Wednesday, 20 August 2014

Leap of faith

From: Inside edge

Returning from holiday this morning to hear Iain Duncan Smith mouth half-truths and dodgy stats about benefits on the Today programme it felt like I had never been away.

The work and pensions secretary was speaking as the overall benefit cap was introduced in another 335 local authority areas from today. The remaining 40 most affected areas will follow next month.

In an astonishing interview IDS packed in so many questionable claims that it seemed he was determined to establish a decisive lead in the Department for Work and Pensions (DWP) game of dodgy stats bingo.

The idea of the competition is to pack as many misleading claims and figures into a broadcast interview as you can and score one point for each one that goes unchallenged. I have absolutely no evidence of course that such a thing exists but I believe that it may.

This after all is that same standard of evidence that IDS applies himself. Questioned by John Humphrys about the UK Statistics Authority’s refutation of his claim in May that 8,000 people have already returned to work as a result of the cap, he simply asserted: ‘I believe this to be right’.

With faith-based politics like that in action there seems no limit to what he can achieve. Hey presto, claimed IDS, ‘every week something like half a million new jobs are in the job centres’. At that rate there should be no unemployment within a few weeks.

Abracadabra! There is no problem getting affordable housing in London. ‘We believe that there is plenty of accommodation available. A third of all rental accommodation in the private sector is available for those who are on social rents.’ Even allowing for him tripping over his own tongue at the end, that’s quite a claim.

Shazzam! ‘The homelessness figures have hardly moved at all’ in response to the housing benefit cuts so far. In fact, homeless acceptances have risen 34 per cent since the election.

Open sesame! This will stop councils putting people in homes they cannot afford in work – conveniently forgetting that this is exactly what the government is doing with affordable rent. 

Behold! Fairness means the old dodgy chestnut of ‘not living, for example, in some cases living in houses costing £50-£100,000 a year in rent’.

When Humphrys quoted figures from Haringey (one of the four pilot areas) showing that in only 4 per cent of capped families had someone found paid employment, IDS fell back on what other people believe.

‘Let’s reverse this argument and put it to you that there are plenty of families out there working and paying their taxes who will be asking this question: ‘why are we arguing about this, why are we having a debate as to whether or not somebody should be earning more than they are on welfare payments not working?’

This shifts the proof from ‘I believe this to be right’ to ‘lots of other people believe it to be right’ and lots of opinion polls about the popularity of the cap would appear to bear this out regardless of the facts. The principle that nobody should earn more out of work than average earnings for someone in work does get wide support, especially among people who cannot conceive how much rents cost in London. Except of course that it a false comparison based on a fictional benefit system. Anyone in work with a high rent or a large family (the two main groups affected by the cap) will also be getting tax credits and housing and other benefits too.

All of which is why the benefit cap and the faith-based politics of IDS are so pernicious. Using the same logic, he could just as easily argue that it is wrong that someone working part-time should apparently get more than someone working full-time, or that the cap should be reduced still further (which is already a serious proposition among some Conservative MPs).

Readers' comments (16)

  • Melvin Bone


    I've not heard the interview yet but judging by the twittersphere he put his foot in every cowpat in the field this morning...

    And I thought it was only Blair & Bush who did faith based politics...

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  • Iron Fist

    I don't know whether to think IDS is just an out and out liar or actually believes the BS he spews out to the press to justify his botched reforms.

    Either way, the facts do not back him up and it must all surely eventually end with his resignation over the next few months, when even his rose tinted glasses are unable to prevent him from seeing the reality he's wrought.

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  • yet more "creative interpretation" of statistics by pants on fire smith. he should be forced to prove these absurd claims and be forced to resign if he cannot do this.

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  • dont hold your breath. grant shaft and lord fraud are past masters and seem to be bullet proof. call me dave will be looking for a convenient lib dem patsy - alas poor nick

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  • Colin McCulloch

    It would help if Owen Jones could get some allies in the mainstream media - to the untrained eye, he seems to be the only person visibly defending the welfare state and proposing alternative measures.

    The public aren't reading these blogs or following the raging debate on Twitter - they're reading the Daily Mail, The Sun. They're watching This Morning and Newsnight.

    If we are to oppose these measures, we must do better.

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  • Chris

    The coalition will walk on water all the way until the media barons decide they are a liability. Hasn't that been the truth of the past 40 years of politics?

    These friends of Murdoch and neighbours of his anointed ones are too closely embedded with each other. It cannot be in the national interest to have so many who sup from the same spoon holding all the levers of power.

    Still, if they carry on acting against the national interest and in the face of parliamentary democracy they will cause the demise of parliamentary democracy and their own removal as a result - power is as illusory as Simon the Sorcerer, and will pass the same way.

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  • Frogman

    Colin: I heard Owen on The Jeremy Vine show today and all I can say is that to have allies you have to convince others that your opinion is correct, Owen failed miserably. To raise wages to Owens 'living wage' of £26000 before tax would do two immediate things. One, Make a lot of SME unviable and two, raise the price of all goods for you and me and all of those on benefits to pay 'The living wage'.

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  • Iron Fist

    Frogman - your point about SMEs begs the question of whether you should bother being in business if you can't afford to pay your employees enough money to live on. It currently costs the state a fortune in having to top up the income of low paid workers with benefits and tax credits so I don't buy the point that the price of goods would rise. If a living wage was paid the benefit bill would be slashed overnight, taxation (inc VAT) could therefore be lowered as well as business rates. There would be no need for the current system of subsidising low pay employers.

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  • Daedalus

    IF,

    I truly wish that what you say was correct, but you miss one very important point.

    If firms started paying a living wage the cost of producing their goods would increase. Therefore their goods would become less price competitive by comparison to other markets including the emerging markets. Therefore the purchaser of those goods (in many cases) would start buying them abroad. The affected companies would go bust. Unemployment would rise, therefore the benefits bill would rise.

    In an isolated economy you would have a valid point. In a global economy your point unfortunately evaporates.

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  • Colin McCulloch

    It costs an extra £41.65 pw (plus employers NI) to pay the living wage (£7.50 ph) a full time member of staff on a 35 hour contract, as opposed to the minimum wage of £6.31 ph (as of October). Will businesses really go to the wall for forty quid?

    £262.50 pw per full time employee is not too much to ask, in my opinion.

    The only way to bring down the Housing Benefit bill is to move people into employment and/or to build more social housing to control the rental market.

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  • Daedalus

    Colin, what you say sounds very reasonable indeed, and I fervently wish that it was true. Let me use an example to explain why it will not work.

    There is an Indian factory which makes cotton shirts and ships them to the UK. They have a landed cost of £1 per shirt in the UK.

    A UK company buys bolts of cotton and processes them into shirts. They have a production cost of £1 per shirt.

    Where do Matalan buy their shirts from in this example? Cost wise it doesn’t matter so let’s assume they do the honourable thing and buy from the UK supplier.

    Now we increase the wage bill of the UK company from minimum wage to living wage. This increases their production cost to £1.40 per shirt.

    Where do Matalan now buy their shirts from? From the Indian supplier of course. The uncompetitive UK company lose all of their orders and shut the factory, making their staff unemployed and needing benefits.

    Net effect? We have increased wages from minimum wage to a living wage, and this has increased the benefits bill, costing the country more money which we haven’t got.

    You can easily pull my figures apart because I have just plucked numbers out of the air to illustrate my point, and if you want to do that please feel free – I will not be defending the numbers in the example. However, the principle is correct. Increase wages and unemployment rises and benefit payments increase.

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  • strange daedelus how that only applies at the bottom of the supply chain. why then do the managers and executives of these sweat shop companies merit six figure lifestyles without denting profitability

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  • Daedalus

    Philty Boots,

    I was referring to the effect of salary increases.

    I am certainly prepared to be corrected, but with sweat shop companies there is usually an owner and the workers, not normally a swathe of middle management, just a few supervisors who are paid little more than the shop floor workers.

    As far as the owner goes they will probably pay themselves a very low salary and take the rest of their income in dividends. That is, they take their cut out of profits. If there are no profits they will not get anything. Generally I do not believe that they are nice touchy-feely owners, if the business is not profitable they will not continue to support the business out of the goodness of their heart.

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  • Colin McCulloch

    Daedalus,

    I can't argue with the logic of your example - but a government looking to increase the spending power and wellbeing of its citizens would not allow foreign companies to be able to "land" products such as you describe for less than the homemade alternatives.

    The globalisation agenda of the capitalist economy will destroy (and is destroying) the ability of western countries to produce their own basic products and services. The government shouldn't then be surprised or outraged when the social security bill goes up.

    The open market must be on terms that allow the majority of this country to thrive - and the global race to the bottom must cease.

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  • Iron Fist

    Colin - I entirely agree with you. The logical outcome of the current system is a return to serfdom and mass poverty. Globalisation is the con-trick by which extremely poor paid people in other countries have been exploited to the detriment of all.

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  • daedelus i undestand your definition of a sweat shop employer but do agree that companies the size of M&S, matalan and tesco et al are no better than the sweat shop proprietors they support in thos e far flung corners where a daily income is a bowl of gruel.
    the blood and sweat of those workers is every bit on the hands as much as the sleazy factory owner. we in the " civilised " west are supposed to be above such things - alas not and every one of us is guilty

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