Feature: Benefits

We need to break out from a benefits system that subsidises poverty-pay employers and greedy landlords – and props up capitalism...

Who benefits from benefits?

WORKERS, MAY 2013 ISSUE

The sheer brutality of the government’s onslaught on the lives of workers is typified by its approach to so-called benefits. Government politicians demonise any worker who receives benefits, yet do not dare to mention the lack of jobs. The sole purpose of the false “debate” on benefits is to turn workers on themselves. In this they are ably aided by the Labour non-opposition.

We need to fight for jobs, not the humiliation of unpaid labour and the dole.
Photo: 1000 Words/shutterstock.com

As the various changes coming into force from April start to bite, the real effect on people’s standards of living is being documented. A propaganda war is being waged on “scroungers” and “a lifestyle choice of living on welfare” to characterise larger and larger groups of workers, and to divide us. The concept of the feckless poor is back with a vengeance, to attack the notion of universal benefits and to justify the impoverishment of the people along with the continuing enrichment of the few.

The issue of benefits is complicated. A benefit is defined as something which brings improvement to somebody. So who exactly experiences improvement and for what purpose? While workers rightly reject the notion of living a life dependent on state benefits, many are allowing the distinction between different types of benefit to become blurred. The introduction by Work and Pensions Secretary Iain Duncan Smith of “universal credit” (see Box) later this year will do so even more.

Universal benefits such as free health care for all and the Welfare State were ceded by a ruling class afraid of workers who had successfully fought fascism in World War Two and were not prepared to accept less. Workers could now assume that their children would receive free, good quality education and training, ands the old could retire and live out their lives free from poverty, although of course workers paid for all this through taxation of different kinds. The hated means tests of the old National Assistance, which smacked of the Poor Law and the workhouse, were to some extent done away with. Health care and medicines would be free to all when needed.

In addition, payments such as Child Benefit – known as “family allowances” when introduced in 1946 – reflected an acknowledgement that children do not earn so cost money to feed and clothe. Likewise the old age pension, maternity and disability benefits.

The principle was that if you cannot, or should not, be working for a wage, society will ensure you can live in dignity and free from want. Some payments, such as the state pension, required individual contributions from employers and employees via wages, but crucially they were not means-tested.

Universal free benefits such as these have been successively eroded by Conservative and Labour governments alike. Fees for dental care and eye tests came in quite quickly. Prescription charges for most adults were proposed by Labour in 1951, and introduced by the Conservatives in 1952. The trick here was to introduce very low initial charges, but once the principle was breached they could rise and rise, and did so. Just look now at the teeth of people on low incomes to see the result. The move to means testing of child benefit – a retrograde step – has now been pushed through. The maternity grant – another acknowledgement of society’s responsibility for children, dating from 1937 – has been abolished.

But many “benefits” are nothing of the sort, simply devices to improve the lot of capitalists. For instance, unemployment benefit – the dole – was always in practice an acceptance that capitalism affords workers no right to work, and that it will from time to time require unemployment that enables workers to be available when required at the whim of the employer, and serves to keep wage rates down. For instance, Thatcher used North Sea oil revenues to fund unemployment as part of a campaign to break trade unions’ resistance to the employers.

Glasgow Rent strike, 1916. Our ancestors took on landlords at source, instead of living with a system that props them up.

Now the labour market has been flooded due to free movement of labour within the EU, making unemployment the biggest weapon of employers against workers, a deliberate method of depressing wages. Payments to the unemployed have been made subject to more and more harsh conditions by successive governments. Now, at a time when there is little work available in many parts of Britain, unemployed workers can be required to work for nothing to obtain this “benefit” – the ultimate indignity – or be “sanctioned” by having all payments stopped if judged to be not trying hard enough to find work. This form of slavery is unopposed by Labour. We need to fight for jobs, not the humiliation of unpaid labour and the dole. And we need to leave the EU.

Payments to those too disabled to work – a number greatly increased by the improved survival rates both of children with profound disabilities and those disabled later in life – are also being reduced or removed at a time when finding work for many can be almost impossible.

Disability payments became discredited when in the 1980s the Thatcher government sought to ease embarrassing unemployment figures by encouraging jobless workers to be registered as “sick” – a move which workers should never have accepted. Successive governments perpetuated the system. Now that it suits capitalism to do so, workers on long-term sickness benefit (retitled Employment and Support Allowance and soon to be rolled into the new Universal Credit) are accused of skiving.

If unemployment benefit enables the state to charge workers in work to fund unemployment via taxation, Working Tax Credits are an even more blatant benefit to employers. This institutionalising of low wages began as Family Credit in 1986, eventually becoming Working Tax Credit in 2003 under Labour. Working Tax Credit is a state top-up payment to low wage-earners – so a direct subsidy to employers who pay wages far below the level at which a worker can live. Even with the credit, it is still a poverty wage so employers are being subsidised to pay below-poverty wages with the subsidies paid for by other workers through taxes. A focus on cutting benefits, characterised as good for workers in work and not on poverty wages, takes the attention off the employer and on to a false battle between groups of workers.

Council Tax Reduction (also called council tax benefit) served the same function, though this was abolished in April this year, and the new “localised” system will compel 465,000 households in London, for example, to pay more council tax, many for the first time.

Another great capitalist wheeze is Housing Benefit, a rent subsidy, introduced in 1982 (and replacing other systems of subsidising rents in place since the early 20th century). It was introduced in the Thatcher era of the sell-off of council housing and increasing deregulation of the private rental sector. It partly or wholly paid rents of low income tenants in private housing.

By the end of the 1990s government control of private rents had virtually disappeared and the “free” market apparently reigned supreme – except that landlords were now highly subsidised by Housing Benefit, enabling them to keep rents high for tenants who would otherwise be unable to pay.

Buy-to-let landlordism has become a career choice for many – making a killing for greedy parasites, and all subsidised by the rest of us. Most Housing Benefit claimants are in work but earning insufficient to pay the high rents.

How we got to here: a brief history of benefits

Rocketing private rents in cities such as London where uncontrolled migration has contributed to an acute housing shortage have brought with them horror stories of large families costing £2,000 a month in Housing Benefit – stories which have eased the government’s path in changing the rules. Many families are now being forced to move out of newly desirable parts of inner cities to cheaper rental areas on the margins – enabling the property companies to move in and make a fortune. So subsidised landlords give way to the even bigger profiteers created through the housing shortage.

Workers need a programme of council housing to meet our needs, and an end to the shortage caused by mass migration. EU membership, government policy and the market in housing have spectacularly failed us. Every worker should be able to find and pay for decent housing from wages, not benefits.

At the last count, the annual Housing Benefit bill is £22.4 billion, while Working Families’ Tax Credits cost £30 billion. Compare this to cuts or threats to universal benefits. Winter fuel payments to pensioners cost £2.2 billion a year, free travel around £1 billion, TV licences for over-75s £600 million. The cut to child benefit saves £2 billion a year.

So who is choosing “a lifestyle of dependency living off the public purse”? Who are the scroungers and skivers? To the poverty-wage employers and private landlords who make their money out of the benefits system, add to the list those such as the bailed-out bankers, profit-making privatised public service providers, offshore account tax cheats, MPs fiddling expenses or moving smoothly from ministerial office into private directorships, MEPs living on massive tax-free allowances, and so on and on. Successive reductions in corporation tax over time by Brown and Osborne from 33 per cent to 21 per cent next year, lowering of top rates of income tax for the very wealthy, and the laughably low levels of Council Tax paid by the obscenely rich in their London West End palaces. Capitalists will make us pay for their system in every way possible if they can get away with it.

Workers are rightly resentful of fellow workers if they are content to live off the system – especially where they see people arriving from other countries, having contributed nothing to our society, taking advantage of our welfare system – this needs to be dealt with by leaving the EU.

But we must stop allowing the erosion of those universal benefits which any decent society needs, and which allow dignity. We must also stop putting up with the humiliation of “top up” benefits and prevent our society from becoming typified by the hated charity hand-outs of food banks for workers – the “poor and needy” who are pitied.

Reject pity and passivity. The answer to the misery of unemployment is work. The solution to poverty pay is pay we can live on. Neither has ever been handed out to us by capitalism. They come only as the fruits of struggle. Our ancestors knew that when they created trade unions, and we must recognise this now.