculations before the Tories ever got anywhere near the Department for Work and Pensions. It is an avoidable mistake that they didn’t avoid. And they’re financially reliable?

Switching from measuring inflation using RPI – which shows a higher rate – to CPI (in order to pretend that the cost of living isn’t rising quite as fast as it really is) hasn’t saved the £4 billion the government expected. This relates more to pensions than any other benefits, as these are linked to inflation. The government was hoping to save billions because CPI inflation rises more slowly than RPI – but it hasn’t happened, for reasons stated in the paragraph immediately above. The Tories should have known this; they didn’t. Stupid Tories.

The BBC reported: “There had been an ‘unanticipated’ rise in housing benefit spending of £1bn, despite cuts of £2bn, which was down to the growth of the private rental sector, rising rents and slow earnings growth.

Are the Conservatives seriously trying to tell us that they didn’t realise the Bedroom Tax would lead to an increase in Housing Benefit claims on privately-rented properties? What did they think was going to happen? Oh no, wait… That was the plan! Tip people out of social housing on the pretext that they are under-occupying, and send them off to rent from private landlords. But private landlords always – always – charge more and the Conservative Party, many of whose members happen to be private landlords, would know that. So we have an increase in the amount of public money being spent on rents that are charged by Conservative-voting landlords. What a handy way of getting money into the pockets of your rich voting base! Let’s conclude that this particular bit of extra spending was in the plan from the start.

Rising rents are a logical consequence of an influx into the private rented sector from social housing. Suddenly there’s a squeeze on space and private landlords are able to hike rents. Again, Tory-voting landlords get a boost from the government.

Slow earnings growth was also planned by the Conservative Party, and is connected to spending on unemployment benefits. The benefits uprating cap of one per cent per year means an increase in social insecurity, intended to force people to seek work of any kind, no matter how low-paid. It’s not so much about making work pay as it is about making it the better of two bad options. The knock-on effect is that there is no job security any more. Anyone agitating for higher wages can be told there are hundreds of people willing to work for less. That will shut them up. The Tories planned this. It seems bizarre that they did not realise people would have to claim in-work benefits in order to make ends meet. That’s why spending on tax credits has fallen by less than expected. So – again – this should have been included in Tory calculations before they got into the DWP. It is another nail in the coffin of their financial reliability.

Here’s a personal favourite: “‘Significant delays’ in the replacement of Disability Living Allowance with the ‘less generous’ Personal Independence Payment had led to a £1.6 billion increase in spending, rather than a £1.2 billion cut.” It seems the Conservatives did not reckon on the people they’re trying to rob doing all they can to stop their money being taken away.

More seriously, this means that all the cuts to the social security budget should never have happened – nor should the thousands of deaths due to the increased pressure placed on claimants by the DWP on the order of its ignorant secretary of state, Iain Duncan Returned-To-Unit Smith.

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14 thoughts on “Tories miscalculate welfare savings. No rich people affected

  1. ireallymeanthis

    Mike, thanks for your excellent piece.
    But a question occurs to me; I read through the IFS report( or their summary of it? )and I couldn’t make out if the cost of the work program,projected as £5 bn, and that of various private sector welfare-related contracts, and other failures, such as the UC fiasco,were somehow factored-into it.
    Because if not, then the true “saving” on welfare is even less than £2.5bn.

  2. victedy

    if the DWP hadn’t wasted so much money torturing sick/disabled/jobless people then they’d be in the black! i.e. How many billions has the likes of ATOS, Maximus & all the work programme providers cost???
    I rest my case…

  3. Mr.Angry

    They couldn’t run a car boot sale yet alone govern a country.!!! Labour should pick up on this and be shouting from the rooftops, time is getting short. We don’t want another coalition, we need a majority – outright victory.

    1. aturtle05

      A car boot sale is above their skill level, however, we know they can organise a posh up in a brewery.

      Whatever we have as the next government should have planned what they will do in their spell in power before now, but we all know that like this lot, they act before they think.

      1. Mike Sivier Post author

        Labour has had to tot up its plans very carefully, under the spotlight of Tory-led criticism – but the Tories are currently letting loose with promises of unfunded tax cuts a-go-go. Who do we think is more responsible?

  4. Stephen Tamblin

    Yes I agree the theifing tories should be tried and convicted of crime against humanity thay have done nothing for poor and inferm and disabled and sick. I have been diagnosed with vascular dementia and depression and angsity attacks and muscular problems so I know exactly what we are going through. because of my dementia my license has been taken away cause of my blackouts. so at the minute I am scared of what thay might do

  5. Florence

    The BBC may have been wrong in referring to State Pensions as “Pension Benefits” but this phrase has been squeaking frequently in Tory-generate churnalism. This is to soften us all up should they steal democracy from us in 2015 to replace state pension with means-tested benefit. Conditionality for the over-70’s anyone?

  6. jaypot2012

    If this lot get in again, which they would have to form a coalition with someone ? – then I’m going to see if I can move to Eire as I know for sure that myself and my hubby would die a long slow death, as would hundreds of thousands of us.

  7. Paul Trembath (@paul_trembath)

    The problem with PIP isn’t just that people won’t just let themselves be robbed; it’s also that the assessment, even loaded as it is against the claimant, takes twice as long as the figure someone pulled out of the air and didn’t bother to test; so the queues keep getting longer.

  8. BarneyT

    Dear Mike,
    I have to correct an inaccurate part of your article (no, I`m not trolling you, I`m always grateful for REAL news) re: private landlords always charge more.
    I`ve lived in the same privately-rented 2-bed terrace for 15 yrs & counting, & my rent is £60/wk. My landlady is a retired schoolteacher who lives in Cheshire & her response to me pointing out that the rent hasn`t risen at all during these 15 yrs is “It isn`t broken, so why does it need fixing?”.
    Not all private landlords are greedy grasping scumbags…just 99% of `em *sigh*

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