www.bankofengland.co.uk/education/P...sh/default.aspxdirect link to the calculator: thanks, Lord Muck
As there is a big row here about whether benefits rates have outstripped the rise in wages (an argument which is unbelievably stupid and annoying for all sorts of reasons) I have used this to have a look at some of the numbers. At present the earliest rates I have been able to find are for 1992/3, which is long after the initial reduction in the value of benefits under Thatcher's first term, but still relates to a period when some of the worst cuts had not yet happened. They are compared with the rate in 2011.
In 1992 a person on Income Support (precursor of the main non means tested benefit available now) was entitled to receive £42.45 a week. In 2011 that person would receive £67.50 a week. According to the Bank of England inflation calculator they would need £72.08 to keep pace with inflation
The equivalent figures for an adult couple are: 1992 - £66.60: 2011 - 105.05: inflation neutral rate - £113.08
This is an underestimate for several reasons. First, inflation for the poor is higher than it is for the general population, because the things they buy have increased faster than the RPI.
Second, the help which had been available to meet exceptional expenses had been seriously eroded by 1992, and a better comparison would be with the situation as it existed before the transition, and indeed with the system prior to that introduced in 1980. It is difficult to estimate the impact of this change but I think that information from the DWP itself is instructive.
QUOTE
The Social Fund was set up under the Social Security Act 1986 and was different from previous schemes, which made only non-repayable grants.
Its origins can be found in Exceptional Needs Payments (that ran from 1948 to 1980), a programme that was discretionary but not cash-limited. The intention was to meet expenses for essential items without which claimants would suffer hardship, not for regular topping-up, which would leave claimants with an advantage over other people on low incomes. It had originally been envisaged that payments would only be made in exceptional circumstances. However, by 1979 the scheme was no longer seen as an exceptional element to the Supplementary Benefits scheme, with every third Supplementary Benefit claimant receiving an Exceptional Needs Payment.
It is not obvious to me that the incidence of take up is any indication that the need was not there: rather the opposite, I would have thought. Indeed it seems to me that all families have "exceptional needs" from time to time and 1/3 does not seem excessive in any way. But this was the beginning of the attack on the welfare state and the change in the characterisation of the poor to the scroungers we see today.
Exceptional needs payments were briefly replaced by single and urgent needs payments: which were also grants.They were a ridiculous policy based on very tightly drawn regulations, void of almost all discretion. To quote the DWP again
QUOTE
This was replaced by the Single Payments Scheme (1980–86) where the discretionary element of its predecessor was replaced by detailed regulations, which were designed to set clear boundaries of help and promote consistency of decisions, to ensure that customers and staff were offered greater certainty in delivery. The scheme was expensive and considered unfair, as those on Supplementary Benefits could get substantial amounts to meet expenses such as essential household items, whereas others on low incomes had to manage without this help. It was also an inflexible, complex scheme which failed to meet individual need.
It is amazing how one political narrative becomes fact over time: the rhetoric about others on low income being treated unfairly if those on even less income can get some help not available to them is laughable: but it is very much the same story we are being told today: as if there is no difference between those on benefits of £71 per week and those on minimum wages of £247.60 per week for a full time job, in terms of their ability to buy a cooker.
Anyway it was a rubbish idea and it was quickly abandoned.
With the introduction of the social fund the principle that help should be based on need was more or less abolished. Instead the social fund was subject to strict budgetary caps for each local area, and that budget was a third lower in 1988/9 than the sum of expenditure under the old single and urgent needs payments had been in its last year of operation: the budget was frozen for the following three years ( I do not know what happened after that, for I do not have the information) and the effect was to force more people into debt because they were offered loans for many things they would previously have got grants for (there were no loans before the introduction of the social fund). There are rules about how much a person can borrow, and should a need arise after a person had already incurred an amount of debt which the DWP considered the most they could afford to repay, there is no access to a loan, no matter how great the need. This led to a greater reliance on charity, as one consequence, though the rules say the DWP can only force people to ask for charity where there was a "realistic expectation that the help would be available, and available in time, if the applicant were to seek it". It should be noted that means tested benefits are set at poverty levels, and it is therefore surprising to realise that such loans were repaid over quite a short period (normal maximum 78 weeks) and were recovered directly from a deduction from weekly benefit of up to 25% (though more usually one of the "normal rates of 5%, 10% or 15%) of the income support rate applicable to the claimant.
If the DWP is correct that a third of claimants got exceptional needs payments: and if we can assume that those grants met the exceptional expenses which arose (I think we can) then the benefits were for day to day living expenses alone. When those same benefits have to cover unanticipated costs such as furniture replacement or plumbing repairs that is a significant reduction in effective income for the poor, regardless of the impact of inflation: it is far more direct than that. But the actual reduction is impossible to calculate: which is handy if you want to pretend it isn't there.
Turning to those in work: The average wage in the uk in 1992 was £12,088 per year. In 2010 (last year I can find figures for) it was £23,504. If it had increased in line with the inflation calculator it would be £20525 per year. So as we can see, even leaving other things aside, those on middle incomes are better off than they were, and those on benefits are worse off.
Of course that is not the whole story any more than the benefits rate is: it takes no account of the insane housing inflation over that period, and that affects wage earners, but not benefit recipients (or at least not so much: there is a cap on housing costs which are met through benefits, and that has its own problems: but until now it has not been so big a problem for those on benefits: another thing this government intends to equalise by levelling down)
A better comparison would be with those on low incomes, arguably. While the "squeezed middle" is one mantra adduced in this horrible attack on the poor, when it suits them they go for the "hard working family on a low income" to fuel the fury against those who are not in work. Unfortunately for that narrative they are the same people: because most of those who are in receipt of poverty wages also get benefits of one sort or another. I cannot find a series for the low paid wage which confines itself to single people who do not get such benefits
I do not know when the people in my country became so nasty as to lead this current government to their confidence that the public will support a truly horrific attack on the living standards of poor people: nor when they became so naive as to fall for this strategy of divide and rule. Assuming they did, of course. I find it hard to believe and if it is true it is deeply saddening.
Edited by FionaK - 3/1/2013, 18:44
