In step with time
Will welfare system survive in the United Kingdom in the next decade?
By Dr Sathi Ludhianvi
In last issue we discussed the state of the NHS system in the United Kingdom. I concluded in that article that if no strongest measures were taken then the survival of NHS system was in doubt. I predicted that the NHS system may not survive until the end of the next decade. Now please read about welfare system and come to your own conclusion.
The world is envious of Britain's National Health Service and Welfare System. According to the analysts these two facilities have also become the magnet for potential immigrants who want to come to the UK from all over the world. There is also wide spread misuse of these systems not only by the foreigners coming to our shores but also by the indigenous population. The attraction factor of both legal and illegal immigrants is in the belief that they think, before they even start from their country of origin that they would be able to claim the generous cash benefit, free housing and free medical care. Believe me in some cases they do get away with claiming these benefits.
The idea of the Welfare State was conceived by The Royal Commission into the Operation of the Poor Laws 1832. The government at that time were concerned that the rich people were not charitable enough to help the poor. So the then government thought of helping the poor by increasing the tax on the rich and thus try to divide the wealth by way of education, health and improving public infrastructure for all the citizens of the country. By 1906 the idea was further enhanced when the Labour Party at the time wanted to attract people from the Liberal Party of Great Britain. They increased the spending on education, health and general welfare of the sick and destitute. After the Second World War and after the general elections in 1945 when Labour Party came into power, the cabinet at that time declared war on poverty by promising the people that the State will look after you "from cradle to the grave." As a matter of fact the then government simply implemented the proposal which were initiated by The Beverage Report of 1942. It recommended the flat rate national insurance scheme which would help fund the initiative to eradicate the very well recognised so called five evils ; disease, squalor, want, ignorance and idleness. The scheme was started with a budget of £9bn in 1948. Even allowing the inflation this figure has ballooned to nearly £150billion. In 2013 under the present economic climate the country can ill afford to continue at this pace. Hence some economists are predicting the demise of this wonderful welfare system if the present coalition government or the future government in 2015 take drastic measures to stem the bleedings and analyse the failings and misuse.
For literally all the ills in the UK, the immigrants are almost always directly or indirectly blamed. I hasten to add that such allegations are mostly aimed at black and coloured immigrants and not at the white immigrants who have come mainly from Eastern European countries. But now at least from some quarters, the finger is being pointed at them also and in my view rightly so.
According to the government's own figure there are 407,000 foreign nationals who are currently claiming the welfare payment of one sort or the other. This is 40% more than in 2008. The bill is running to hundreds of millions of pounds. These nationals are mainly from East Europeans block countries. This figure was released under the freedom of Information Act. In 2008 there were only 12,600 benefit claimants from Poland and seven other eastern European countries which joined the European Union. This sharp rise is because these people are now legally entitled to benefits. Most of the benefits go towards job seekers allowance. British people are now naturally concerned that as from 1 January 2014 thousands of Romanians and Bulgarians will head towards Britain. These people will be entitled to claim benefits soon after their arrival as under the EEC rules it would be discriminatory not to allow workers and their families coming from other member countries the state benefits. Immigrants coming from these two new member states already number 141,000 until the end of June 2013. This is an increase of 26% from the previous year. There are at least 40,000 parents who are getting the child benefit allowance even though their children are not living with their parents in the United Kingdom. This costs the British taxpayer £40 million per annum. Tax credits and housing benefits are also payable. The government has not released the figures of these two benefits. Sir Andrew Green the chairman of the pressure group Immigration Watch UK has shown deep concern," It is very striking that claimants from Poland and other new Eastern European member states have increased by nearly three quarters in just one year since they gained the same access to the UK benefit system as British citizens". Mathew Sinclair, the chief executive of The Tax Payers' Alliance also showed his concern,” The bill for these benefits have ballooned so much that it is causing concern. Benefits must be simplified to protect the tax payers. There are still thousands of British people who are entitled to benefit but they don't understand it." The EEC directive is so strong that Brussels is considering taking United Kingdom to the court by demanding that it should pay more to the EEC nationals who want to settle in the UK.
The new figure also shows that since last year 102,000 from Africa and 132,000 more people from Asia and Middle East are also claiming the benefit but Eastern European are the largest group of people who are draining the benefit system. According to the Sunday Times poll commissioned by Lord Ashcroft, the public thinks immigration hurts UK more than the benefits it gives.. 20,000 people asked if the immigrants are beneficial to the country. 60% thought immigration on balance, had brought more disadvantages than advantages to Britain. Many people are concerned that the foreign workers go on the benefit once they are entitled. A quarter claimed that they have been denied housing and other public benefits apparently because of the competition from immigrants. It is worth noting that some local councils give the housing to people under the means testing scheme. The newly arrived in most cases don't have the means to get the housing facilities for themselves and for their families. Some asylum seekers are also given the housing under that scheme. The British are naturally very resentful of that.
On the other hand the government is being criticised by left leaning liberal and labour politicians and some other organisations for being too hard on people who are claiming one benefit or the other. The Labour Party is accusing Work and Pension Secretary Ian Duncan Smith for not having a clear vision for the future of welfare system. They are critical of Universal Credit in particular. The Labour Party is of the opinion that Ian Duncan Smith is covering up the difficulty he would face in the implementation of the scheme. Please note that the Universal Credit will merge several benefits into a single payment that will be adjusted to ensure that the claimants are always better off in work than on welfare. Mr Smith has assured the country that some difficulties have been identified and eradicated. He assured the public that the Universal Credit system could be operational within four years.
The major difficulty the welfare system has is the inefficiency of some civil servants. The department is losing £1million a day because of the errors in overpaying the claimants. The welfare managers try to recover the money but most of the time it is unsuccessful. To add to the misery, the Supreme Court ruled in 2010 that the people on benefit should not be threatened with legal action if they don't return the overpaid money. Consequently an estimated one million pounds a day is being written off. The Supreme Court blamed the Department of Works and Pensions for its inefficiency. Hence it got to suffer for its incompetence. It is worth noting that last year alone, the welfare department lost £361million. The Supreme Court ruled that the DWP's bearocracy is to blame and that the DWP have no right to reclaim any overpayment. The legal action was brought by the Child Poverty Action Group. It has also transpired that the figure could be higher because any overpayment of under £65 is written off straight away and was not followed. This was happening before the Supreme Court ruling of 2010. Surprisingly none of the civil servant is reprimanded for these beaurocrtas mistakes. It is also worth noting that the loss due to these errors is greater than the proposed savings of £350million by the government.
The welfare system is being cheated from left, right and centre. For example in England and Wales there are at least 240,000 lone parents who should not be claiming the lone parent allowance as they are in fact in regular relationship with the father of their child or children. According to The Marriage Foundation organisation a lone parent is better off by about £7,000pa than if that lone parent was to live with the father of the child. If there are more than one children involved then this amount goes up to just less than £9,985pa. If there are three children the amount proportionately goes up. An enquiry headed by the honourable High Court judge Sir Paul Coleridge is trying to find the way to reduce the number of people going through the justice system to far less than 500,000 annually. The report says that the people in stable relationship should be given the financial reward so that they are not tempted to take the route of lone parenthood by concealing the stability of the relationship. It also says that the proposal by the Chancellor of The Exchequer George Osborne to give a marriage incentive of £150 is not enough. The judge proposed a lot higher allowance for married couples which obviously could cost the exchequer billions of pounds per annum which the government can ill afford.
It is shocking that the fraud with the welfare system sometimes remain undetected for a long time. Welfare budget loses millions of pounds every year. Out of many examples, I quote here just a typical one. A serial thief who was driving expensive cars and living in a six bedroom house defrauded the welfare department in the field of housing, council tax benefit and child tax support. She had a fraudulent mortgage on the house too. Ms Dawn Simon of North London was stealing from people who just used the cash machines to draw cash. She would then follow them, rob them and in some cases get hold of their pin numbers to draw more cash. While pursuing the career in stealing, her fraud with the welfare department ran into thousands of pounds. Why she was not detected earlier on is anybody's guess.
The present coalition government is trying its best to reduce the welfare expenditure. They are much unhappy about those work shy people who are content in getting the hand out from the state even though it is not great deal of money under the present economic climate. The chancellor of the Exchequer George Osborne has announced that the people who are healthy and do not simply bother to find work will be helped by the government departments to find work. If somebody is mentally sick he/she will be treated in the hospitals. If someone is alcoholic or is on drugs he/she will be asked to give up the habit or get the treatment. The government feels that the getting illnesses due to excessive use of alcohol and drug is self-inflicted and the user should be publically blamed. Such people should be told that the taxpayer should not be penalised for their habits. Such addicts should be told in no uncertain terms that they got to get up from their back side and find work otherwise their benefit will be stopped or it should be reduced to the mere minimum. George Osborne proposed that the long term unemployed on benefit should be helped to find work. The people should be trained for various skilled and semi-skilled jobs. If a person is illiterate or his/her education slandered is not up to the mark then government's education department should be asked to help. If they can't get the job then we as a government look into the reasons for it. He also said that the unemployed on benefits should be made to clean the streets, cook for the elderly, work in the hospitals and other areas where there is acute labour shortage. People on benefits should be made to work at least 30 hours a week to do the community work.
The new welfare rules are the brainchild of Works and Pensions Secretary Mr Ian Duncan Smith. The Chancellor Osborne is now fully supporting his ideology although only recently it was believed that George Osborne had some reservation for the scheme. Its central point is to make the jobless work. If they are unwilling then their benefits should be stopped. For the implementation of this scheme the cost to the exchequer will be £300 million but George Osborne is of the opinion that this can be recovered by reducing the number of work shy people. It is estimated that there are at least 60,000 households in Britain where are long term unemployed. In some cases some households have none of the members who go to work. Some households have no concept of work for three generations. It is also expected that once the jobless people realise that they had to put at least 30 hours into the community work for nothing and because of the daily registration at the job centre, a majority of the jobless would think that it was not worth their while to stay at home and might as well find the job by making serious effort. George Osborne has virtually declared war on the lazy unemployed by saying," No one will be ignored or left without help. But no one will get something for nothing. You got to earn your benefit." He further added, “For the first time all the long term unemployed people, who are capable of work will be required to do something in return for their benefit. The government will help them find the work. It will no longer be possible to claim Jobseekers Allowance without doing anything to earn it." At the time of writing this article and within days of this announcement just less than 100,000 unemployed have already stopped working in the black economy. It is a major headache for the government that the workshy people were having both ways. Some are claiming the unemployment benefit and at the same time they were working in the black market. At the Conservative Party Conference ministers promised more mandatory schemes for the long term unemployed to save more and more money for the welfare budget. Unemployment peaked in 2011 to 2.7million people. 500,000 vacancies are available and Eastern European immigrants are finding work immediately on arrival. So why can't the British people find work? The government is determined to solve this problem before the 2015 general elections.
A debate has been going on for some time as to why a family earning more than £60,000 per annum should receive the child benefit? Consequently Mr George Osborne, the Chancellor of the Exchequer scrapped child benefit for such earners. A household earning more than £50,000 per annum will lose part of child benefit. On average a household will lose £1,300 per annum. Such parents of high earning capacity were given an option to opt out themselves or fill in a self-assessment form so that HMRC can calculate how much benefit they need to take back. This exercise will save millions of pounds to the exchequer. At present the first child gets £20.30 per week and the second and subsequent children get £13.40 per week. Some people are resentful that the couples who have more children get lot of money from the tax payer. Some people are of the opinion that there should be cap on the number of children getting child benefit. They say the maximum number of children getting child benefit should be just two. This matter can particularly be contentious with labour and liberal democrats.
As I said somewhere in this article, the problem with the cutting down on welfare payments is the fact that the present government is not purely conservative one. It has got coalition with the Liberal Democrats. Any proposal the conservatives float in the public arena, it is in most cases opposed by its partners in the government. For example when Ian Duncan Smith, the Work and Pensions Secretary suggested that there should be a cap on the child benefits and that it should not be paid for third and subsequent children, Nick Clegg, the Liberal Democrat leader and the Deputy Prime Minister in the coalition government labelled it as "echoes of China." When asked as to what was his opinion of the man who has 12 children and getting £52,5000 per annum of tax payers cash? Mr Clegg replied," I can't comment because i don't have the full detail. We have put a cap on how much a household can receive in benefits. This is £35,000 before tax." It is amazing that the Deputy Prime Minister was hesitant in committing to the fact that benefit after two children was right or wrong. After all it is not a bottomless pit.
When we talk about bottomless pit we should point out very strongly that it is not. There is a limit how much cash you can allocate to the welfare system. Let us take the example of NHS. Only recently the medical director of NHS England Dr Andy Mitchell said very clearly that the NHS is unsafe as there is a shortage of money and acute shortage of medical staff also. Cutting down on medical staff is the direct result of efforts to save money. He indicated that if you were to give proper medical care then there can be a shortfall of £4bn straight away in London alone. The same goes for welfare system. If it was to survive then it is extremely necessary to take drastic steps. The next few years are crucial.
E mail: drsathi@hotmail.co.uk
Blog:drsathiludhianvi.blogspot.co.uk
