Tuesday, 30 June 2015

Meaningless statistic of the week: "Half of households receive more in benefits than they pay in taxes"

The Torygraph dutifully trots out the misleading headline:

The Office for National Statistics reveals that more than 13 million households in Britain receive more in benefits than they pay in taxes

Accompanied by a picture of celebrity welfare claimant and Torygraph hate figure Dee White.

We knew this anyway: there are approx. thirteen million workless households (eight million pensioner households and five million working age households). They all get much more out than they pay in, duh. We could add on a significant chunk of public sector households as well.

But let's read on a bit...

However the figures from the ONS demonstrate the scale of the welfare state in Britain.

The average household pays £13,402 in taxes and receives £12,940 in benefits, which include both cash payments such as tax credits and benefits-in-kind such as the cost of education and the health service. The poorest fifth of households receive £14,868 in benefits but pay just £4,886 in tax.

No, the average working household pays/generates more like £40,000 in taxes (£600 bn divided by 15 million), I assume they are cheerfully omitting most taxes and just looking at income tax and Employee's NIC.

The £12,940 figure looks just about plausible, if you include all households i.e. £27 million x £13k = £350 billion = cash pensions and welfare spending + NHS + education.

If the average household were to get as much out as they pay in, isn't that a sign that the government is working efficiently? If you compare the more accurate £40,000 with £12,940, that highlights how inefficient it is.

Further, if it were true that the poorest fifth of households get £10,000 more out than they pay in, that equates to about £50 billion a year, three per cent of GDP and nothing to worry about, really.

Then there's this bit of gibberish at the end:

Britain currently spends £125billion a year on working age benefits. Over the last Parliament the government achieved £15billion worth of cuts but Mr Osborne is now pushing ahead with £12billion worth of cuts in just two years.

Direct cash benefits to working age households are much less than that, about £80 billion from memory. If you are consistent and add on the education budget and the cost of the one-half of NHS services 'consumed' by working age households, maybe you are closer to £200 billion.

Minus off the not unreasonable £50 billion extra going to people at the bottom and that leaves the working age population with a tax bill of £600 billion and net benefits of £150 billion, which looks a pretty fucking appalling return to me. That's one-quarter of what you pay in.
I bet the comments section is a hoot.


Lola said...

Oi! Mrs L and I are 'pensioners' but we aren't workless...Oh of course. Silly me. I didn't read the memo, again...