Tories Harsh Crackdown on Benefits

Welcome to Reality Check. Today I’m taking a close look at the Conservative pledge to cut billions from the welfare bill.

Tory 3-strikes Policy
First-time offenders would lose benefits for three months
Second-time offenders would lose benefits for six months
Third-time offenders would lose benefits for up to three years

The party says that benefit fraud and error has cost £80 every second under Labour.

Their answer is what they call a “crackdown” on cheats. Anyone who is cautioned or convicted of benefit fraud three times will have their payments stopped for up to three years.

So how much will their “three strikes and you’re out” policy actually save?

We asked the Conservatives and they said “We can’t say”, so I have attempted to do the sums instead.

How many people have been convicted of benefit fraud three times? The Department for Work and Pensions tells me the answer is… zero. No-one. Ever.

How many have had their benefits stopped after two convictions? Last year the figure was 69 people.

Stopping their benefits for twice as long, as the Tories propose, would save roughly £100,000 a year or less than one penny a second. Thus reducing the cost from £80 a second to £79.99.

Even if we include those people cautioned as well as convicted, it is clear that this proposal is not going to save much money.

Theresa May was asked if she knew there was no record of anyone being convicted three times for such an offence

The shadow work and pensions secretary, Theresa May, was asked by Reality Check if she knew there was no record of anyone being convicted three times for benefit fraud.

She declined to give a direct answer, but said the policy was intended to send out a clear message to benefit fraudsters.

More savings

The Conservatives’ bigger promises on welfare rely on saving £600m within three years. Not by targeting cheats, but getting people off Incapacity Benefit (IB).

Basically, the Tories argue that one in five of the 2.6 million people currently on IB is fit for work. That’s just over half-a-million claimants.

They would be moved onto Jobseekers Allowance which gives them about £1,300 a year less.

The government is already planning to do the same thing and last month calculated moving people off IB would save £300m a year over the next five years.

The Conservatives’ figures suggest a saving of £200m a year – significantly less than Labour.

But there’s a problem with both figures.

They are based on an assumption that significant numbers can be moved off IB. But no-one knows if that is right because it’s not been tried.

We do know that with new claimants, a quarter of those told they were fit to work appealed against the decision, and of those, more than a third had their appeal upheld.

Neil Coyle of the Disability Alliance prefers to get benefits right the first time

And Neil Coyle, of the Disability Alliance, believes the policy would hit the vulnerable. He prefers to get benefits right first time

Both Labour and the Conservatives believe that getting tough with benefit claimants goes down well with voters.

But if the consequence of reform is thousands of vulnerable individuals with long-term health conditions being treated unfairly, it’s a policy with built-in dangers.

Taken from BBC News

Tory benefit cuts ‘not the answer’

Conservative leader David Cameron outlined plans on Monday for benefit cuts that would plunge more than half a million disabled and mentally ill people into deeper poverty.

If elected his party would retest all 2.6 million people on £90-a-week incapacity benefit and switch them to the £64-a-week jobseeker’s allowance if found fit to work, he said.

The Tory claimed that the proposal – which he expected would hit one in five incapacity claimants – would save £1 billion over five years.

However it would also mark a multimillion-pound bonanza for the private sector.

Mr Cameron revealed that some of the cash saved in benefit bills would be channelled into firms paid for getting people back into work.

His announcement was swiftly condemned by left economists.

Left Economics Advisory Panel co-ordinator Andrew Fisher dismissed the Tory proposals and called for the creation of new jobs specifically tailored for those who could make an economic contribution to society.

He said: “A more ambitious scheme would be to invest in secure and supported working environments with decent pay and pensions – on the Remploy model – to support people back into work if they are able.

“In the long term, the only cost-effective model of reducing welfare costs is to create jobs for those who need them.”

Mr Fisher added that the Tory proposals were not cost-effective and would not tackle the underlying discrimination that disabled people face.

“Cameron’s scheme will cost more to implement than it saves and will not create a single job, raise a single income or do anything to tackle the discrimination faced by people with disabilities from employers,” he said.

“This mean approach has obviously earned David Cameron the Sun’s support, but it will hopefully cost him some votes.”

The government claims that a recent pilot scheme showed that one in five people on incapacity benefit could work – figures which the Conservatives twisted to argue for their own proposals which would hit all claimants.

Employment Minister Jim Knight labelled the Tory plans “callous.”

“This is unfair on the genuinely sick, who should not suffer a £25-a-week cut in benefit,” he said.

Taken from Morning Star

A4e propose new benefits delivery system

The CJS Dynamic Benefits report outlines a scheme to abolish all benefits and replace them with two. All surpluses from abolished benefits will be channelled to service providers in a bonanza of Corporate Welfare. Unsuprisingly the report was written by former A4e and Lloyds Directors. It will be Tory Policy at the next election.
The Tories are proposing to use “Dynamic Modelling” to determine benefits. What they do not mention is Dynamic Modelling is one of the techniques that created the Profit Crunch. The entire model is based on the assumption that people will work for employers. Be very clear, this is not a model that allows people to be rewarded for being in Education, being self Employed, Being the “stay at home parent” or being Retired. This is a model for ensuring that work is the only economic model for receipt of benefits. Those who do not work enough will be dynamically modelled out of the system.

Nicholas Boys Smith, currently Wealth Director in the International Private Banking division of Lloyds Banking Group helped to write the report. As one of the people responsible for the Banking Crisis, is he really competent enough to be given direct control of eleven million peoples lives?

James Greenbury, another author, has spent the last 20 years running a number of private equity backed support services business that had a majority of the work force for whom staying on benefits was necessary. As an employer needing low paid workers, is it really responsible to suppose he will get people out of poverty?

Sara McKee, yet another author, is Group Services Director of Anchor Trust and previously Group Commercial Director at A4e. Is it really sensible to allow A4e deeper into the corporate welfare trough?

Yet another author is Debbie Scott: Chief Executive of Tomorrow’s People and a member of the Employment Advisory Group of the CBI and its Public Service Industry Forum (PSIF).

Is it really sensible policy to allow Employers to determine what happens to people they do not employ? If policy were to dictate that employers were not allowed to exercise their “right to manage” there would be uproar – yet there is no representation of the “right to work”. With these people as headline contributors – not to mention a member of the Insurance Industry a few Oxbridge Graduates and the patronage of Ian Duncan Smith – the whole report is unlikely to make anybody on benefits happy.

The basis of “Dynamic Modelling” is “Claims Handling” – a euphemism for reducing the amount an insurance scheme has to pay out. Pursuing a claims handling model requires an infrastructure is built in order to minimise payouts. In order to minimise payouts a clear goal is needed. For Insurers, this is maximising shareholder profit. For the Tories it is maximising the number of people in employment.

To make things perfectly clear: for the Tories the goal is maximising the number of people in employment. This does not mean maximising the amount of tax revenue. This does not mean maximising the income of individuals. This does not mean encouraging self employment – far from it: self employment segments the workforce. This does not mean working to live. This means living to work.

There is a large criticism of “Dynamic Modelling” that the Insurance Industry makes – and tries to hide. That criticism is that dynamic modelling works badly when markets are segmented. Cut through the jargon and you find that segmentation means anything that creates uniqueness. A need to look after a dependent creates uniqueness. A desire to be self employed creates uniqueness. Indeed, the one workhouse fits all approach of A4e is the best way to manage benefits in a dynamic modelling policy. It removes the uniqueness and so the system “works well”.

The problem with the report (“Dynamic Benefits: Towards Welfare That Works” A Policy Report by the CSJ Economic Dependency Working Group [16/09/2009]) is that it is a dynamic modelling solution of a segmented market. It is based on some fairly unreformed Thatcherite assumptions about how to treat those who are not indentured to employers. The hook the report has for the Right is “withdrawal rates”. This means how much a claimant loses by earning more. It is also the tool that the Torys intend to use in order to force people to take increasing amounts of work.

The proposals create a new kind of nanny state: the kind of nanny that fails the CRB and murders their charges. The proposed mechanisms would ensure that anybody taking work from being a benefits recipient would be obliged to take extra overtime because the mechanisms are in place to maximise working. People who stand still – people who want part time work or short hours for childcare – will be pushed through a system that “encourages” longer working hours.

This hook works at the lowest paid jobs. The research says that those most penalised by the benefits are those entering low paid work. So, people are reluctant to enter those jobs. So the dynamic model ensures that a person entering a low paid job is better off than a person currently on benefits. However, long term, the person in a low paid job can only sustain that differntial by additional work. A long hours, cheap labour culture ensues.

Anybody with any experience of A4e will recognise the system.

The proposals would also make housing benefits part of an integrated system. Housing benefits are the benefit most frequently obtained by fraud. This fraud is usually the landlord rather than the claimant. Making this part of an integrated benefit in a dynamic model ensures that the landlord has easier access. Taking mortgages into the same benefit system – while ostensibly a “fair” policy – then allows the banks greater access to corporate subsidy.

The truth is the proposals are about creating a sustained corporate welfare system.

The reforms are supposed to do the following:

(1) continue to relieve poverty;
(2) reduce worklessness and benefit dependency;
(3) support positive behaviours by reducing the couple, mortgage and savings penalties; and
(4) increase the affordability of the system.

This will be achieved by reducing the available benefits from 51 to 2. All other benefits will be channelled to service providers. The proposals are not about reducing poverty but about channelling tax revenue away from the electorate and towards shareholders.

Taken from UK Indymedia