The benefit cap: more media driving policy

Yesterday I talked about how the media, and the right wing tabloid press in particular, plays a major role in determining not only government policy on immigration and the EU, but also determining the policy of the Labour opposition (on austerity, immigration and the EU). Yesterday also saw the introduction of a reduced benefit cap in the UK, which is another issue where both government and opposition policy has its origins in the tabloid press.

The benefit cap imposes a maximum figure you can receive in benefits (where benefits include child benefit). The previous cap hit around 20,000 households, mainly those with large numbers of children or paying very high London rents. (This and subsequent figures come from here.) The new lower cap will hit nearly 90,000, and its impact will be felt throughout the country. Those already capped will lose a further £3,000 per year (in London) or £6,000 per year (elsewhere). The government expects those households newly affected by the cap to lose an average of £2,000 a year.

The origin of this cap come from countless stories like this in the tabloid newspapers. Such stories, which are hardly ever contextualised in terms of how typical they might be, understandably annoy many people. As a result, the policy of a benefit cap has proved very popular. The government formalised motivation for the original cap with the idea that no one on benefits should receive more than they could by working. But as Declan Gaffney explained in this superb post:

“people are not generally better off on benefits than working: that’s the effect of having a minimum wage to which levels of in-work support (tax credits and housing benefit) are calibrated. As long as someone is working 16 hours a week at the legal minimum hourly wage, they are better off in work. So the principle that the public approves – the one they are in fact approving when they give their support to the cap- is already built into the social security system. But as the public is not generally familiar with the workings of the system (why should they be?), they are not necessarily aware of this.”

However the cap was quantified by comparing all the income of those out of work with just some of the income of those in work.

“So child benefit, child tax credit and housing benefit are included on one side of the comparison (out of work) and excluded on the other (working). You can demonstrate anything if you’re prepared to rig the comparison in this way, and that is precisely what the government has been doing.”

It is difficult to imagine any other motivation beside garnering popularity or appeasing the press for why the government introduced the benefit cap. The original cap raised relatively small amounts, but had a large negative impact on already poor children. The evidence suggests that only a very small percentage of those hit by the cap were encouraged to find work or move. But such was the popularity of the cap, that both the LibDems and Labour accepted it ‘in principle’. Gaffney’s post contains this very revealing quote from the LibDem Lord Kirkwood

“I want to make it clear that I am implacably opposed to a household benefit cap in principle. People's eyes glaze over when I try to explain my main reasons. I tried it in Grand Committee and by the end people looked at me as though I was possessed..... What I should really like to do with Clause 94 is vote against the whole thing. However, my noble friend Lord German and one or two others took me into a dark room, sat me down and said, "That wouldn't be sensible because the great British public know the square root of next to nothing at all about the detail of the technicalities". He has persuaded me that I should mitigate Clause 94, and I am prepared to do that.”

The benefit cap is also an example of where an opposition tactic of ‘accepting in principle’ but tinkering at the edges just becomes failed appeasement. Gaffney ends by saying: “there are costs attached to this strategy, in terms of the quality of political debate and more generally in the endorsement it gives to a big untruth about the social security system and those who are relying on it.” His post was written about the initial cap in 2012, and yesterday’s intensification of the policy suggests he was absolutely right. (Contrast with the bedroom tax, which Labour did oppose.) [1]

In 1966, Ken Loach made the television play Cathy Come Home about homelessness. In a small way it shocked the nation, by making many people aware of something that was otherwise unreported. Today what we have on television is Benefit Street. Ken Loach recently made the film I, Daniel Blake about the victims of the government’s benefit system which has helped create the huge expansion of food banks. But if the film was shown on TV today, I doubt whether it would have the same impact as Cathy Come Home. The idea that most benefit claimants are in some sense fake remains embedded in the public consciousness, and the belief is supported by the same media that initially helped create it. It is another politicised truth: a falsehood that politicians and the political media pretend is true.

 [1] The danger of conceding the principle can also be illustrated by austerity. Once you accept that the deficit is a problem that requires an immediate solution, there are no limits on how much austerity you have, as public credit will always go to those to try and solve the deficit problem quickly.

Media myths

At first sight the research reported here is something that only political science researchers should worry about. In trying to explain election results, it is better to use ‘real time’ data rather than ‘revised, final or vintage’ data. But as the authors point out, it has wider implications. Voters do not seem to respond to how the economy actually is (which is best measured by the final revised data), but how it is reported to be. (This does not just matter for elections: here is a discussion of some other research which suggests how the way recessions are reported can influence economic decisions.)

Just one more indication that the media really matters. I would not bother to report such things, if this point was generally accepted as an obvious truth. That it is not, in the UK at least, reflects various different tendencies. Those on the right know that the print media is heavily biased their way, and that this has a big impact on television, so they have an interest in denying that this matters (while funding think tanks whose job is in part to harass the BBC about its alleged left wing bias). Those on the centre left often react negatively to a few of those further left who discount all awkward facts by blaming the media. And the media itself is very reluctant to concede its own power.

As an example, here is Rafael Behr in the Guardian talking disapprovingly about Labour supporters:

“I heard constant complaints about failure to “challenge myths” about the economy, benefits, immigration and other areas where Labour is deemed unfit to govern by the people who choose governments. The voters are wrong, and what is required is a louder exposition of their wrongness.”

What is really revealing about this paragraph is what is not there. We go straight from myths to voters, as if no one else is involved. I doubt very much that many who voice the ‘constant complaints’ Behr is talking about think that voters created and sustained these myths all by themselves.

The discussion of issues involving the economy, the welfare system and immigration among most of the ‘political class’ is often so removed from reality that it deserves the label myth. In the case of the economy, I provided chapter and verse in my ‘mediamacro myth’ series before the election. It was not just the myth that Labour profligacy was responsible for austerity, but also the myth about the ‘strong recovery’ when the recovery was the weakest for at least a century, and that this recovery had 'vindicated' austerity. Given the importance that voters attach to economic credibility, I do not believe I was exaggerating in suggesting that the mediamacro myth was in good part responsible for the Conservatives winning the election.

The media is vital in allowing myths to be sustained or dispelled. That does not mean that the media itself creates myths out of thin air. These myths on the economy were created by the Conservative party and their supporters, and sustained by the media’s reliance on City economists. They get support from half truths: pre-crisis deficits were a little too large, GDP growth rates for the UK did sometimes exceed all other major economies.

Myths on welfare do come from real concerns: there is benefit fraud, and it is deeply resented by most voters. But who can deny that much of the media (including the makers of certain television programmes) have stoked that resentment? When the public think that £24 out of every £100 spent on benefits is claimed fraudulently, compared with official estimates of £0.70 per £100, that means that the public is wrong, and we have a myth. (An excellent source for an objective view of the UK’s welfare system is John Hills’ book, which has myth in its subtitle) As I noted in that post, when people are asked questions where they have much more direct experience, they tend to give (on average of course) much more accurate answers. Its when they source the media that things can go wrong. It is well known that fears about immigration tend to be greatest where there is least immigration.

Of course reluctance to acknowledge myths may not be denial but fatalism. Fatalism in believing that voters will always believe that migrants want to come to the UK because of our generous benefit system because it suits their prejudices. Encouraging those beliefs will be in the interests of what will always be a right wing dominated press. Some argue that myths can only be changed from a position of power. But myths are not the preserve of governments to initiate. According to this, over 60% of Trump supporters think their president is a Muslim who was born overseas. [1]

Myths need to be confronted, not tolerated. The initial UK media coverage of the European migrant crisis played to a mythical narrative that migrants were a threat to our standard of living and social infrastructure (to quote the UK’s Foreign Secretary!). This reporting was not grounded in facts, as Patrick Kingsley shows. That changed when reporters saw who migrants really were and why they had made the perilous journey north. It changed when Germany started welcoming them rather than trying to build bigger fences. These facts did not fit the mythical narrative.

The UK government was clearly rattled when it realised that many people were not happy with their narrative and policies. Myths can be challenged, but it is not easy. Policy has been changed somewhat, but attempts are also being made to repair the narrative: to take some of those who have made it to the EU will only encourage more (a variant of the previous European policy of reducing the number of rescue boats), and a long term solution is to drop more bombs. Such idiotic claims need to be treated with contempt, before they become a new myth that the opposition feels it is too dangerous to challenge. Challenging these myths does not imply pretending real voter anxieties about migration do not exist, but grounding discussion and policy around the causes of those anxieties rather than the myths they have spawned.

Yes, the non-partisan media needs to recognise the responsibility they have, and use objective measures and academic analysis to judge whether they are meeting that responsibility. But more generally myths are real and have to be confronted. The biggest myth of all is that there are no myths.

[1] The probability pedants among you who read the link will know that I’m actually making an assumption in writing this!

When Labour lost its soul, and the next election

Even the seasoned political commentators who are sympathetic to Labour cannot understand the reported popularity of Jeremy Corbyn, the left wing candidate for the Labour Party leadership. Perhaps those party members with more centrist views have left during Miliband’s leadership, they muse, leaving constituency parties dominated by the far left. These commentators may be right that if Corbyn was elected it would be electorally disastrous for Labour, but in failing to correctly understand his relative popularity they show how dangerous the Westminster bubble has become. It is not Labour party members who have changed, but the position of most of their potential leaders. 

If you want to see the tragedy of what is currently happening to Labour, you just need to look at the Welfare Bill that was debated in parliament yesterday. This bill

●     repeals most of the Child Poverty Act, and in particular abandons poverty reduction targets

●     tightens the ‘benefits cap’, the total amount a family can receive in benefits

●     extends the freeze on working age benefits for the next four years

●     limits child tax credits (subsidies for the low paid) to the first two children

Although Labour tabled amendments to this bill, after those were inevitably defeated it abstained rather than voting against. Of the four leadership candidates, only Corbyn defied this party line.

Labour did not vote against this bill despite the inevitable result that it will increase child poverty. Indeed, an apt title for this bill would be the ‘Increasing Child Poverty’ bill. One of the great achievements of the last Labour government was to reduce child poverty, largely through the system of tax credits, and today’s Labour party has abstained on a bill that will set about dismantling and reversing that.

I doubt if any Labour Party members think now is the time to start increasing child poverty. They wanted child poverty reduced under the last Labour government, and with the number using foodbanks in the UK rocketing, they hardly think now is the time to reverse that. For many party members reducing poverty is a core Labour value - it is one of the reasons they joined.

So why on earth did Labour not vote against this bill? The main reason Labour gives is that they must ‘listen to the electorate’. Measures to ‘reduce welfare’ are popular among voters. It is popular because voters constantly see stories in the press and TV about people living the ‘benefits lifestyle’, and justifiably resent that. This is what people mean by ‘reducing welfare’. But if you ask people about child poverty, they overwhelmingly believe that it should be a government priority to reduce it. There are not stories about the hardship that poverty causes every day in the media, and how the welfare system is vital in preventing even worse. So welfare is associated with supporting scroungers rather than reducing poverty.

The other excuse often given by Labour MPs for supporting measures of this kind is that they need to show they are competent to run the economy, which alas nowadays means reducing the deficit. Yet we know there is no macroeconomic logic in reducing the deficit as rapidly and as far as Osborne plans. Again Labour appeal to what voters believe, never mind the reality. In addition, this government is cutting inheritance tax for the better off. So not opposing this welfare bill is equivalent to saying that the children of the poor must pay so that the rich can pass on more of their wealth.

This electoral strategy of moving the party to the right by abandoning its core values seems doomed to failure. Unless the plan is to outdo the Conservatives in dismantling the welfare state, Labour will always be seen as ‘soft on welfare’ by the electorate. Even if they voted with the government on every single deficit reduction measure, the Conservatives will still argue that Labour’s claims to be competent at running the economy are not credible, and use the unchallenged assertion that Labour caused austerity as evidence. In addition, following the Conservatives to the right is potentially suicidal because it takes for granted that those on the left will continue to vote for them.

If you want to know the disaster that can befall those who follow this ‘a bit to the left of the Conservatives’ strategy, look at what happened in Scotland, and look at what happened to the Liberal Democrats. However it would be very foolish to think that the LibDems are no longer important in UK politics. Their new leader, Tim Farron, will undoubtedly try and fill the void that Labour leaves on the centre left, and I think he has every chance of succeeding. His party voted against the ‘Increasing Child Poverty’ bill. He said

“The truth is the Tories do not have to cut £12bn from welfare: they are choosing to. The Liberal Democrats will always stand up for families. We will not let the Conservatives, through choice, and the Labour party, through silence, unpick our welfare system."

I’ve also seen it reported that he said he would have attended the recent anti-austerity march. If he campaigns against what he could call Osborne’s ‘excessive and obsessive austerity’, his eclipse of Labour on the left is assured. For those who think that poverty should be reduced and the rise in food banks is an indication of social failure, it will be pretty obvious who to vote for in 2020.

Greece and other benefit scroungers

Whenever I write a post critical of German views on Eurozone policy, I get comments which can be paraphrased in the following way. Greece (and maybe other Eurozone countries) are incapable of governing themselves properly, and when they get into difficulties Germany has to bail them out, so it is only reasonable that as a price for this Germany should insist on imposing changes to the way these countries do things.

To say such an attitude is inherently wrong (wrong in any possible circumstances) seems to be too strong. The IMF, after all, has played a very similar role many times. Many may criticise the kinds of reforms that the IMF has demanded as part of its conditionality, but to suggest that conditions are never made as part of such a loan package seems unrealistic.

But while conditionality of any kind cannot be ruled out, it can also go far too far. It should never become imperialism, and the choices of a sovereign people should be respected and accommodated, not ignored.

It is clear that the Greek government ran up unsustainable debts, and tried to hide these. As a result, it was bound to default on those debts. As doing so would exclude it from the markets for a time, it was also reasonable to lend (not give) Greece money to enable it to gradually rather than immediately achieve primary balance. Some conditionality to correct any underlying weaknesses in the openness and accountability of the budgetary process would seem reasonable in such circumstances.

Contrast that with what actually happened. First the Eurozone resisted default, and then it was only partial, which meant providing far larger official loans than were needed. The beneficiaries of this were mainly the financial institutions (e.g. Eurozone banks) who would have otherwise lost money. Second, ridiculously severe austerity was imposed, which crashed the economy and made it much more difficult for Greece to adjust. Third, conditionality far in excess of what was required is being imposed.

I have argued before, based on very rough and ready calculations that the fall in Greek GDP since 2010 could be entirely accounted for by fiscal austerity. This conclusion has now been backed up by rather more rigorous analysis in a new paper by Sebastian Gechert and Ansgar Rannenberg. As we both acknowledge, some GDP loss was inevitable because the deficit had to be reduced (and Greece does not have an independent monetary policy which could offset the impact of deficit reduction). However, as always, timing is everything. The paper argues that “most of the costs of fiscal consolidation could have been avoided by postponing and gradually implementing it after the recovery of the Greek economy, due to the lower expenditure multipliers during normal times.”

The delay in default, its partial nature and a degree of austerity that Gechert and Rannenberg describe as ‘biblical’ and which did such damage are all acutely embarrassing for the Troika. But instead of criticism being directed at these governments, we see a narrative that tries to blame what happened from 2010 onwards on Greece itself, and the Greek people in particular. The economy has crashed because the Greek people do not work hard, austerity has not worked because it has not really happened, and there have not been enough reforms. None of this is true, but the narrative seems largely impervious to facts. (On reforms, for example, see here.)

All this reminds me strongly of how certain attitudes to beneficiaries of the welfare state have been encouraged by the UK coalition government. Rather than admit that unemployment benefits had risen because of the recession and the absence of a recovery (itself a result of austerity), the focus became on the personal failings of the unemployed themselves. The media (TV as well as the tabloids) are still full of examples of supposed ‘welfare cheats’, but they rarely put such examples into context: how tax evasion is a bigger problem that benefit fraud, for example.

People do hate the idea of ‘their taxes’ allowing ‘other people’ to get ‘something for nothing’. In contrast tax evasion does not sound too different from tax avoidance, which many people do as much of as they can. Condemning one and ignoring the other may be human nature. What is clearly wrong is politicians playing on these feelings to misdirect anger away from their own mistakes, or undertaking unnecessary or even harmful policies to play to the gallery. A clear case of the latter is the recent increase in benefit sanctions, which are being applied in an excessive and unfair way, greatly increasing the use of foodbanks as a result. That a committee of MPs where the government is in a majority have expressed grave concerns about the policy just before an election gives an indication of the scale of the injustice that has been taking place.

When politicians do this, it is a sign of chronic political weakness: a desperate attempt to cover up past mistakes. There is a strong danger that the same dynamic may occur in the continuing standoff between Greece and the Eurozone. Having encouraged a rhetoric where a virtuous Eurozone has shown nothing but generosity to a feckless Greece, politicians feel compelled to live up to that false narrative by acting tough in negotiations, which does no one any good to put it mildly. When Putin behaves recklessly to boost his popularity and succeeds, we can blame the lack of press freedom. When political leaders in the UK or Germany play the same trick, do we blame the media for playing along or the people for falling for it?

A campaign to mislead

This week UK taxpayers are starting to receive letters which detail where their money goes. It is a George Osborne initiative designed, supposedly, to increase transparency about how taxes are spent. Here is what taxpayers will see.

It shows that a quarter of state spending (including debt interest) goes on welfare. And everyone knows what welfare involves - welfare payments to the unemployed, the poor and disabled etc. 

Except that this is not how welfare is defined here. As the IFS point out, welfare in this figure includes pension payments for those employed by the state, like nurses and teachers. Why the welfare total should include these pension payments, while the state pension itself is separated out, is inexplicable. The IFS also point out that this welfare total includes spending on social care, which is not a cash transfer, and which would be more logically included under health. The IFS also show how it would be quite easy to break this welfare total down into more meaningful parts.

So the way the chart aggregates welfare spending appears not only wrong, but also strange if the idea is to inform the public. But of course that is not the aim. This presentation is part of the Chancellor’s election campaign to convince voters that there is plenty of scope to cut public spending further by reducing this huge welfare bill. The idea is that many of those receiving this information will assume welfare involves all those state handouts to scroungers that their newspapers are always providing examples of.

The background to all this is straightforward. When people are asked whether they want higher, the same or lower taxes and government spending, about 35% say they want higher taxes and spending, while about 7% want lower taxes and spending. For a Conservative party committed to reducing the size of the state, this is a serious problem. The solution is two-fold. First suggest, mainly through a constant stream of newspaper articles but occasionally backed up by TV and the Chancellor himself, that some part of public spending is wasted on transfers to the undeserving poor. Second, label that ‘welfare’ and exaggerate its size as much as possible, using in this case public funds to do so. This is not about transparency, and it is not even about spin. It is about giving a distorted view of reality to produce a political outcome that only a small minority of people appear to actually want.

Postscript (6/11/14) A number of people have written about how misleading the government's presentation is, although most do not put the background in quite as stark a way as I do. To see why this matters, here is a nice poll from YouGov, which shows how opinions are influenced by better information. Which, of course, George Osborne knows full well. 

How many UK elections can a nasty party win?

This last month I wrote my most widely read post in this blog’s nearly three years existence. Over 20,000 read this on Scottish independence. Yet I wrote that post with some regret, because I was acting as the typical economist killjoy. I had a lot of sympathy behind much of the support for the Yes campaign, which was to avoid being governed by a fairly extreme right wing party. I hope no one ever writes that the No vote was a victory for David Cameron’s Conservatives, because that would be a truly Orwellian distortion of reality. One of the most telling contrasts for me was Gordon Brown’s impassioned speech for the union compared to Cameron’s opportunistic attempt to appease his own MPs the morning after the result.

A post I have no regrets writing is this about Theresa May’s one time concern about the Conservative party being seen as the ‘nasty party’. Everything in the months since I wrote it, including the current party conference, confirms that this image no longer worries the leadership. The puzzle I raised in that post is why as late as 2010 Cameron was still keen to foster the idea of a more compassionate conservatism. What has changed so completely in just four years?

One answer is UKIP. Yet trying to prevent losses to another party of the right should not alter the traditional logic that a party needs to occupy the centre to win an election. Another answer is the recession, which has perhaps led to a hardening of attitudes among the electorate as a whole. The hypothesis is that in a recession people are more inclined to believe those on welfare are scroungers, and that immigrants steal their jobs. This hardening should reverse as the economy recovers, but we also know that real wages are still likely to be lower in 2015 compared to 2010.

That was where I ended that previous post. I wrote “although nastiness might accord with voter sentiments today, at some point in the future voters in more generous times will have no problem forgetting this, and just remembering the Conservatives as the nasty party.” But in writing this I might have been both unfair to the British electorate and to the strategy of the Conservative party.

To see why, take a temporary detour from welfare to macro. Chris Dillow rightly questioned the “groupthink bubble” that sees George Osborne’s stewardship of the economy as the Conservative’s strongest card. Yet those in the bubble could respond that they were simply reflecting what the public appear to be saying in the polls. The problem here is establishing cause and effect. What I call mediamacro believes that the last Labour government seriously mismanaged the public finances, when in reality its sins were relatively minor. Mediamacro thinks that the deficit somehow helped cause the recession, whereas in reality the causality goes the other way. Mediamacro thinks that the deficit is the most important problem of today, and largely ignores the stagnation of productivity. Mediamacro celebrates the 2013 recovery as vindicating austerity, which is an argument only the most politically committed academic economist would endorse.

So why do those answering polls think the Conservatives are more competent at managing the economy? It can hardly be because of their own experience, with real wages falling since 2010 compared to steady increases before then. While they might think that Labour allowed excessive leverage by UK banks which helped cause the recession, they are unlikely to also believe that the Conservatives were urging much greater caution at the time! Or could it be that their answers about competence are influenced by what mediamacro itself believes?

If there is this huge disconnect between reality and media portrayal for the macroeconomy, could the same thing be happening with attitudes to welfare? There is no doubt that the representation of disability in the print media has changed substantially over the last decade or so. Television has, after a lag, followed this trend. There is scant evidence that this reflects any significant change in the degree of benefit fraud. It could reflect a ‘hardening of attitudes’ as a result of the recession, but causality could also run the other way. Do people vastly overestimate the amount of benefit fraud because they want to do so, or because of the information they get through the media? Is this overestimation a reflection of a recession induced hardening of attitudes, or a cause of it?

This is crucial to answering the question posed in the title to this post. If squeezing the poor and disabled is a policy that reflects a recession induced change in public attitudes, then the party that follows this change may be vulnerable when the recession ends (although perhaps not before 2015). If it reflects misinformation provided by the media, then the relevant question is whether this misinformation might continue well beyond the economic recovery. If it does, the Conservative party may have a much more durable election strategy. 

Hitting the poor and the disabled

In the UK, Wales has a degree of regional autonomy. This has helped shed some light on two aspects of UK government policy: taking income from the disabled and the working poor.

The Welsh government asked the highly respected Institute of Fiscal Studies (IFS) to examine the cumulative impact of the coalition government’s tax and benefit reforms up until April 2015. Ideally we would like such an assessment for the UK, but the government has said this would be ‘difficult’ and ‘meaningless’. However there is no reason why findings for Wales should be very different to the UK as a whole, and the Welsh government - run by Labour - had no inhibitions asking the IFS to do this for Wales.

In terms of income distribution, the report’s findings are summarised in this chart.

Summary of gains and losses across the income distribution, 2014–15 prices. From “The distributional effects of the UK government’s tax and welfare reforms in Wales: an update” by David Phillips, IFS.

The chart speaks for itself, except to say that UC and PIP stand for the new Universal Credit and Personal Independence Payments schemes, which will not have their full impact until beyond 2015.

The study also looks at how this breaks down among particular groups. Pensioners fare relatively well, losing only 0.5% of income as a result of all these changes. In contrast the working age disabled are hit relatively badly, suffering on average a 6.5% loss. Yet this loss may pale into insignificance compared to the fear that has been created by the government’s new assessment procedures, contracted out to private firms whose methods are confidential. (See also these case studies by Demos, and Alex Marsh and the Economist on the government’s welfare reform in general.)

You might cynically think that this kind of thing is an inevitable result of austerity, where help to the poor and disabled is considered a luxury that society can no longer afford. Certainly the UK is not alone here. However the second policy has nothing to do with austerity. As part of its drive to reduce ‘red tape’, the government abolished the Agricultural Wages Board (AWB), the last surviving wages council which set minimum terms and conditions for agricultural workers. The government’s argument was that the Board hindered ‘flexibility’ in the labour market, and that it duplicated the role of the national minimum wage.

The last argument is simplistic. Although the AWB set a basic hourly rate very similar to the national minimum wage, it also set overtime rates, which as anyone living near a farm will know are particularly relevant to farm workers. The importance of this can be found from the government’s own impact assessment of abolition, which suggests a transfer of as much as £33.4 million from farm workers to farm owners as a result of abolishing the AWB. (Farm workers are poorly paid on average: in 2011 the average wage was £8.17 per hour, compared to a minimum wage of £6.08.)

As to the need to increase market flexibility by reducing external intervention, this is particularly rich given the scale of public subsidies received by this sector. This government has fought hard to maintain the subsidies from Europe that go to large farms, so no free market there. Farm workers themselves are particularly powerless compared to their employers, which is why the AWB was the one wages council that the previous Conservative government did not abolish in 1993.  

What has this got to do with Wales? The Welsh government argued that it had the power to keep an AWB for Wales. The UK government disagreed, and took this all the way to the Supreme Court, but last Wednesday it lost. So Welsh farm workers will retain some protection.

I would love to say that these two cases are isolated examples, but they are not. Conservative ministers have recently proposed additional restrictions on the right to strike, requiring over 50% of all eligible members to vote in favour of strike action before a strike can be called. As Steven Toft says, this is a strikingly stupid idea, and is essentially just an attempt to further weaken an already weak trade union movement. In terms of the future of the welfare state, the Chancellor’s plans for future austerity require yet further reductions. With pensions protected, this means the disabled will be in the firing line once again.   

Nasty politics in hard times

This is a post about morality rather than economics, and as a result I am rather unsure about whether I should be writing it at all. Yet it is something that I have kept thinking about over the last few days, even though I would rather put it out of my mind. So perhaps this is blogging as therapy.

When jobs are scarce, people become understandably more exercised about the idea that some people are getting an income from the state without trying to find a job, just as they imagine that immigrants are ‘stealing‘ what jobs there are. Such views are encouraged by the tabloid press, as I noted here - the tabloids are our equivalent of Fox News.

 
There has recently been a particularly egregious example of this in the UK. For those UK readers I just have to say the Philpott case and the Daily Mail, and they can skip the rest of the paragraph. For those outside of the UK, a criminal case recently came to an end where someone called Mick Philpott and two others were jailed for killing their six children by burning down their house. It was not murder: the individuals intended to rescue their children and frame someone else as part of a custody battle, but the ‘plan’ did not work out. A tragic case, and as the architect of the plan, Philpott received a very heavy sentence for manslaughter. Philpott had 17 children by five different women, and received large amounts of money in benefit payments. Which allowed the Daily Mail newspaper to print the headline “Vile Product Of Welfare UK”. Not to be outdone, the Sun said “Let's hope this is the last time the state unwittingly subsidises the manslaughter of children.”

This all takes place at the same time as the government’s welfare reforms are starting to be implemented. I am far from an expert in this area, so I have not talked about these reforms in this blog, although I did recently note how they are expected to reverse recent declines in child poverty. That aside, whether these reforms make sense or not is beside the point here. What is important is that one of the government’s stated aims is to make the system more efficient, because in times of austerity money needs to be saved.

It is clear that the problem of the welfare state allowing, let alone encouraging, certain people to remain unemployed and have large families is not the main issue in trying to make the welfare system more efficient. To quote the Economist: “Though most of them seem to end up in newspapers, in 2011 there were just 130 families in the country with ten children claiming at least one out-of-work benefit. Only 8% of benefit claimants have three or more children. What evidence there is suggests that on average, unemployed people have similar numbers of children to employed people.”

What we do know is that the vast majority of welfare payments go to people who are trying to find a job but cannot because jobs are scarce, or who are disabled, or who do have a job which is very poorly paid. These are people that most citizens in the UK would never want to exchange places with, and they deserve our sympathy and support. So what do you do if you are a public figure who knows these facts, and a national newspaper like the Daily Mail not only distorts the truth with its headlines, but by implication paints all those receiving welfare in such horrible colours?

I would suggest any decent person would try to bring the debate back to reality. At the very least you might say the following: "The Philpott case is an individual tragedy. Children have died in that case. I think that is where we should let that case lie. I would not want to connect that to the much wider need to reform our welfare system." That is what Danny Alexander, the (LibDem) Chief Secretary to the Treasury said. But this is what his boss, the Chancellor George Osborne, said. "Philpott is responsible for these absolutely horrendous crimes and these are crimes that have shocked the nation. The courts are responsible for sentencing him, but I think there is a question for government and for society about the welfare state – and the taxpayers who pay for the welfare state – subsidising lifestyles like that, and I think that debate needs to be had."

So he sees no problem with the Daily Mail’s headline. Regular readers will know that I think George Osborne has been a hopeless Chancellor, and in addition that he has subordinated his economic task to the urge to make political capital. Yet even I was surprised by this attempt to use the tragic deaths of six children in a bizarre and unique case to try and score political points. 

People can make up their own minds about the morality of this. Or you might take a cynical view, that all politicians will take any opportunity they can to make populist points, and that there is no morality left in politics. In which case the last thing any politician should do is say this “... do you exploit tragedy, like the Philpott tragedy? The right place for Mr Philpott is behind bars, but do you exploit the deaths of six children to try and make a political point about the welfare system, and at the same time say to people that this is somehow a common truth about people on benefits?" Perhaps there is just a little morality left in politics, whichever side you are on.