Outside the marginals

a commentary on the politics that followed the UK 2010 & 2015 elections

Playing the percentages

Commenting on the benefit changes today (2 April 2013) a number of politicians seem to be saying that if you are poor / unemployed it is fair if you get a lower percentage increase in your income than the “strivers”.  When that increase is less than inflation you are faced with taking a cut – and that hits the poorest regressively – something many Tories either won’t or can’t recognise.

Looking at some examples surely illustrates this:

If you are earning £100,000 a week (£5,200,000 p.a., see recent comments about footballers), what is the effect of a 10% cut in your income?  Well you don’t turn the heating off, you don’t eat out less, you don’t take fewer holidays – you probably just save a “little less”.  No real hardship

If you are earning £10,000 a week (£520,000 p.a., what I believe some directors of moderate sized companies may “earn”) a 10% cut may mean that you don’t take that third holiday, you may defer replacing your spouse’s car (your car is probably supplied by your company – your spouse’s may be as well). You probably also cut the amount you save. Not exactly hardship, but probably noticeable – did-dums.

If you are earning £1,000 a week (£52,000 p.a. – what a successful production engineer may earn), a 10% cut will probably mean that you don’t take the second holiday, you do defer capital expenditure (such as a new car), less eating out, you may shop more often at a cheaper supermarket and you may not drink wine every evening.  Saving, other than pension, is possibly out of the window depending on your choice of save or consume. Definitely cutting back – “making your contribution” – but no real hardship.

If you have an income of £100 a week (£5,200 p.a. – what an in/out of work struggler may achieve), a 10% cut (which may arise from a cut in pay, a cut in hours, an increase in council tax, a reduction in benefits etc.) has more drastic effects.  You won’t be saving (not even for a pension – how feckless!), you are already shopping at the cheapest shops looking for food that is nearly date expired.  Clothes may come from second-hand shops (or outlets for products made in eastern sweatshops).  You don’t take holidays; there is no car whose renewal can be deferred.  So what gives?  “Heat or Eat” is the probable choice – and a prolonged period of cold weather may force you to consider both.

Do our two posh boys understand?  I doubt it.

When looking to share out “cuts” shouldn’t we be looking to force people to make equal percentage cuts in “discretionary spending”?  Or might the rich actually realise that they might take a greater relative cut?

Related Posts

The problem with the rich

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Impoverish the poor or soak the rich?

Taxation and the behaviour of the rich vs. the rest of us

Bonus Fetid Culture

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2 thoughts on “Playing the percentages

  1. No – you are totally wrong headed. The welfare state should be about providing a safety net for those who fall on hard times, not about subsidising a lifestyle. I would go further and say no one should receive any welfare benefit if they have less than say 5 years contributions. We need to move from benefits as a right to an ‘insurance’ based system. We need to do that now.

  2. I am not sure that many people on £5,000 pa view their life as “a lifestyle”. There will be a few people who give others on benefit a bad name – the government has successfully used a few examples to demonise those on benefits.

    For most, I suspect benefits are already a “safety net for those on hard times” – cuts then represent holes in the net.

    If you say “no benefits until you have paid 5 years contributions”, what do you want done about those who have not made 5 years contributions? This will include for instance young homeless single mothers (yes “feckless”?) and their children (probably not feckless), unemployed graduates (and not just those who read media studies) those granted asylum and Britons returning from living abroad (the scroungers!). I suppose they could set up refugee like “camps” (tents made from cardboard boxes and bin liners) in corners of our parks and laybys – and hope not to get moved on (or assaulted). They can feed themselves from our dustbins, and they can stink out our GPs’ waiting rooms when they inevitably get sick – or are they to be denied healthcare (welfare surely) until they have paid 5 years contributions?

    I am not sure I want to live in a society where the default attitude to the unfortunate is to label them feckless and undeserving and expect them to hide away in the cold shadows of society. They will never be able to make “5 years contributions” and shall remain a blot on society – unless someone comes up with a solution for “these people”.

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