An Open letter to fellow Labour MPs from John McDonnell

December 6, 2012 5:12 pm

We’ve been sent the following letter which has been sent by John McDonnell to all Labour MPs, urging them to vote against Tory plans to implement Welfare cuts. The letter is published in full below:

Dear Colleague,

Proposed Welfare Benefits Bill

As you know, Osborne announced that the Coalition is to bring forward before Christmas a Bill to sanction the cuts in welfare benefits set out in yesterday’s autumn statement.

We all know that there is no need for primary legislation to implement these cuts and that this is his crude and blatantly cynical attempt to lay what he considers will be a political trap for Labour.

In his crude political terms, his obvious aim is to be able to claim that if Labour votes against or abstains on his Bill then we are on the side of the so called skivers whilst the Tories are the champions of the strivers. If we do vote for the Bill he will then cite our vote as support for his attack on benefits.

Like many right wing politicians over the years, when their policies are demonstrably failing they reach for a scapegoat. It’s often the poor simply because they haven’t the power to defend themselves.

I believe that we shouldn’t allow ourselves to be dragged into the gutter of politics by Osborne’s exploitation of the poorest and most vulnerable in our society.

Instead of falling for this grubby trap us let’s take them on, on this issue.

If we have the courage and behave astutely, we could turn this cynical ploy by Osborne into an opportunity for us to transform the debate on the issues of welfare, poverty, unemployment and fairness in our society.

This means stop all hesitation on this matter and making it clear now that we are not voting for this cynical attack on the poorest, which includes cutting benefits to many people in work and struggling to survive on low pay and often poverty wages.

It means saying now that we are taking the Tories on, on the issue of fairness. Nobody, especially ordinary working people, likes a skiver but there are mechanisms that can deal with this and if they need improving well let’s have that debate. The fact is that it is becoming increasingly obvious to our people that it is the rich and wealthy, who are ripping us off with tax dodging. It is equally becoming obvious whose side the Tories are on.

Let’s seize upon this opportunity to highlight the real facts about the hardship that so many of our people are facing. Most of our community are under pressure. Many are only a couple of pay packets away from a life on the edge. Many others have tipped over into debt and poverty.

Let’s turn the tables on Osborne and use this opportunity to expose this reality and offer our alternative of a fair tax system and investment for growth led employment.

Let’s get out there and build the coalition of all those people and organisations who are willing to speak out on what is happening to our people. That means nationally and locally bringing together not just all the charities and campaigning organisations that take an interest in poverty and welfare but all the churches, mosques, synagogues, gurdwaras, community organisations and anyone with a conscience on this issue.

Let’s lead in forming a new national coalition against poverty and those who attack the poor.

Let’s enlist the support of people from all walks of life, including artists and performers, in the same way we did in the fight against the prejudice of the Nazis against black people and ethnic minorities.

In many ways it’s the same struggle against prejudice mobilised by cynical politicians.

It should start though by making it clear immediately that we are not playing Osborne’s cynical political games. We are not voting for his cuts to the poor.

Yours ,

John McDonnell MP

  • AlanGiles

    John has every right to publish this because he was one of the very few Labour MPs to oppose Freud when Purnell was pushing the reforms through. He is being honest and consistent.

    What really angers me are those spineless MPs and ex-ministers (many of whom agree with the reforms at least in part) and their faux outrage now that it is the coalition cracking the whip and not them,

    Injustice is injustice regardless of what colour rosette you are wearing.

    • http://www.facebook.com/profile.php?id=100001102865655 John Ruddy

      Yes lets attack those MPs who we want to change their minds… that will win them over…

      • robertcp

        John/Alan, it is a bit worrying that there is any doubt about how Labour will vote on this issue. Rachel Reeves made herself look ridiculous on Newsnight when she said that the 1% rise was awful but refused to answer when Paxman asked if Labour would vote against it. Several other spokespeople have also refused to answer straightforward questions recently. It does not look good.

      • robertcp

        John/Alan, it is a bit worrying that there is any doubt about how Labour will vote on this issue. Rachel Reeves made herself look ridiculous on Newsnight when she said that the 1% rise was awful but refused to answer when Paxman asked if Labour would vote against it. Several other spokespeople have also refused to answer straightforward questions recently. It does not look good.

      • robertcp

        John/Alan, it is a bit worrying that there is any doubt about how Labour will vote on this issue. Rachel Reeves made herself look ridiculous on Newsnight when she said that the 1% rise was awful but refused to answer when Paxman asked if Labour would vote against it. Several other spokespeople have also refused to answer straightforward questions recently. It does not look good.

      • robertcp

        John/Alan, it is a bit worrying that there is any doubt about how Labour will vote on this issue. Rachel Reeves made herself look ridiculous on Newsnight when she said that the 1% rise was awful but refused to answer when Paxman asked if Labour would vote against it. Several other spokespeople have also refused to answer straightforward questions recently. It does not look good.

      • robertcp

        John/Alan, it is a bit worrying that there is any doubt about how Labour will vote on this issue. Rachel Reeves made herself look ridiculous on Newsnight when she said that the 1% rise was awful but refused to answer when Paxman asked if Labour would vote against it. Several other spokespeople have also refused to answer straightforward questions recently. It does not look good.

      • robertcp

        John/Alan, it is a bit worrying that there is any doubt about how Labour will vote on this issue. Rachel Reeves made herself look ridiculous on Newsnight when she said that the 1% rise was awful but refused to answer when Paxman asked if Labour would vote against it. Several other spokespeople have also refused to answer straightforward questions recently. It does not look good.

      • robertcp

        John/Alan, it is a bit worrying that there is any doubt about how Labour will vote on this issue. Rachel Reeves made herself look ridiculous on Newsnight when she said that the 1% rise was awful but refused to answer when Paxman asked if Labour would vote against it. Several other spokespeople have also refused to answer straightforward questions recently. It does not look good.

      • robertcp

        John/Alan, it is a bit worrying that there is any doubt about how Labour will vote on this issue. Rachel Reeves made herself look ridiculous on Newsnight when she said that the 1% rise was awful but refused to answer when Paxman asked if Labour would vote against it. Several other spokespeople have also refused to answer straightforward questions recently. It does not look good.

        • http://twitter.com/waterwards dave stone

          I’m genuinely shocked that there is doubt about how Labour will vote. This should be a line in the sand issue for Labour – the chips are down and now is the time for the PLP to defend those who vote Labour.

          • Alexwilliamz

            What is Labour for? These clowns need to look at themselves in the mirror and answer that.

          • Alexwilliamz

            What is Labour for? These clowns need to look at themselves in the mirror and answer that.

        • AlanGiles

          It just adds to the very strong impression I have that Labour is making it up as they go along, and, frankly – like the coalition – they don’t have a clue.

          It looks ramschakle, indecisive and unprincipled, not to mention complacent – they are just waiting for the coalition to fail, rather than make any real effort to make people want to vote for Labour – “we’re not quite so bad as the coalition” is not the best election slogan to have.

          • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

            Agreed

          • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

            Agreed

        • Serbitar

          Reeves seems terribly mechanical and robotic, desperate to stay “on message” at all times, and seems unable to think independently for herself. She continually repeats herself, flubs her lines, and looks more like a talentless actress trying to play a passionless careerist politician than a spirited, intellectual Labour Party firebrand. I suspect that the real Rachel Reeves may have been replaced by a Stepford wife. Whatever, the end result is hopeless.

          • robertcp

            I agree. It does look like Labour will make the right decision but it should not take this long!

  • http://twitter.com/tolpiddle Bexhill Combe Haven

    So you should stand up against Osbourne on principal, but then you are over-paid self- serving politicians.

  • http://twitter.com/robertsjonathan Jonathan Roberts

    I understand the point. Sincerely I do. We have to stick up for the weakest and it’s one of the reasons we’re all in the party. But it has to be done in a way that we can afford. With respect John, most of this article is rhetoric. We all agree we want to protect the poorest, but to form a view we need a costed, detailed agenda that looks almost like a business plan. The days of real growth are probably over – and much of the growth we had in the past decade was fake as it was built on a rise in national and personal debt. Whilst I am no economist, I know enough to see that there is much lazy economics going on from all sides (probably including me), with many uncosted ideas and pie in the sky thinking that doesn’t fit reality, and ultimately it is the poorest who suffer whilst politicians blame each other. There are no easy answers to the problems we face – so it will take someone with considerable intellect to put forward a plan that can actually work (generic slogans like ‘tax bankers more’ and ‘clamp down on tax avoidance’ just aren’t detailed enough to be viable). You are a great campaigning MP, and you certainly have a brain, I just wish you would put the real necessary meat on your ideas. I wish you luck, but it sincerely is hard to know who to trust at the moment – especially when people try to simplify the nightmarish economic outlook as much as most politicians do.

    • AlanGiles

      Hello Jon, on the point of who to trust, at least John McD has always been consistent in his view, and voted AGAINST the 2009 bill – one of the very few who did – most admitted they voted for the Purnell bill against their better judgement, which shows to my mind just how unprincipled too many MPs are. There will be those who will disagree with him, but at least, unlike the shadow minister he doesn’t say in one breath that he is in favour of three quarters of the coalition’s welfare reforms and make an exhibition of himself for the quarter he doesn’t – it’s a hollow vessel that makes most noise, and if Byrne is ever allowed to “regionalise” benefits it will be as big a disaster as Duncan-Smith’s universal credit. Both Smith and Byrne show they are totally unsuited to their jobs, and really don’t know what they are doing (except on their own interests fillinbg out their expenses claims).

      • http://twitter.com/robertsjonathan Jonathan Roberts

        Morning mate. I don’t doubt for one second that Mr McDonnell is consistent. And I know it makes me sound like a bore, but we’ve always got to ask about how policy ideas and general position statements like this can actually be funded. I too want to protect and help the poorest, I just want to know how it can be done realistically, with proper costings that stretch beyond ‘tax the rich more’, which is always much more complicated than it sounds. The great strength of the left is its compassion. I think traditionally its great weakness is its accountancy skills. I reguarly hear fabulously attractive policy demands from the left, but with virtually no detail as to how they can be paid for – which means ultimately it’s just day-dreaming.

        One of Mr McDonnell’s best ideas is a national investment bank. It’s a stunning idea, one that he has repeated often. But he has never put a business plan forward for scrutiny – i.e. how much it will cost to capitalise the bank, how much to administrate it, what the likely return on the investment would be. All he has offered is a very wishy-washy ‘paid for by a levy charged on banks’ statement which is nowhere near detailed enough.

        I don’t think it makes me bad at being a Labour member to want policy ideas costed properly and realistically, I honestly think it’s just basic good practice. As I say, good luck to John – I just think he would be a greater force if there was sufficient detail to his ideas.

        • AlanGiles

          My great contribution towards the age of austerity would be to axe the replacement to Trident. I always think of it as the equivalent of the teddy bear I had as a small boy. I was terrified of the dark and I used to drag Bruno up to bed with me to cuddle every night. Of course, if there really had been something nasty hiding under the bed or in the cupboard poor Bruno would have been useless, but he made me feel better.

          It’s the same with Trident – we would never be allowed to use it (thank goodness), but some people feel comforted by it, but it is a very expensive conceit or safety blanket, and just as I had to face the dark without Bruno, so with Trident. That would be quite a sizeable contribution to the national investment bank, which – I agree, is an excellent idea.

        • PeterBarnard

          Jonathan R,
          “The language of politics is priorities” and all that is needed is political will and the belief, drive and persuasive skills to convince people that social justice is not only desirable, but also both “affordable” and highly effective.
          The Nordic countries are a country mile away from us in their attitudes, and I don’t think that Denmark and Sweden are going down the pan (I’ve left out the special case of Norway, with its disproportionate revenue from hydrocarbon production).
          The “great weakness” of the left that you mention (“accountancy skills”) is a product of propaganda to a large extent. I could present a case that the so-called “hard headed” approach of the Conservatives between 1979 and 1997 was, in fact very weak on “accounting skills” ; were it not for the proceeds of their numerous privatisations, public sector net debt (as a proportion of GDP) would have been higher in 1997 than it was in 1979. As Lord Stockton remarked, they “sold off the family silver.” Well, we can all discharge our debt obligations by selling off assets, but unless the underlying income/expenditure equation is settled, a problem will remain.

          • http://twitter.com/robertsjonathan Jonathan Roberts

            All that is fine by me. I don’t think any one party or ideological faction can claim to be superior in their economic ability. When it comes down to it, to some extent it is fine for armchair politicos to say ‘we should have this or we should have that’ without giving any real detail as to how those ideas will be financed. But when politicians do it I get worried. When the country runs out of money, it is the poorest who get hit hardest – so I think it is Labour’s resonsibility to always make sure its ideas are affordable. Because if they aren’t, somewhere down the line it will come back and bite the poor on the backside. All I ask is for the detail, and if MPs can’t give details, their ideas are not ready to be made public. Just a humble view.

          • PeterBarnard

            How do you think anything (whether it is produced by the private or public sector) is “financed,” Jonathan?
            I’m afraid that you have swallowed the propaganda.

          • http://twitter.com/robertsjonathan Jonathan Roberts

            Unnecessarily provoking a fight again Peter? No thanks. I don’t think considering what is affordable is swallowing propaganda but there you go.

    • Dave Postles

      Formerly, my comments were intended as a ‘critical friend’ of Labour. I now conceive of no way of returning to this tarnished party. The ‘squeezed middle’ is a fallacious argument. ‘One nation’ is mere rhetoric when you equivocate about the poorest. There are a multitude of costed responses which can be made, both at a political and a personal-political level. We can all examine our economic lives to consider how we can contain wealth – and we remain a wealthy nation in general – in this country rather than assisting in its leakage.

  • Daniel Speight

    It’s a question of principle, but are there enough principled people in the Parliamentary Labour Party? To not make a stand would tell us an awful lot about this section of the party.

  • Daniel Speight

    The good thing about what Osborne is planning is that it does become a test of the courage of the party leadership. Will they be able to take a position that is right even when it is not popular? Some people claim that Ed Miliband’s stand on Murdoch and phone hacking was just this, but I have doubts it took that much courage. If he had taken the stand when Baldwin was still sending notes to the shadow front bench telling them not to connect phone hacking and the BSkyB takeover, and before the Milly Dowler phone hacking story broke, now that would have taken courage.

    Here we all seem to be on the same hymn sheet. Osborne is trying to demonize the poor while giving tax breaks to the rich. We know the right thing to do, so as Mark has talked about Ed Miliband’s ‘clanking balls’, let’s see them in action, although I hasten to add, not literally. Of course the Progress crowd won’t like this, but to paraphrase their hero Tony Blair, “Ed, these people don’t like you, they never did like you, and they never will like you. You were the wrong bro, bro.”

  • http://www.facebook.com/people/David-Trant/1105641645 David Trant

    How can anyone after Osborne’s sneer at anyone on benefits (they are not all scroungers) not vote against it.

    • Dave Postles

      I have a confession to make: I am a benefit scrounger. I receive £100 as part of a joint household for winter fuel allowance. I don’t need it and I don’t want it. I give it to charity, but wouldn’t it be better if it were not paid to me? I also have a bus pass, but when I use the bus (quite often), I pay for the fare – because I can afford to do so. Next year, I shall receive my state pension, no doubt with the 2.5% increase. It just means that I will have more disposable income. The wrong part of the welfare bill is being constrained. Why is this happening? It is happening because there is no consideration for justice/injustice, just stupid politics.

  • http://www.facebook.com/jim.crowder2 Jim Crowder

    “Let’s turn the tables on Osborne and use this opportunity to expose this reality and offer our alternative of a fair tax system and investment for growth led employment.”

    Fine words, but where’s the detail? What is a fair tax system? It’s certainly nothing like the one we have now; you need to start from scratch to create it as the existing system is shot full of allowances and loopholes. As for growth led employment, well all we need is growth (which we currently have) and the problem is solved.

    You can’t argue against specific proposals with nebulous concepts. It doesn’t work.

    • http://twitter.com/waterwards dave stone

      You want Labour to support Osborne’s proposed benefit cuts on the grounds that we don’t have a fair tax system?

      Doesn’t make much sense to me, I’m afraid.

  • kb32904

    Well said John & I hope we hear just that !

  • brianbarder

    I agree that there should be no question of Labour failing to vote against these repulsive proposals. But I also agree that to justify voting against them, Labour absolutely must put forward an alternative plan, supported by some detailed calculations that add up. Instead of talking all the time about ‘growth’, as if there’s a real possibility of returning to growth year on year for the rest of recorded time, we should be talking about ‘recovery’ and a fairer distribution of wealth; and the means to these ends, grossly neglected by the coalition, must be to revive demand in the economy, by putting money into the hands of those who will actually spend it (namely the poorest, those on benefits, the unemployed, the disabled, the homeless, those on the minimum wage and below the living wage) — not by pouring more and more money created by QE into the banks, who simply squirrel it away to shore up their reserves, and who certainly won’t lend it to small and medium sized enterprises which dare not borrow to finance investment or to hire labour when they can’t see any prospect of selling their goods and services because no-one has any money to buy them with. One obvious way to stimulate domestic demand and spending immediately is to halve the rate of VAT, perhaps for a limited period (say two years), or even to suspend it altogether, if the EU will let us. Big increases, not cuts, in almost all benefits would be another. It should be possible to put together and cost a comprehensive package designed to re-float aggregate demand in the economy. Deficit reduction is necessary, but it should be achieved over time by reviving the economy, thus getting more people back to work (and paying taxes), and slashing the benefits bill by reducing the numbers of people who need welfare support, not by arbitrarily cutting the benefits paid to those who still depend on them.

    But if Labour is going to promise a radical realignment of spending in favour of those with the highest marginal propensity to spend, we also have to explain (a) where the money is coming from, and (b) how such a radical change of policy can be executed without frightening the financial markets and driving up the interest rates on the additional money we will need to borrow (in the short term, until demand recovers and the economy starts to move again).

    The answer to (a) can only be by a combination of higher taxes on the rich and especially the super-rich, by a serious attack on defence spending (including abandonment of the not-independent nuclear non-deterrent and most of the means for fighting optional foreign wars), and inevitably by increased borrowing — and in justification of that, it should be stressed that the coalition’s failed austerity programme also involves increased borrowing but without using the money we borrow to reinvigorate demand or to facilitate a redistribution of wealth in our morbidly unequal society. To put figures on such a programme should not be rocket science, but it would call for some real political courage. I don’t think Ed Balls is lacking in that department.

    I don’t know the answer to (b) — how to mount a programme to stimulate demand by a radical transfer of resources from the richest to the poorest, financed in part by borrowing, without frightening the markets into pushing up the rates we would have to pay to borrow, thus potentially negating the viability of the whole programme. Ideally we should try to form an alliance of like-minded governments who would all act together under an EU or IMF umbrella that would help to assuage the suspicions and fears of the markets. Alas, that would take time and might not be achievable anyway. But to win general support for and understanding of such a radical change of course, Labour will need an answer to (b), as well as to (a). Otherwise we’ll all be sunk, the poorest first.

    • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

      We also need to be talking about far more localized production and the end of the lie of wasteful ‘choice’

    • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

      We also need to be talking about far more localized production and the end of the lie of wasteful ‘choice’

  • http://www.facebook.com/jon.marsden.96 Jon Marsden

    Anyone of you lot who actually believe this “scrounger/skiver” shite myth perpetuated by the likes of the Murdoch press need get a grip….. yes YouGov says it`s worth points on the voting scale to kick the Underclass/Chavs/Great Unwashed etc but these votes you will be attracting will be the voters who buy that type of gutter press……..Go and read Platos` Republic esp. the analogy of the beast/bear. Vote for kicking the poor and don`t come crying to me when they kick back. Sheffield LP/Fabian

  • Serbitar

    How sad that a man of conscience has to appeal to his colleagues in the PLP to do the right thing. What has happened to the Parliamentary Labour Party if its members need to be persuaded to think twice about opposing cruel policies designed to cause deliberate harm and to magnify the suffering of the poor and most helpless members of society?

  • Serbitar

    How sad that a man of conscience has to appeal to his colleagues in the PLP to do the right thing. What has happened to the Parliamentary Labour Party if its members need to be persuaded, to think twice about opposing cruel policies, designed intentionally to magnify the suffering of the already pained poorest and most helpless members of society?

  • Serbitar

    How sad that a man of conscience has to appeal to his colleagues in the PLP to do the right thing. What has happened to the Parliamentary Labour Party if its members need to be persuaded to think twice, about opposing cruel policies, designed to magnify the suffering of the already pained poorest and most helpless members of society?

  • Serbitar

    How sad that a man of conscience has to appeal to his colleagues in the PLP to do the right thing. What has happened to the Parliamentary Labour Party if its members need to be persuaded to think twice, about opposing cruel policies, designed to magnify the suffering of the already pained poorest and most helpless members of society?

  • Serbitar

    How sad that a man of conscience has to appeal to his colleagues in the PLP to do the right thing. What has happened to the Parliamentary Labour Party if its members need to be persuaded to think twice, about opposing cruel policies, designed to magnify the suffering of the already pained poorest and most helpless members of society?

  • Serbitar

    How sad that a man of conscience has to appeal to his colleagues in the PLP to do the right thing. What has happened to the Parliamentary Labour Party if its members need to be persuaded to think twice, about opposing cruel policies, designed to magnify the suffering of the already pained poorest and most helpless members of society?

  • Serbitar

    How sad that a man of conscience has to appeal to his colleagues in the PLP to do the right thing. What has happened to the Parliamentary Labour Party if its members need to be persuaded to think twice, about opposing cruel policies, designed to magnify the suffering of the already pained poorest and most helpless members of society?

  • Serbitar

    How sad that a man of conscience has to appeal to his colleagues in the PLP to do the right thing. What has happened to the Parliamentary Labour Party if its members need to be persuaded to think twice, about opposing cruel policies, designed to magnify the suffering of the already pained poorest and most helpless members of society?

  • Serbitar

    How sad that a man of conscience has to appeal to his colleagues in the PLP to do the right thing. What has happened to the Parliamentary Labour Party if its members need to be persuaded to think twice, about opposing cruel policies, designed to magnify the suffering of the already pained poorest and most helpless members of society?

  • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

    I agree with John on this one. The cuts simply can’t hit the protest any harder when the relatively affluent are doing fine. We need more progressive tax bands and An abandonment of the Tory dislike of the public sector. Good article from Suzanne Moore in the Guardian yesterday – some tekkibg points which we need to think about.

  • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

    I agree with John on this one. The cuts simply can’t hit the protest any harder when the relatively affluent are doing fine. We need more progressive tax bands and An abandonment of the Tory dislike of the public sector. Good article from Suzanne Moore in the Guardian yesterday – some tekkibg points which we need to think about.

  • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

    The problem is that means testing can cost more than simply giving everyone the benefit. Also I think there is a danger that if benefits are seen to be only for the poor the better off will resent paying for them

    • brianbarder

      I agree, Mike. The principle underlying universality of benefits — that we all contribute broadly according to our abilitry to do so and the risks of ill-health, unemployment, homelessness, or just poverty are spread over all of us meaning all are entitled to benefit — is worth defending. If we start means-testing everything from bus passes to winter fuel allowances, the NHS will soon be confined to the poorest in society and standards will fall accordingly. The solution surely is to tax the value of benefits as part of income tax.

      • jaime taurosangastre candelas

        Brian, I disagree, but to do so we need to differentiate between cash-paid and non cash benefits such as the NHS.

        No one paying higher rates of income tax should receive a penny of cash benefits (i.e. Child Benefit, Winter Fuel, etc) – but if it is too difficult to stop the payment being made, then they should be taxed at 100% in the self-assessment return. It is simple, on the self-assessment form insert a new pair of boxes: “If you have received any of the following cash benefits {list} in this year, insert total amount” Then another box: “Copy value from the first box and add this amount to any other taxes you owe”. Equally, make it easy to “opt out” of receiving the benefit, and they need not be paid at all.

        Ideally for those on the median wage and greater but less than higher rate income tax payers, the benefits should be tapered, but I can see there are expenses associated with that, as those in this position do not do the self-assessment. Perhaps too difficult to do immediately.

        • Alexwilliamz

          The opt out is an excellent idea, for those with a genuine social conscience.

          • jaime taurosangastre candelas

            Thank you Alex, but it is such a simple idea that it cannot NOT have been thought of before by others with better brains than me.

            Thinking about the potential for fraud, what is the cost of ink to print on the form “We will check one in ten entries. If you are discovered to have failed to declare cash benefits as a higher rate taxpayer, you will be fined 20 times the amount of benefits received”. Whether or not checks are actually made (at a cost to HMRC) is perhaps different, but the “frighteners” will be applied. It would not be worth gambling that no check would be made.

            In simple terms, while in each year you have a 10% chance of being caught out, over time that rises in any decade, with a fine of 20 times the amount claimed. It would become like “Russian Roulette”, but the gun is loaded by HMRC, and has every year another bullet in the chamber of ten spaces. So it should be a simple decision for the higher rate taxpayer (who should normally be assumed to be intelligent, if they are paid so much): Pay back the cash benefits that you do not need, and even better, do not claim them at all. And then this little honesty / reporting problem goes away entirely

            (EDIT: the HMRC could also apply some intelligence to this, for instance checking 10%, but weighting that selection to those filling in the forms for the first time, and who might “forget” that claiming benefits as a new higher rate taxpayer is not allowed)

          • jaime taurosangastre candelas

            Thank you Alex, but it is such a simple idea that it cannot NOT have been thought of before by others with better brains than me.

            Thinking about the potential for fraud, what is the cost of ink to print on the form “We will check one in ten entries. If you are discovered to have failed to declare cash benefits as a higher rate taxpayer, you will be fined 20 times the amount of benefits received”. Whether or not checks are actually made (at a cost to HMRC) is perhaps different, but the “frighteners” will be applied. It would not be worth gambling that no check would be made.

            In simple terms, while in each year you have a 10% chance of being caught out, over time that rises in any decade, with a fine of 20 times the amount claimed. It would become like “Russian Roulette”, but the gun is loaded by HMRC, and has every year another bullet in the chamber of ten spaces. So it should be a simple decision for the higher rate taxpayer (who should normally be assumed to be intelligent, if they are paid so much): Pay back the cash benefits that you do not need, and even better, do not claim them at all. And then this little honesty / reporting problem goes away entirely

            (EDIT: the HMRC could also apply some intelligence to this, for instance checking 10%, but weighting that selection to those filling in the forms for the first time, and who might “forget” that claiming benefits as a new higher rate taxpayer is not allowed)

        • Alexwilliamz

          The opt out is an excellent idea, for those with a genuine social conscience.

        • brianbarder

          As I see it, the issue is not the mechanics of abandoning the universality principle — there are many relatively simple ways of confining benefits to those who can demonstrate that they need them — but rather whether universality is worth preserving where it is currently observed. Personally I think it is. No-one seriously questions the universality of the greatest benefit of all, namely the NHS; nearly all the others are under increasing attack. If only those able to demonstrate need are entitled to receive them, the inevitable result is that benefits for the poor become poor benefits (as Mike has put it even more pithily). Not only does abandoning universality require all the machinery of means testing, which may cost more than the savings from withholding the benefit from the better off: it also humiliates recipients by labelling them as social failures, even though most of them will have been paying their taxes and NI contributions for many years, and very few can be held personally responsible for their situations. In some cases a universal benefit costs society much less than it seems at first sight: for example, the free bus pass enables elderly people to use public transport capacity between the rush hours that would otherwise be unused. Others are purely transfer payments with little or no net real cost to society, and socially valuable as marginally reducing inequality.

          But the nub of the question is a philosophical or ideological issue: we should see the welfare system as a massive insurance scheme under which everyone who can afford them pays the premiums and absolutely everyone is entitled as of right to the benefits. Thus there’s no stigma attached to receiving a benefit, and benefits are not a form of optional charity financed by virtuous “hard-working families” to keep the shirkers and failures from starvation or death from hypothermia: they are a right for which society pays and from which society benefits. Those of us fortunate enough not actually to need a free bus pass should feel no guilt about no longer paying every time we board a bus; we’ve contributed to the scheme (and continue to contribute every time we pay our income taxes or pay VAT on a purchase) and we’re as much entitled to the resulting benefit as we are entitled to our state pensions or to the street lighting outside our homes, and there’s no obligation whatever to “opt out” of either.

          However, I wouldn’t regard taxing the money value of all benefits as income at the appropriate rate as in any way damaging to the principle of universality, and if that’s the price of preserving universality, I’m all for paying it.

          • jaime taurosangastre candelas

            Brian,

            I do not disagree on the “principle” but perhaps a magnifying glass should be turned onto the decision making process of what is a reasonable benefit, and what is not.

            I may fail to explain this clearly, but I can conceive of a “sliding scale” or axis which at one end is labelled a “fundamental human right”, and at the other “a nice little “perk”". The issue is therefore once politicians decide that “something” is a benefit, it gets dropped onto the axis, and there then seems to be an inexorable ratchet mechanism in which something that starts off as a very limited scheme is inexorably dragged towards the “fundamental human right” end of the scale, and defended as such. When viewed in the isolation of a single benefit, it is understandable. When you look at ALL of the benefits together, there appears to me to be a significant over-weighting at one end of the scale, and so there is equivalence in access to NHS treatment and (for examples) the EMA, SMP/SMB and Winter Fuel payments.

            The issue is how many things we as society want to defend as benefits, and how we pay for them. There is a limit to what is affordable, and choices for Government as to whether we keep them all but under-funded, or whether we actively get rid of some but fund the remainder properly. To my mind, JSA is “scandalously” underfunded – £71 is ridiculously low. Not paying the Winter Fuel of anyone in the upper half of the income range could increase JSA.

            (This is perhaps not the place to air my views that Council Tax needs great reform. Why should my family of 4 pay only 25% more than our single next door neighbour in the mirror-image semi house, when we consume 4 times the amount of council services that he does?) But broader thinking is needed.

            I have been too long and complex. In a world of constrained finances, can we afford to maintain the principle of Universality?

      • Dave Postles

        Do you want to force child benefit on me then, even though we have no kids? It’s worth considering now qualification for benefits, just as tax credits are targeted. We have to get the money to the right people. Pensioners as a group are being protected by the politicians for purely political reasons. Unlike the pensioners of the generation of Jack Jones, many pensioners now are very well placed financially – even more so if e could introduce the Dilnot recommendations.

      • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

        Exactly Brian – poor services for poor people. See USA.

      • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

        Exactly Brian – poor services for poor people. See USA.

    • brianbarder

      I agree, Mike. The principle underlying universality of benefits — that we all contribute broadly according to our abilitry to do so and the risks of ill-health, unemployment, homelessness, or just poverty are spread over all of us meaning all are entitled to benefit — is worth defending. If we start means-testing everything from bus passes to winter fuel allowances, the NHS will soon be confined to the poorest in society and standards will fall accordingly. The solution surely is to tax the value of benefits as part of income tax.

    • Dave Postles

      Actually, the only benefit which I somewhat resent paying is child benefit for people who can afford to pay for the maintenance of their own kids.

  • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

    The problem is that means testing can cost more than simply giving everyone the benefit. Also I think there is a danger that if benefits are seen to be only for the poor the better off will resent paying for them

  • Daniel Speight

    So from today’s Guardian/Observer website:

    In a high-risk move that could come to define his leadership, Miliband appears ready to order his party to oppose real-term reductions in income for millions of the poorest and most vulnerable, announced in Wednesday’s autumn statement, when proposals are placed before parliament next month.

    But there’s still Progress:

    One senior Labour figure said there were still tensions inside the party, with a caucus of “new Labour” figures believing it will be politically suicidal to leave the party open to charges that it sides with “scroungers” and is in denial over the need to cut the benefits bill.

    “New Labour” figures whom seem to be to the right of Industry Minister Vince Cable, who referring to Osborne stated:

    …he says ministers should not “insult” or “demonise” people on benefits, most of whom are out of work “through no fault of their own”.

    While at the same time ex-New Labour pinup boy Luke Bozier is in all sorts of trouble with his attempts to help the third world young under-employed.

  • Daniel Speight

    So from today’s Guardian/Observer website:

    In a high-risk move that could come to define his leadership, Miliband appears ready to order his party to oppose real-term reductions in income for millions of the poorest and most vulnerable, announced in Wednesday’s autumn statement, when proposals are placed before parliament next month.

    But there’s still Progress:

    One senior Labour figure said there were still tensions inside the party, with a caucus of “new Labour” figures believing it will be politically suicidal to leave the party open to charges that it sides with “scroungers” and is in denial over the need to cut the benefits bill.

    “New Labour” figures whom seem to be to the right of Industry Minister Vince Cable, who referring to Osborne stated:

    …he says ministers should not “insult” or “demonise” people on benefits, most of whom are out of work “through no fault of their own”.

    While at the same time ex-New Labour pinup boy Luke Bozier is in all sorts of trouble with his attempts to help the third world young under-employed.

  • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

    I have no kids either, but I don’t resent people getting child benefit. I generally think that universal benefits and more progressive taxation is better than ever increasing complexity of means testing with all the disincentives it brings

    • Dave Postles

      We continue to disagree then. I would prefer more effective targeting of additional entitlements, especially where dependants are involved. EMA was an excellent scheme, for example.

    • Dave Postles

      More targeted support for undergraduates from poorer backgrounds is also necessary. OFFA cannot do much to make certain that bursaries are effective. All Les Ebdon can seem to do is exhort. It is now reported, as you probably know, that a really high proportion of undergraduates from poorer backgrounds is working more than 14 hours a week to pay their way. They need targeted assistance so that they are not placed at a disadvantage against their more affluent peers.

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