Divided We Stand: Why Inequality Keeps Rising

So just why is David Cameron so keen to cut the money paid in benefits to the disabled by 20% ?  Well it allows him to cut the top rate of income tax from 50% to 45% which is good for himself and all his friends who can afford to pay £250,000 for for dinner and never mind the fact that income inequality has already made the rich richer

A report from the OECD Directorate for Employment, Labour and Social Affairs (UK notes) states:

Income inequality among working-age persons has risen faster in the United Kingdom than in any other OECD country since 1975. From a peak in 2000 and subsequent fall, it has been rising again since 2005 and is nowwell above the OECD average.

The annual average income of the top 10% in 2008 was almost GBP 55,000, almost 12 times higher than that of the bottom 10%, who had an average income of GBP 4,700. This is up from a ratio of 8 to 1 in 1985. Taxes and benefits reduce inequality by a quarter in the United Kingdom, in line with the OECD average.

Amongst the key findings:

Top income shares doubled. The share of the top 1% of income earners increased from 7.1% in 1970 to 14.3% in 2005 [Table9.1]. Just prior to the global recession, the top 0.1% of top earners accounted for some 5% of total pre-tax income. At the same time, the top marginal income tax rate saw a marked decline: dropping from 60% in the 1980s to 40% in the 2000s, before its recent increase to 50%.
Benefits became less redistributive despite being more targeted towards the poor. This was largely driven by declining benefit amounts. It was also due to more people working, often at low-wage jobs and so not qualifying for benefits. And lastly due to tighter eligibility conditions.

Far from having the top rate of tax cut the report says that:

The growing share of income going to top earners means that this group now has a greater capacity to pay taxes. In this context governments may re-examine the redistributive role of taxation to ensure that wealthier individuals contribute their fair share of the tax burden.

You can read the full report here http://www.oecd.org/document/51/0,3746,en_2649_33933_49147827_1_1_1_1,00.html


Prime Chump

Schadenfreude is an emotion that one does not normally admit to feeling as it has an immoral or unethical connotation.  I will admit to wallowing in this negative emotion this week with relation to David Cameron, the leader of the Conservative Party and so the leader of the UK government known as the Prime Minister but this week I should imagine he feels more like a Prime Chump.

Before I write any more I should point out that my politics are actually rightish wing, a wee bit right of Genghis Khan in fact but in the case of the modern Conservative Party I see them making so many financial and ethical errors that I simply cannot support them.

He started the week early by sticking his nose straight in to Scottish politics in fact right into the face of the Scottish First Minister, Alec Salmond trying to take over and dictate the timing and questions of the Scottish independence referendum.  Salmond bared his teeth, growled and Cameron immediately hid behind his Scottish Secretary, Michael Moore, and insisted that Salmond must speak to Moore.  “I shall speak to the master not the monkey” quoth Salmond.  And that is why after the Scottish Parliament has released its’ consultation document on the referendum a meeting will be held between the UK Prime Minister and the Scottish first minister.

According to the media and, in fact the participants, there is a lot more to the matter but as it is almost entirely irrelevant flannel and posturing I will not repeat it here.  Later in the week Cameron got another beating by a bunch of cripples.  Before anyone objects to my use of that word let me point out that I am one myself which is why I have been so happy recently about the relatively large volume of work I have been able to do.  Things I have not been capable of for 4 years and I only hope I can manage this well into the future.

Who are these people who gave the Prime Minister such a well deserved battering.  A group of disabled people who refer to themselves as Spartacus after a famous scene in Stanley Kubrick’s film of the same name.  They produced and distributed a report “Responsible Reform to the DLA”  DLA is disability living allowance.  In part this report was a response to the media campaign waged by the government and Department of Work and Pensions to discredit the disabled.  A campaign which you can hardly have failed to notice as for the last year or more disabled people have been portrayed as benefit cheats and scroungers which has been widely reported in the media.  Of course like any other benefit or the  tax system ist is open for abuse.  The DWP’s own figure for DLA fraud,which is hard to find as it is hidden in this anti-disabled campaign’s plethora of misleading statements and statistics, is less than 1%.  I wonder what the figure is for tax evasion and fraud?

Spartacus communicated via social media and most of their work was carried out using the internet.  They used about £4,000 , Hansard and the freedom of information act to get their source material and produce their report which was published on Monday 9th January.  Within hours Twitter was full of support, reportedly 3 million tweets of support in the first day.  Stephen Fry tweeted “Looks as if the government’s been found out lying and misleading the people on the subject of disability allowances”.

The DWP countered in their usual mendacious style.  A spokeswoman for the DWP said the Spartacus report was a selective analysis of consultation responses, which had looked at 500 responses out of more than 5500 submitted on the Government’s proposals.

She added: “Disability Living Allowance is an outdated benefit with the majority of people getting it for life without checks to see if their condition has changed. This has led to hundreds of millions of pounds in overpayments.

“We have been working closely with disabled people and disability organisations on the introduction of Personal Independence Payment and have listened to their views.”

In fact the Spartacus report analysed each one of the 523 organisational submissions to the DLA consultation the rest were from individuals and in their response to the consultation the government continually  separated what organisations had said from what individuals had said, so looking just at organisational responses was both reasonable and practically possible for a small and unfunded group.

The majority of people do not get DLA for life, each claimant is regularly reviewed on a schedule set by the DWP which involves the claimant filling out a 50 page form of very personal questions.

This report is probably why the government was defeated so soundly in the House of Lords.

I could write a lot more here but others have already done a far better job than I could so I will simply end with a link should you want to read more.

Click here to open a new window Diary of a benefit scrounger.