Who benefits from benefits? (First published Feb 2013)


Last week via his State of the union address President Barack Obama signalled his intention to raise the minimum wage in the United States from $7.25 per hour to $9 per hour. Within 24 hours, here in the UK, Iian Duncan Smith explained why he disagrees with the High Courts decision that found it illegal to force thousands to work without payment. The MP for Chingford and Woodford Green was particularly aggrieved at the allegations of ‘Slave labour’ that have been directed at the scam scheme. I’m not sure why he was aggrieved as a quick check of the definition of ‘Slave Labour’ in the Oxford English dictionary defines it as “labour which is coerced and inadequately rewarded”. I think I’ve made my point and could stop writing here, but just for fun lets explore this a little further.

Graduate Cait Reilly won her appeal against the workfare programme that insisted that Cait should work at Poundland in order to receive her JSA payment of £50.95 per week, or £1.69 per hour for the 30 hours per week she was expected to work at Poundland as part of the scam scheme (sorry I done it again). The Workfare programme basically provides companies such as Poundland free labour and they get a nice little bung from the DWP via an approved provider, someone like G4S, and the government gets to massage the unemployment statistics. Everyone’s a winner, well everyone apart from the unemployed person, now forced to work for their benefits, or the person who’s potential Job has been filled by the government sponsored free labour, oh and the tax payer who is essentially paying for this person to work for free at an already profitable private sector company. Apart from them there are definitely some winners, including those with shares in G4S or one of its major shareholders ‘The Prudential’, such as home secretary Theresa May MP and her spouse, for example. The constant awarding of government contracts to G4S has certainly made winners of Mr an Mrs May.

Prior to the current workfare programme slave labour was last evident and recognised in the UK during the Victorian era, within workhouses, where the country’s poor and destitute were expected to work 9 hours per day for no more than three meals a day and a roof over their head. Which sounds bad, but to be fair, even on today’s national minimum wage of £6.19 per hour there is no guarantee of three meals a day and somewhere to live. In fact those who have a minimum wage job today would only receive £940 per month, after deductions, for working 40 hours per week. Is it possible to put a roof over your head and feed yourself three meals a day on £940 per month? To save any, back of a fag packet, maths, its not. In large areas of the country rent on a one bedroom flat would exceed £940 per month and in those areas where rents are less even Scrooge McDuck would find it hard to make the remainder cover three square meals a day, let alone the ever rising additional costs associated with other necessities such as gas, electric, water rates, council tax and work related travel costs.

In October last year BBC Business reported that 1 in 5 workers in the UK earn less than required for a basic standard of living. To make up for this shortfall, between the minimum wage and cost of staying alive, those earning the least, depending on their household circumstances, can apply for benefits. It’s worth remembering that 93% of housing benefit claimants are from working households. So really who are these benefits benefiting? Is it the underpaid claimant or the employer who can maximise profits at the expense of the state and by proxy the tax payer who are required to subsidise the unliveable wages paid by the employers?

Last December Chancellor George Osbourne MP targeted benefit claimants, including the working majority, by capping any rise in benefits to a level less than the most conservative estimates of real world inflation. The son of 17th Baronet Sir Peter Osbourne claimed this was to be done out of ‘fairness’ as benefits shouldn’t rise faster than wages. This logic would see particularly ‘fair’ parent feeding one child no more than its anorexic sibling, out of ‘fairness’. This exercise in diversion, with added divide and conquer, neatly side stepped the question of why wages for many are so low? When many of the companies that pay the minimum wage or close to it regularly make annual profits into the hundreds of millions. We have seen how the government is keen to offer tax breaks to its chums in large corporations, so why not offer tax breaks to large employers who pay their least paid employees a wage that needs no state subsidy via benefits. That way everyone benefits, even dignity.







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