Budget Day: The cold, hard numbers of rich and poor Britain.

My favourite little factoid about the House of Commons has to do with Budget Day, and it’s this:

“Members may not eat or drink in the chamber; the exception to this rule is the Chancellor of the Exchequer, who may have an alcoholic beverage while delivering the Budget statement” (Wikipedia)

Today, it may be the rest of us that need the alcohol.

In 2008, the British government approved a rescue package to British banks. The banks had lowered their credit standards, given out more money and brought in profit for their shareholders. Then the housing bubble went pop. The greed of bankers and shareholders who wanted to lend out more money to bring in more profit, meant that the returns weren’t coming back in. And the banks were running out of money.

The rescue package in 2008 consisted of the UK government giving £500 billion to UK banks, to get them out of their financial hole.

£500,000,000,000 is what it look like when you write it out. It’s a whole load of zeros. Let’s look at another number that has a lot of zeros.

£16,000,000,000. That’s sixteen billion. Which is the amount the banks paid out in bonuses the year they received the bailout.

How about another number.

£50,000,000,000. Fifty billion. That’s how much the government gave to the banks in 2009, for the second bailout.

Another number?

£93,000,000,000. Ninety-three billion. The amount handed to businesses in subsidies and tax breaks.

One more.

£12,000,000,000. Twelve billion. The amount Osborne is expected to cut from the welfare bill before 2017. The money that goes to the poorest people in society.

Because when you’ve given £516 billion to the banks to fix their mistake, and £93 billion to businesses to make sure they’re alright, someone has to foot the bill. And the people footing the bill are the people who never had any money in the first place.

More numbers? Alright then.

£20,000. Twenty thousand. The amount of money a family outside London is expected to live on. (Here’s a previous blog post about how that pans out)

3,500,000. Three and a half million. The number of children in the UK living in poverty.

1,084,604. One million, eighty four thousand, six hundred and four. The number of people who had to receive emergency food and support from the Trussell Trust food banks in 2014-15.

15,955. Fifteen thousand, nine hundred and ninety five. The number of benefits sanctions in the FIRST THREE MONTHS of 2014.

One final one? Gladly:

0. Zero. The number of British bankers who have faced any criminal charges for their reckless lending.

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The Tories: Making Children Pay.

This post was prompted by Sue Marsh’s post about the Benefit Cap. You can read it here.

**Edited to add: Now, with new OMG!HOUSING!BENEFIT! section at the end of the post!!**

The new benefits cap states that no-one will be able to claim more than £26K per year in benefits. This figure is based on a couple, but it also states that it doesn’t matter how many children this couple have it will still remain at a cap of 26K. The reasoning behind the 26K figure is because the coalition say that this is an average household’s income. As Sue rightly pointed out in her blog entry:

“Of course it isn’t, because families bringing in 26k are likely to get a whole host of tax credits, child benefit and housing benefit too, but let’s not spoil a good bit of spin eh?”

This got me thinking, and two things (among MANY issues with this whole idea) stood out for me.

  1. That 26K would be the average household income for most households.
  2. That it doesn’t matter how many children you have, you still get 26K

So, to test both these theories I had to do a few calculations. I tell a lie, I hopped over to the awesome website turn2us.org.uk who are brilliant at telling you your benefit entitlement just by you plugging your details into their website. I came up with a partly-biographical-partly-hypothetical family and created a couple of scenarios.

**note: in both these scenarios I just plugged in my and my partner’s details for simplicity – dates of birth, local authority, social housing, rent, council tax etc. The only difference was I made us both non-disabled so I could take that out of the equation. I also gave us three school-aged (10,7 and 5) children, all born on Jan 1st. Birthdays seem to be an expensive time in my fictional household. I also assumed we had the “allowed” number of bedrooms in both cases to take out any Bedroom Tax complications**

Scenario 1 – Married couple with 3 children. Both partners work 37 hours a week at £6.75 an hour (just over minimum wage) bringing our joint income to £26,000 (the “average income” figure from the government). No other earnings/savings/capital.

Scenario 2Exactly the same as above, but with neither partner working. No income of any sort recorded in the calculation.

Scenario 1 results:

hb1 A benefit allowance of £7,822.88. Add that to the income of £26,000 and you get a total of £33,822.88.

Scenario 2 results:

hb2A benefit allowance of £23,992.28. Which is £9,830.60 lower than the first scenario.

So, what does all this mean, really? Is this realistic? Possibly not entirely – the earned income is GROSS income for a start, so there will be some tax and NI to pay which will take it down a bit. But I think we can safely say that Sue’s thought that earning 26K would still get you additional benefits on top is clearly correct. – it gets you nearly £8,000 a year on top of your £26K.

But, I think this hypothetical scenario raises some interesting questions. Firstly, is this morally right? The Tories are all about “making work pay” and there’s no denying that the working fictional family is definitely better off than the unemployed one. Is this a good thing? Does this mean that our fictional unemployed family should “get off the sofa and look for work?” Maybe. But, to me the really worrying thing is about the rest of this fictional family. Our three fictional children.

Having our three fictional children has earned our non-working family an extra lump of cash, that’s for certain. But, the cap for benefits is set at 26K no matter how many children you have. This smacks of the “well, if you can’t afford ’em, don’t have ’em!” attitude but that doesn’t account for a massive amount of societal problems that cause people to have children they may not be able to afford. The lack of aspirations among young women who can only see themselves having kids as a future. People who haven’t been educated enough in sexual health to take proper precautions to avoid unwanted pregnancy. The closure of sexual health clinics, youth projects, sexual health workers whose job it was to bring down the rate of unwanted pregnancy.

I believe that you should not punish children for the actions of their parents. This policy of the benefit caps does exactly that. It is unethical, it will push more children into poverty and it will punish children for the acts of their parents, and punish parents for not being able to access resources they need. The policy is a punishment, not an incentive, and only does more to push the vulnerable further into poverty. It needs to go.

**if you feel my calculations or my conclusions are wrong in any way or you feel I’ve misinterpreted something, please let me know in comments. I’m very interested to see what people think.**

EDITED TO ADD: THE OMG!HOUSING!BENEFIT! CLAUSE (because I’m going to have to point this out 30 times in the comments otherwise…)

“But, the people on benefits will get their rent paid for them while the other family won’t, so it’s not accurate!”

Exhibit A

Exhibit A

Please see Exhibit A. It’s a part of the benefits breakdown from Scenario 2, our family on benefits. As you can see, by the big red ring I’ve drawn round it, Housing and Council Tax Benefits are INCLUDED in this family’s total amount of money for the year.That means that, just like the working family have to pay their £500 a month of rent from their total income of £33,822.88, the family on benefits have to pay their £500 a month rent from their total income of £23,922.28. I haven’t missed anything out, both have to pay the rent.

(Seriously guys, trust me on this one. Not only am I currently on Housing Benefit myself, I worked for 3 years for the local council in their housing department and spent 8 hours a day talking to people about their rent and housing benefit. Please believe me when I say I know how Housing Benefit works!!)