The government proposes to cap benefits at just 1%, a below inflation rise. Their argument is that benefits should not rise faster than general wages but this shows a total and complete misunderstanding of the purpose of benefits and a lack of empathy with those receiving them. It’s very hard for me to talk about this without getting very angry with people in government who clearly have never had to budget or decide whether to turn on the heating or be able to eat a meal but I have to try so here goes.
It seems almost mandatory to start a discussion of this area with "of course not everyone is a scrounger…" but since this scheme is in no way going to identify or target such people, there really is no need. What this scheme will do is reduce the ability of these at the bottom of society to pay the most basic of bills. The reason is obvious to anyone who has ever had to carefully balance their finances (which discounts most of the cabinet of course!). Living requires shelter, food and utilities. The cost of shelter is rising, often faster than inflation (especially in cities) whilst the cost of food tends to track inflation. But the cost of utilities, especially electricity and gas, has far outstripped inflation lately and, of course, those on the lowest incomes are the least able to switch providers and take advantage of "pay up front and save" offers. All-in-all, the basic cost of living is rising, at best in line with inflation but probably even higher.
So why is inflation low? Well how much did you pay for your last computer, phone or television? Was it the same, or even less, than you paid for the previous one? The cost of many such items has actually fallen, which means that for some groups whose spending is heavily into such items, their "personal inflation" figure is actually negative. But of course benefit recipients are not buying these items and their income is all used to pay for the basics of life, the cost of which is often rising faster than inflation.
So we should raise benefits more quickly than wages? Well yes and no. I believe that benefits should provide for the basics of life, no more, no less. So during "the boom" years, when wages were rising rapidly in many sectors, benefits were most certainly not keeping pace and that’s quite correct, but that works the other way; just because wages are not rising, it doesn’t mean that benefits can stop tracking inflation.
Or to put it another way, when times are good, the wages can reap the benefits and their spending power increases whilst in bad times, the waged have to cut back on luxuries. But for benefit recipients we iron out the boom and bust – they are supported when times are hard but not gifted extra spending power when times are good.
Or another way? Well if you can afford an espresso, you can afford to not have your wages track inflation but if you can barely afford a pint of milk, you cannot be expected to shoulder further cuts in your income – that’s the welfare state in a nutshell, as much as you need, no more, no less.
So that’s why Mr Cameron. I doubt he’ll get it though :-(.