Iain Duncan Smith Misleads Parliament About Level of Unemployment Support

by richardhutton

For the second time this week, the Work and Pensions Secretary has made misleading claims about social protection. In this instance, he has claimed that unemployment benefits have risen at an unfair rate, much higher than the rate of average salaries. Is this true? Not really. Duncan Smith is misusing rate to create a false impression, by removing it from context. See, if you receive £1 in January, and receive £1.50 in the following December, that’s an increase of 50% – which is equal to the rate Directors’ pay rose by during the same period. However, you have only received an addition of fifty pence – they received a salary increase worth hundreds of thousands of pounds.

Rates are incredibly easy to manipulate. This makes the actual financial value a proper measure of change, and its significance.  Let’s look at the change in actual value of Job Seekers’ Allowance during the last five years[1]:

2007

Higher rate (over 25’s):             £59.15 per week

Lower rate (under 25’s):             £46.85 per week

2012

Higher rate (over 25’s):             £71 per week

Lower rate (under 25’s):             £56.25

So, an increase of £11.85 and £9.40 per week, respectively. Therefore, the actual value of Job Seekers’ Allowance per annum rose by £616.20/£488.80. However, since April 2007, prices have risen by 18%[2] – which means that Job Seekers’ Allowance is no more copious than it was five years previously.

Moreover, the average annual pay for full-time workers is £26,500 per annum[3]. The highest rate of Job Seekers’ Allowance equates to £3692 per year, which means that the average full-time worker receives seven times as much money as a person claiming Job Seeker’s Allowance.

Another factor of proper context is the abundance of low-paid jobs in the private sector – which is the rate of increase Duncan Smith and sympathetic journalists were citing as comparative:

“Private sector pay has stagnated during the recession, while the public sector has been subject to a three-year pay freeze”[4].

In reality, the average weekly pay of staff in the Public sector and Private sector increased: despite the government pay-freeze on most employees in the public sector, full-time staff saw their weekly-pay rise by 1.6%, to £565; while those in the private sector saw their earnings go up by 1.5%, to £479. So this was a weekly growth in salary, which was almost fifty times higher than the weekly increase in social protection for the unemployed. In fact, it nearly equalled the annual rise in Job Seekers’ Allowance: £565/£479 per week, as opposed to £616.20/£488.80 per annum[5].

It is clear that comparing social protection rates to those of average earnings is unhelpful, and has been done in a misleading manner by Duncan Smith. Unsurprisingly, however, the media tended to accept Duncan Smith’s claims at face value[6]. For example, the Daily Mail claimed that:

“While working families have faced a greater squeeze on their income from inflation, benefit claimants have been cushioned from the soaring cost of living by automatic inflation-linked rises in their payments”.

Again, this is divorced from context. As with Duncan Smith, the Mail are pretending that claiming benefits and being in work are two different things. In reality, many of those whose wages have failed to keep pace with inflation actually rely on working benefits, such as tax credits, to prevent them living in poverty, despite the fact that they work[7]. It is equally false to claim that unemployed benefit claimants have been cushioned from the soaring cost of living. Unemployment is severely damaging to people. As Oxfam reported in 2009:

“People being made redundant now may find it hard to get back into work quickly, and the longer the time spent below the poverty line subsisting on inadequate benefits, the bigger the impact on your health, wellbeing and self-esteem”[8].

Moreover, when a joint project between several research organisations asked 39 groups made up of members of the public of all incomes, they found that “a single working age adult needs a budget of £158 per week, not including housing, to get by. This wasn’t about looking at what people wanted, but what they needed to meet their basic needs and have a chance to participate in society”. In other words, they required over twice as much as Job Seekers’ Allowance actually provides[9].

So, irrespective of what rate Job Seeker’s Allowance has increased by, its recipients are still poor – and Duncan Smith is planning to make them poorer still. His case rests – as it invariably does – on misleading claims, and misuse of vague unreferenced data. Not only does he apply rates without context, but he also continues to suggest that benefits are paid only to the unemployed, at the expense of people who work; and that these are at an unwarranted high level. In reality, the vast majority of benefits are payable to people in work, precisely because their salaries are low; while recipients who are unemployed continue to live at subsistence level. The case for the government’s Welfare Reform Act continues to be made on false grounds.

UPDATE:

Channel4’s Fact Check Blog has a short piece on this subject, here.

 


[1] The current rate of Income-based Job Seekers’ Allowance is available on the government’s website:  https://www.gov.uk/jobseekers-allowance/what-youll-get

For past rates, the only official source for data I could locate was an archive by the Department For Social Development, but their documents are all Excel formatted – so I couldn’t access them: http://www.dsdni.gov.uk/jobseekers_allowance

However, data which is consistent with the sums cited by the Daily Mail can be accessed via ‘Various Rates For Benefits In 2008-2009’ by Rights To Benefits: http://www.rightstobenefits.com/benefits_news/rates_of_benefits_payments.htm

[2] ‘Average earnings rise by 1.4% to £26,500, says ONS’ by BBC, 22 November 2012:  http://www.bbc.co.uk/news/business-20442666

[3] ‘2012 Annual Survey of Hours and Earnings’ by Office For National Statistics, 22nd November 2012: http://www.ons.gov.uk/ons/dcp171778_286243.pdf (p. 4)

[4] ‘Benefits rising twice as fast as salaries: Payments to unemployed jump by 20% in five years’ by Gerri Peeve/Daily Mail, 2nd January 2013: http://www.dailymail.co.uk/news/article-2255837/Benefits-rising-twice-fast-salaries-Payments-unemployed-jumped-20-years.html

[5] ‘Average earnings rise by 1.4% to £26,500, says ONS’ by BBC, 22 November 2012:  http://www.bbc.co.uk/news/business-20442666

[6] See, for example, ‘Benefits rising twice as fast as salaries: Payments to unemployed jump by 20% in five years’ by Gerri Peeve/Daily Mail, 2nd January 2013: http://www.dailymail.co.uk/news/article-2255837/Benefits-rising-twice-fast-salaries-Payments-unemployed-jumped-20-years.html

‘Benefits Handouts Rise Twice As Fast As Private Sector Pay’ by Alison Little/Daily Express, 2nd January 2013:

http://www.express.co.uk/posts/view/368165/Benefits-handouts-rise-twice-as-fast-as-private-sector-pay

‘Benefit increases far outstrip private sector pay, DWP figures show’ by Christopher Hope/Telegraph, 1st January 2013:

http://www.telegraph.co.uk/news/politics/9774333/Benefit-increases-far-outstrip-private-sector-pay-DWP-figures-show.html

[7] See ‘Memo to Duncan Smith: low wages are not an argument for cutting benefits’ by George Eaton/New Statesman, 2nd January 2013: http://www.newstatesman.com/politics/2013/01/memo-duncan-smith-low-wages-are-not-argument-cutting-benefits

[8] ‘Could you live on £60 per week? And could your MP?’ by Antonia Bance/Oxfam, 12th February 2009: http://www.oxfamblogs.org/ukpovertypost/2009/02/could-you-live-on-60-per-week-and-could-your-mp/

[9] ‘Could you live on £60 per week? And could your MP?’ by Antonia Bance/Oxfam, 12th February 2009: http://www.oxfamblogs.org/ukpovertypost/2009/02/could-you-live-on-60-per-week-and-could-your-mp/