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Cameron’s War on the Poor

There is a line right at the start of Joseph Stiglitz’ book Globalization and it’s Discontents (Wiki link) where the renowned economist wishes that governments would indulge in some reality-based policy. The facts are there, people worked hard to figure them out, couldn’t governments at least do them the politeness of using them? It seems more sensible than running with people’s prejudices, or flat-out making shit up.

Like this week. David Cameron – a man who probably has a better understanding of quantum physics than poverty, has announced a crackdown on benefits fraud.

Naturally, this was welcomed by certain parts of the media – even BBC News 24 did their part by repeatedly playing that video of an outlier jive dancing while on Incapacity Benefits. After all, this matters – the benefits fraud bill is £5.2 billion and surely we cannot allow scum like this to take advantage of ordinary working people?

Well, if it were true.  Although the Telegraph calls it all fraud, more honest papers admit that the statistic combines ‘fraud and overpayments’. But this is still a dodge and a deliberate one; if I tell you that ‘fraud and overpayments’ (or just ‘fraud’, for the more dishonest out there) is £5.2 billion, it’s quite clearly A Big Number, A Bad Thing and needs dealing with.

Signs of statistical abuse come early and often though; fraud is talked about in absolute terms (so many billion pounds) and without comparators. That’s understandable for the cynically-minded; £5 billion (a false number, but I’ll come to that) sounds a lot, incites a need for action, right?

Does it sound a lot compared to £148 billion – the benefits budget? How about when compared to £120 billion, the estimated loss by tax avoidance?

In absolute terms, benefits fraud is really quite low. That’s why it always gets lumped in with administrative error – the error is actually larger than the fraud and so helps the un-scary number to look big.

So, some facts.  According to the DWP report March 2010, fraud was counted at 1.8% of the benefits budget. Just to put it into perspective, underpayments (i.e. people not getting what they’re entitled to) caused by both office and customer error came out at 2.3%. Just so you know, non-fraud overpayments clocked in at 4.3% and really needs getting under control, but when clerical error massively outweighs fraud, we’re wasting too much time and money on too small a target.

The note does actually cover this, pointing out that the system’s complexity, high standards of proof and not being able to check what else claimants already get make administrative error more common than it should be. In short, getting people who are already less likely to be able to navigate bureaucracy (or are even straight-out illiterate) to jump though hoops is counterproductive.

Obvious, really.

Cameron also said:

‘In the end it’s taxpayers’ money. People going out to work hard every day do not pay their taxes so that someone can basically claim it fraudulently. That is not right, it is not fair and I want to stop it.’

Well…that’s not quite true either. You see, estimates suggest that tax evasion is costing the country around £120 billion. That’s quite a lot of people not paying their taxes – far more than the chickenfeed of benefits fraud.

The Telegraph, which also covers the story in an unquestioning manner, is also owned by a pair of Channel Island tax-dodgers. Will Cameron deal with them? Of course not.

Surprisingly, even the normally lefty Mirror joins in with the kicking.  It uses the same example of ‘jive dancing benefits cheat Terence Read’. That makes me wonder if; if fraud is as prevalent as claimed, why do I keep seeing the same example?  Surely the best thing the government could do is post a whole slew of things to get outraged about.  It’s almost as if there aren’t as many outrageous examples of benefits fraud as they’d like to pretend…

I’m not even to dissect the whole thing with credit agencies because it’s just dumb. The fact that Cameron’s willing to hand over money to this badly regulated, secretive group of businesses who classed Credit Default Swaps as AAA (investments claimed to be safe as, hah, houses) with no comeback, should be enough to get the warnings lights flashing.

And the kicker is that none of what I’ve said matters.  The PM and ministers have access to the same data as I do and probably more, with smart people to explain it to them if they have trouble. The evidence is there and strong, making it clear that the choices are choices and not ‘hard decisions’.

And not just the Tories, from whom I frankly expect this shit, but New Labour did the same.  Its members may argue that not doing so would have led to castigation by the newspapers, but I am unmoved; a politician’s power to change things also brings the responsibility to do what’s right and real, rather than helping sell a myth that attacks their claimed principles.

The choice to kick a segment of society that is too bewildered and restricted in options to kick back, to turn people’s neighbours against them rather than ask questions like ‘why can’t we go after that £120 billion’ is not good enough.

And here’s a final thought; a while ago, a councillor asked what I thought politicians could do to improve public trust.  I’d have though that ‘don’t lie to us like this’ and ‘don’t war against the poor’ were too obvious, but apparently not.

Addendum:

I have heard that the US did, for a while at least, run a project to properly reclaim tax and that the project was highly effective, reclaiming three dollars for every three dollars spent.  Google hasn’t got me very far; if someone could point me in the direction of a study on this, I’d love to read it.

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Categories: Uncategorized
  1. jamie
    August 13, 2010 at 12:36 pm

    haven’t a fair few MPs falsely claimed for money too..!

    • August 13, 2010 at 1:42 pm

      Yes, about 1/3 of parliament was considered to have claimed unreasonably – that’s about 200 people. Some were worse than other though and it was spread roughly evenly across the parties. Five went to court and tried to claim immunity. Most paid back.

      Which, of course, meant they were let off far more lightly than any of the rest of us. While I appreciate that MPs do a dificult job and should have subsidised food and drink while at parliament, they really took the piss and should have been punished for it.

      Lots of lefty blogs ‘shopped the benefit fraud posters with parliament, MPs and ministers in the crosshairs at the time.

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