The ‘Better Off On Benefits’ Lie
by Ian Sinclair
15 April 2014
Attempting to justify their cuts to the welfare state, Work and Pensions Secretary Iain Duncan Smith and Chancellor George Osborne have both argued that people are often better off on benefits than they are in work.
However, to paraphrase Edmund Blackadder, there is one tiny flaw with this assertion – it’s bollocks.
Chris Goulden, the Head of Poverty at Joseph Rowntree Foundation (JRF), recently noted that the ‘better off on welfare’ claim is one of the most persistent myths about poverty in the UK: “While in some extreme cases, it may be true, the social security system, combined with the National Minimum Wage policy, is designed specifically to make sure you get more money in a job than if you’re out of work.” Goulden then goes on to do the actual sums, showing how a single person over 25 is better off working full-time on the minimum wage than being on benefits, as is a family of four (two adults and two children) with one of the adults working full-time on the minimum wage. Save The Children, CLASS thinktank and Turn2us, a charity helping the financially vulnerable, all agree this dangerous myth has no basis in fact. Citing the Government’s own figures along with data from the Organisation for Economic Co-operation and Development the Public and Commercial Services Union (PCS) have gone one step further. Informed by their members working in job centres, PCS are so sure the Government isn’t telling the truth that they issued a challenge to Duncan Smith to prove that anyone is better off on benefits than in work. They are, as far as I am aware, still waiting for a reply.
Several tricks are used by those who assert people are often better off on benefits. They often falsely compare all of the income of a family on benefits with some of the income of a family in work. It is rarely mentioned, for example, that many in low-paid work are entitled to some housing benefit and child tax credit. Comparing the income of a non-working family with children with the income of a working family without children is another sleight of hand used. Finally, the myth ignores the rather obvious point that those in work have the possibility of increasing their income (pay rise, promotion, switching jobs etc.), something that is not an option for those on benefits.
This ongoing confusion about the financial reality of being on benefits is the result of an ideologically driven campaign of disinformation and demonization – led by the political establishment and amplified by the corporate media. Frustratingly, many other myths about welfare feed off this mass ignorance and also feed in to the idea people are often worse off in work than on benefits.
One popular assumption is that unemployment benefits are too generous. In reality, since 1979 unemployment benefit has halved relative to the average wage. And compared to the rest of Europe the UK has one of the lowest replacement rates (the ratio of unemployment benefits a worker receives relative to the worker’s last gross earning) in Western Europe.
Duncan Smith’s assertion that there are three generations of families who have never worked is also often repeated. However, a JRF study was unable to find any such families. In another study two economists analysing the Labour Force Survey found only 0.3% of families had two generations that had never worked.
Finally, many believe there are lots of large families on benefits, many of whom have children to get more benefits. In contrast, the evidence shows families with five or more children account for just 1% of out-of-work benefit claims. Moreover, Save The Children point out that “rather than living ‘lavish’ lifestyles, out-of-work families with three or more children are less likely to be able to afford a basic standard of living” than smaller families. This is because “it is clear that the amount of extra support provided to families who have an additional child doesn’t sufficiently meet their additional financial needs.”
Referring to the pejorative language used by the Department of Work and Pensions, Child Poverty Action Group argue “it is very much linked to the fact they’ve got a major programme of cuts to social security under way, and are seeking a narrative to justify this.” With polls showing broad support for the Coalition’s benefit cuts, the public’s ongoing ignorance works perfectly for Government. “Voters least able to give accurate answers about benefits are the most likely to back the government’s policy on cutting benefits”, noted the Trade Union Congress about a 2012 poll looking into the public’s knowledge of the benefits system.
So next time you hear a politician, commentator or friend assert that people are often better off on benefits than in work, challenge them to show you exactly how. The answer will surprise them – and hopefully change their view of those unfortunate enough to be dependent on out-of-work benefits.