Osborne accused of reinforcing myths about poverty

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   By a Newsnet reporter 
 
Scottish National Party spokesperson for Work and Pensions Dr Eilidh Whiteford MP has accused Chancellor George Osborne of pandering to poverty myths and reinforcing negative stereotypes of those on benefits, in the week the UK Government’s Welfare Reform has been introduced.
 
As poor and disadvantaged families saw their incomes cut, the richest earners benefitted from a tax cut, the reduction in the top rate of Income Tax from 50p to 45p gives 13,000 millionaires an average tax cut of £100,00.

In the Chancellor’s speech this week and in further comments, Mr Osborne attacked those on benefits and reinforced the idea that those on benefits have an ‘easy life’, with references to claimants’ lack of incentive to get a job.
 
Despite the claims of the Conservative-led government, research shows the experience of living on a low income is one of constant struggle to manage limited resources, with small events having serious consequences.  Statistics show that the poorest spend their money carefully, limiting themselves to the essentials.
 
The Chancellor said that in 2010 alone, payments to working age families cost £90 billion, and that was ‘one reason why we’ve got such a big deficit’. However the proportion of our tax bills spent on benefits has remained stable for the last 20 years.
 
Mr Osborne complained that people on disability benefits don’t get counted as unemployed, however the number of people claiming out-of-work benefits because of sickness or disability has steadily decreased since the mid-1990s, whilst the severity of the claimants’ conditions have in turn increased.
 
The Chancellor also referred to welfare dependency as being entrenched from one generation to the next, however evidence suggests that in less than 0.1% of the 20 million working age households in the UK are there 2 generations that have never had a permanent job. The numbers of such families, if any exist, are so small that no survey has yet been able to detect the much cited three generations of worklessness.
 
The Coalition’s recent comments and actions are part of a wider move to shift the blame for the economic crisis from financial institutions and rich individuals committing tax fraud and tax evasion onto the poorest and most vulnerable. 
 
The amount of benefits which go unclaimed is over ten times greater than the sum lost to benefits fraud.  The total cost to the taxpayer of benefits fraud is estimated by the Department of Work and Pensions at around £1 billion annually – or just 0.7% of total government spending on benefits.  Fraudulent claims for tax credits are thought to total around £400 million annually, bringing the total to around £1.4 billion a year. 
 
Meanwhile the Treasury estimates that the amount lost to tax fraud is estimated at £15 billion annually. A further £20 billion is thought to be lost to tax avoidance.
 
However many believe that the Treasury’s estimate of the amount underpaid in tax is considerably lower than the true figure.  A recent study by the International Consortium of Investigative Journalists discovered that British Overseas Territories such as Jersey and the British Virgin Islands are sheltering trillions of pounds in funds squirrelled away by rich individuals in an effort to hide them from the tax authorities.  The ICIJ believes that if these funds were properly taxed, there would be no financial crisis. 
 
Despite the UK government having the power to take action to force these British governed territories to tighten their financial regulations, it has taken no action to do so.  Instead the Chancellor’s recent speeches have focussed on the benefits bill.
 
Meanwhile the Labour party is campaigning this weekend against the reduction in the top rate of tax for the best off.  However when an SNP motion opposing the tax cut for the wealthy was presented to Parliament in March last year, Labour abstained on the vote.  Labour MP Willie Bain later admitted that it was party policy not to support any motion presented by the SNP.
 
Tax and benefits are likely to prove a major issue in the Scottish independence referendum campaign.  A recent opinion poll found that an absolute majority of Scots want control of taxation and welfare benefits to be in the hands of the Scottish Parliament.  Scottish control of tax and benefits was a key demand in the “devo-max” proposals which were circulated before the referendum question was decided, however the anti-independence parties refused to allow a question on enhanced devolution to be included on the ballot paper.
 
Dr Whiteford said:
 
“George Osborne’s comments show just how out of touch with the real world he is. The Chancellor’s speech hid the complexity of the true nature of poverty in the UK – which his Tory austerity agenda is increasing – and reinforces negative, harmful stereotypes. And this is happening at the same time as people at the top are gaining from an income tax cut.
 
“Mr Osborne’s speech was full of ill-informed assumptions, not based on facts or research. Meanwhile our poorest and most disadvantaged citizens are bearing the brunt of the Tory/Lib Dem coalition’s austerity measures.
 
“We need a welfare system that reflects Scotland’s values, helps working families and protects the most disadvantaged people – and a fairer welfare system for Scotland can only be achieved with a Yes vote in September 2014. A clear majority of people in Scotland already want decisions on taxation, benefits and pensions to be taken by Holyrood rather than Westminster, where our MPs have little ability to prevent such damaging measures as the iniquitous Bedroom Tax.”