Who truly benefits from state support?
Much is said about the need to reduce the benefits budget, highlighting benefit fraud and a culture of dependency as problems that should be tackled by limiting benefit payments overall, abolishing universal benefits in favour of means testing, and removing certain payments such as housing benefits to younger people.
Much less is said about the way in which employers – both private and public sector – exploit the benefits system to pay low wage rates that are less than subsistence level.
In other words, employees can only afford to work for these wage rates when they top up their income with benefits.
Surely, it could be argued, rates of pay that are too low are as much to blame for the current crisis as benefits rates that are deemed to be too high? A number of questions arise from this.
Doesn’t this represent a hidden subsidy for British industry operating within the single European market where competition rules apply, since labour costs are partially met by the government?
Why are politicians not demanding that employers increase their wage rates to reduce dependency on benefits and, as a result, reduce the benefits bill?
Why do politicians always target poor people as the sole cause of a large benefits bill, whether they are low-income workers or unemployed benefit claimants, when employers create benefits dependency through low pay?
Bearing in mind that the single European market is an economic policy designed, at least in part, to assist employers by facilitating international labour migration, to what extent has the UK benefits bill been affected by the in-migration of low-paid workers from the rest of the European Union who are, like UK citizens, eligible for benefits?
UK employers earn higher profits when labour costs are lower. Low wage rates, the benefits system and labour in-migration are inter-related and play their part in lowering labour costs.
Therefore, benefit fraud not withstanding, it is hypocritical to suggest that the benefits bill can only be reduced by making benefits lower or by removing them entirely from certain groups.
It is also hypocritical to suggest that only benefits claimants gain advantage from the benefits system when it has a positive impact on the competitivity and profitability of British industry, share dividends and executive salaries.
In the debate about the future of the benefits system, let us start with an open and honest appraisal of who actually benefits from it in the first place.
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