The real cost of the Budget

So the Guardian scoops today:

Budget will cost 1.3m jobs - Treasury Exclusive:
Leaked government data concerning next five years shows hidden costs of austerity drive.

So where are those millions of jobs for those currently on incapacitated going to come from?

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The BBC has picked up on it:

Forecast suggests 600,000 public sector jobs to go.
Some 600,000 jobs are expected to be lost in the public sector over the next five years, the Office for Budget Responsibility has said.

Leaked Treasury documents had suggested last week's Budget could increase unemployment by up to 1.3 million.

A laugh?

If you are in need of a laugh, and I know I do, then I recommend David Mitchell's Observer Column last week.

Whelk ice cream never meant we stopped being a Pot Noodle nation.

Our taste for fancy food that made us look like fine diners during the good times is now exposed as a canard.

It muses on the fact that being in a bust now, means we were in a boom before. Only none of us really noticed, did we? He pens this line wonderful:

We didn't really prioritise food. Like drunks at a urinal, we were splashing out because we were loaded.

Magic.

Millions of People Off Benefits?

Heard on the radio this morning that the aim of the government is "to get millions of people off benefits and into work". Let's look at some more official stats: (http://www.statistics.gov.uk/cci/nugget.asp?id=12)

April 2010

employment : 28.86 million

unemployment : 2.47 million (7.9%)

claiming JSA : 1.48 million

unemployed 12 months+ : 772,000.

Inactive people : 8.19 million (i.e. working age, but not working)

That's relatively high unemployment - especially considering we've just had a boom. Has the bust affected us so much?

Now from the same page:

The number of vacancies for the three months to May 2010 was 492,000, up 7,000 over the quarter.

So for the 3 months to May there were roughly 500k jobs available when at any given time during that period there were roughly 1500k people seeking work, and another 1000k unemployed but not looking (bums like me). That's 3 people for every job going.

Now the government is pursuing a high unemployment strategy and expects (partially) incapacitated people to join the work force. My question is what the fuck are they talking about? Where are these millions of jobs coming from?

The government approach to benefits is to sweep it all under the carpet in a way that reduces welfare spending, but reduces welfare full-stop.

So, the Welfare Madness Begins

News began to filter out today (strategic press releases by the government's spin doctors) about plans to target people on Incapacity Benefit. Anyone getting this benefit is suspected of malingering. Too many people could do some work and so all of us are going to be scrutinised more closely. By whom one wonders? Given that my regular doctors and specialists are at a loss to do anything about my symptoms I wonder how I will be judged by someone tasked at cutting benefits. What criteria are going to be applied? (And who the fuck would employ me). How are they going to test how anxiety and depression affect my ability to work? So far I have no confidence at all that my pain will be taken seriously by any doctor whose agenda is to force people back into work - my pain doesn't show up in the tests I've had so far because the tests are simply not geared for it. (I need to write about this, but some other time).

We need to be clear that the point here is reduce spending.

Budgets are being cut everywhere which will include the NHS. This is going to create considerable conflict. On one hand reductions in spending will cause unemployment to rise. They want this because it will force wages down (though not for senior executives or merchant banker, eh). More people will be 'signing on', and less people will be processing their applications. Overpayments will go up (currently official mistakes make up one third of benefit overpayments).

On the other hand the system for testing the incapacitated will have to be beefed up (paid for how?) and this will push people off the IB on onto Job Seekers Allowance (or what ever it is rebranded to), which costs a lot less (£25 per week in my case). These people will be entering the job market with some incapacity (though perhaps not enough to keep them out of full-time employment). They will not be able to compete with all the able bodied people in the high unemployment situation, and this means subsisting on JSA - which is considerably less than IB. This in turn will mean a higher demand on social services at a time when those services are being cut. Being a job seeker is demanding, so stress on the incapacitated will increase. Many people have been incapacitated by stress related illnesses such as depression, anxiety and chronic fatigue. So increasing the stress means more people will be in crisis, but now they have been judged fit to work so there is no safety net.

Another thing is that at present one has to be looking for full-time work to qualify for JSA. So these people who cannot, and won't be expected to, seek full-time work are going to be covered how? Presumably the details will emerge over time, but the next few days and weeks are going to be uncomfortable for many people, me included.

A lot of sick people are going to end up falling through the cracks. This is going to be a disaster for them, but the real costs will be hidden and it will be a PR victory for a government a wee bit short on popularity. Though the way they are covering up the massive reduction in benefit fraud may be cited as a counter-example.

BBC.

Q&A: Incapacity benefits explained.

"Some 2.6m people claim incapacity benefit, or its successor, the employment and support allowance, at an annual cost of about £12.5bn..."

Duncan Smith denies sickness benefit tests to triple.

"Iain Duncan Smith has denied reports that ministers are considering trebling "fitness to work" tests on people claiming incapacity benefit..."

Guardian

Welfare crackdown begins with drive to reduce incapacity benefit claims.

Coalition's plans include taking people off higher rate of benefits if tests reveal they are fit to do some work.

What we are up against

I said to watch the Blue Blog. Watch the comments also. This is a comment from there, this what we're up against:

A good budget. I’m particularly pleased you are raising VAT the one tax we can decide to pay or not by limiting our consumption.

I can never understand why Labour say poorer people are most affected — do the poor regularly buy wide-screen TVs or state of the art consumer goods? I don’t think so, People make do and mend — in any case, everyday consumables such as food or children’s clothes are zero-rated.

Some Truths About Benefit Fraud

In 2009 the DWP published some statistics about benefit fraud. These can be found in the document entitled: Fraud and Error in the Benefit System: April 2008 to March 2009. We are right to be worried about this as it depletes resources that should otherwise go to worthy people. There are three sources of benefit overpayment: fraud, customer error and official error. Here's the graph of the period 1997/8 - 2008/9 for Income Support and Job Seekers Allowance.

There are two main things to say about this. Firstly in the last 10 years there has been a massive reduction in benefit fraud overpayments. This appears to have bottomed out in 2005/6 and to have had a small increase since then. To be clear the reduction is from £850m to £330, with a low of £290m in 2005/6.

Fraud overpayments are less than half what they were a decade ago. How did this get lost in the discussion!?

Now notice that as fraud has gone up, official overpayments have gone up by the same amount. So 50% of the increase (more or less) of the increase from the low figure of £290m is due not to increasing fraud but to official errors (i.e. incompetence).

At the same time there the contribution from the customer has remained much the same -getting as high as £160, but presently at about the same as it was a decade ago.

As it stands about half of the overpayments are due to fraud, ie people deliberately misleading the DWP, and about half are due to mistakes by either the customer or the DWP (with the DWP making twice as many mistakes as the customer).

The DWP are responsible for one third of the overpayments - let's target them for efficiency savings!

Here are the figures from the report in a table:

Year	Fraud	Customer Error	Official Error	Total
1997/98	850,000,000	100,000,000	280,000,000	1,220,000,000
1998/99	780,000,000	90,000,000	330,000,000	1,190,000,000
1999/00	760,000,000	90,000,000	260,000,000	1,120,000,000
2000/01	690,000,000	80,000,000	200,000,000	980,000,000
2001/02	600,000,000	120,000,000	220,000,000	940,000,000
2002/03	570,000,000	110,000,000	250,000,000	920,000,000
2003/04	400,000,000	160,000,000	290,000,000	840,000,000
2004/05	290,000,000	140,000,000	250,000,000	680,000,000
2005/06	240,000,000	150,000,000	180,000,000	570,000,000
2006/07	300,000,000	110,000,000	170,000,000	590,000,000
2007/08	280,000,000	120,000,000	140,000,000	540,000,000
2008/09	330,000,000	110,000,000	200,000,000	640,000,000

The Budget

Government opts for medical exams over form filling. Aims to put all people claiming Disability Living Allowance through examinations - presumably these examiners will be highly qualified experts in every kind of debilitating illness? Yeah right. Ha! not that I even qualify anyway.

Anyway. Comment here at Arbitrary Constant.

Housing benefit cap should not affect me either as I live in low cost housing. Note that the government is unable to reward people who save money, only to punish the profligate - and some people appear to have been very profligate indeed - if the stories can be believed!