Friday, 28 September 2012

Nick Clegg: Utter, utter shit

Factcheck examines Nick Clegg's bold assertion that "One of the things about governing is it forces you to confront the inconvenient truths oppositions choose to ignore. Like the fact that, over the last 50 years, our economy has grown threefold, but our welfare spending is up sevenfold."

Factcheck's quite correct conclusion is that the bulk of the increase is due to people living longer past retirement age:

This isn't actually very surprising: as the DWP itself has discovered, life expectancy has been steadily increasing for the past half century, which for DWP accountants means that state pensions are being claimed for longer...

In fact, when taken as a share of GDP, the sums spent on working age benefits have changed very little. The DWP expenditure tables calculate that in 2011/12, working age benefits cost 3.5% of GDP, approximately the same proportion that was being spent in 1982/83, and actually a smaller share than was being spent throughout most of the 1990s, where it hit 4.6% of GDP at one point.

Clegg's comparison with fifty years ago is particularly duplicitous as it implies a slow and steady increase. As the chart in the FT shows, there was a huge leap from 6% to 12% of GDP between 1962 and 1980 (the Boomers feathering their own nest early in life), and since then it has hovered around the 12% mark (plus or minus 2%). So he would have been far more accurate to say that "Total spending on working age welfare has been pretty stable for the last thirty years, costing a modest 3% or 4% of GDP"
And then of course there is a problem of definition:
* Why are only cash welfare payments included and not non-cash welfare such as education or the NHS (of which half is on old age care?).
* Fraud in the welfare system amounts to £5 or £10 billion a year. But the system is made so deliberately complicated that it costs more than £10 billion to administer. Does that count as welfare for civil servants and software companies?
* If they sell off council houses for £15,000 and then pay Housing Benefit of £5,000 a year to rent them back two decades later, is that really an increase in welfare spending or is that just an increase in subsidies to landowners?
* Do artificially low interest rates count as welfare for mortgage borrowers?
* What about netting? There are plenty of pensioners who get a state pension and also a private pension on which they pay tax; and they pay council tax and VAT like anybody else. The net transfer to the pensioner is a lot smaller than his actual old age pension.
* If government tax policies cost somebody his job in which he earned £200 a week and he ends up claiming £100 a week in benefits, then that £100 is welfare spending but why not minus off the £200 which he is being deprived off?
* What about Home-Owner-Ist policies like shifting the tax burden from land ownership to work and enterprise, and pushing up house prices generally through NIMBYism, why is that not welfare for home owners (although difficult to quantify?)

And so on. The whole thing is meaningless guff and the closer you look at it, the more meaningless it becomes.


Lola said...

The really worrying bit is that he probably believes what he's saying.

Lola said...

Thinking about it a bit more the whole state tax n' spend is some sort of giant Ponzi scheme?

Mark Wadsworth said...

L, politicians neither believe nor disbelieve what they are saying, they are beyond cynicism. And yes, the "nation-state" is a giant confidence trick, but without it there is neither peace nor prosperity, so good stuff! The big question is, who is to benefit from its existence most? Favoured groups or 'everybody equally'?

Bayard said...

"L, politicians neither believe nor disbelieve what they are saying, they are beyond cynicism."

I hadn't thought of that, but yes, most pols are simply broadcasting devices for political theories thought up by others. You might as well criticise a recorded railway station announcement loudspeaker for being callously wrong about the train times.

A K Haart said...

"it costs more than £10 billion to administer. Does that count as welfare for civil servants and software companies?"

In my book yes - why not? Fascinating post.

Mark Wadsworth said...

B, that's a good example. I must remember that.

AKH, good, I've got the same book as you have.

James Higham said...

Can we take it from that that you're not enamoured of him, Mark?

Mark Wadsworth said...

JH, he's had a gilded upbringing, had his snout in the EU trough, conned his way to being leader of the Lib Dems, managed to become Deputy PM by a bizarre sequence of co-incidences and instead of doing his best and being a little bit "liberal" about anything, he has just merrily gone along with the Tory narrative, and also flushed the Lib Dems down the electoral toilet. I'm far from being a Lib Dem but if I were I would hate him with a passion.

So yes, any benefit of the doubt I may have ever given him has long since evaporated and he turns out to be just as vacuous/devious as the rest of them.

Sarton Bander said...

Still better than "Blakey" Cable.

Lola said...


People on both sides of the desk in the benefits offices are on benefits...

Anonymous said...

More interesting would be to know the increase in the cost of govt services (wages and bought in services). Have you noticed that as soon as they mention cuts, the politicians always jump straight to welfare i.e. negative taxes as opposed to tackling the real issues?

Mark Wadsworth said...

SB, I don't hate Cable.

AKH, exactly.

AC, also exactly. If somebody puts a gun to the local council's head and says "Shave £200,000 off your budget" they don't say "OK, we'll lose the Chief Exective" they say "We'll have to shut a library".

The basic unit of political currency used to be "one nurse" so back in the day under Howard when the Tories said they'd cut £8 billion off public spending, Labour said "That's equivalent to 20,000 nurses"

Today, when the Lib Cons say they'll give the banks £60 billion interest free loans, Labour should be shouting "That's equivalent to the entire staff budget of the NHS" and when the Tories say "We'll spend £12 billion a year on foreign aid" Labour shoudl be saying "That's equivalent to 30,000 nurses".

But they don't of course because they are into the whole Indian Bicycle Marketing thing.

Bayard said...

AC, in my fantasy world, an interviewer mentions cuts to a pol and the pol says "where should we start? Schools? Hospitals?" and the interviewer says "Oh, I didn't realise you had cut government expenditure so much already that the only things the government now funded were education and health".