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Politics

Cameron’s hamstrung Exchequer

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Pledges cost money: David Cameron’s hamstrung Exchequer

THE NATIONAL tabloids are often full of foaming at the mouth headlines about ‘scroungers’, stories about ‘dole fiddlers’, and tales expressing horror that some people pretend to be ill to get disability benefits.

That is nothing new and it is conspicuous that there is a spike in such stories (particularly involving those from outside the UK) when governments of whatever complexion have announced ‘welfare reform’ (cuts) ‘designed to deliver to those most in need’ (not those in most in need).

WHERE THE MONEY GOES: PENSIONS

Welfare spending makes up around 35% of the UK Government’s spending and totals over £260b per year. However, ‘welfare’ is a broad term and only a fraction of welfare benefits spending is on unemployment benefits.

The largest amount paid out in welfare benefits is for pensions and the Office for National Statistics’ last available figures show that £108b of the £258b welfare spend in 2014/15 went on pensions.

In fact, total pension spending has increased by 25% since the financial year 2010/11. This isn’t surprising as life expectancy has been steadily increasing, so state pensions are being claimed for longer. The remaining life expectancy for someone aged 65, in 2016, is 21 years for a man and 24 for a woman.

What that means is that the idea that people have ‘paid in what they get out’ is increasingly untrue. Some of those claiming pensions will have contributed comparatively little to their state pensions, whereas actuarial calculations on future pension need carried out when older pensioners were working would have been predicated on them dying within a few years of retirement. The fact that we are all living longer means that the proportion spent on pensions is likely to continue to rise just at the point when the working age population which funds the spending is in decline.

WHERE THE MONEY GOES: CARE AND DISABILITY

£29 b is spent on personal social services. About £41 b goes on benefits for people who are ill or disabled, while £10 b goes on elderly care payments. Disabled people are more likely to live in deprived areas and work in routine occupations. In the 2011 Census, 18% of people (10 million) reported some form of disability.

As for elderly care, there were 9.2 million people aged 65+ in 2011, making up 16% of our population. The care home population has actually stabilised over the last decade at around 300,000 people, but there has been an increase of 600,000 people (likely family members) providing unpaid care between 2001 and 2011. In total, 5.8 million (10%) provided unpaid care in England and Wales in 2011, and the majority were of working age.

W HERE THE MONEY GOES: POVERTY AND THE UNEMPLOYED

£44 b goes on family benefits, income support and tax credits. This includes benefits such as child benefit and support for people on low income. Around £3.5 b goes to the unemployed.

There were around 3 million people in in-work poverty in 2013. This meant their household income (adjusted for household size and composition) was below the poverty threshold and were in employment themselves. The 10% of households with the lowest disposable income spent an average of £196 a week in 2013. Of this, half (£98) was spent on food and non-alcoholic drinks, transport, housing (including net rent), and household fuel and power.

As for out of work people claiming Jobseeker’s Allowance and Universal Credit, there were 760,200 people claiming these benefits in January 2016. This number has decreased by 11.2% compared with a year earlier

WHAT ABOUT FRAUD?

The notion, often pushed by the tabloids, is that there is a massive amount of benefit fraud. A poll carried out by the TUC in 2012 revealed that British people believed that 27% of benefits were claimed fraudulently.

To describe that as a ‘wild overstatement’ does not do how wrong it is justice. It seems to be one of those figures arrived at on the basis that ‘everybody knows’, rather than being remotely founded in reality.

The actual level of all fraud in the UK’s welfare benefits system was 0.8% in 2014/15.

While that is the amount of detected fraud, to suggest that it is completely out of line with actuality is to ignore the fact that the UK government employs 12 times as many benefits fraud investigators than it has tax fraud investigators.

The UK loses six times more through tax evasion and aggressive tax avoidance than the total value of fraudulent welfare benefit claims. Moreover, the UK fails to collect £34b in tax each year. And that is providing you accept the UK government’s figures, which are disputed by some economists as a wild underestimate.

While benefits fraud is an issue, there is an argument that the amount of time spent on it and the amount of publicity it receives is out of all proportion to the actual value of the fraud involved.

University of Warwick political scientist Adam Taylor said: “

This isn’t to say that benefit fraud is OK or that HMRC isn’t doing anything about tax evasion. But it is wrong that the government feels it can openly threaten the poor while merely cajoling the rich. And it is sad that the tax-burdened middle class reserve their outrage for the single mother working in the cafe while lionising the rich, famous and powerful who are getting away with it, tax free.”

WHO PAYS?

Successive governments have been aware of the crisis facing benefit payments for over two decades and yet none of them has sought to do anything more than fiddle at the margins and target the most vulnerable and weakest members of society: the Cameron Government spent an enormous amount of political capital to no good end making an economically pointless adjustment to housing benefit with the hated bedroom tax. The projected savings from that policy were tiny.

In addition, the amount of direct tax paid by the working population is contracting along with the numbers of those in work and the changing profile of work economic activity.

In the past, when the welfare model was fixed, there was generally one full time bread winner per working class family in a job which lasted an entire working life. Stable incomes represented a stable and predictable tax yield. However, the change from a high labour manufacturing economy to a service-based one with lower labour requirements, altered the whole dynamic of working class life. Multiple part time jobs may reduce the number on the unemployed role, but lower income jobs pay less into the UK’s tax base.

So, the question that all governments face is how to provide people with the welfare benefits they need without upsetting voters who have to pay for them.

NO EASY ANSWER

The issue is particularly acute due to David Cameron’s 2015 promise not to raise National Insurance, Income Tax, or VAT. Where else, the question might fairly be asked, would the money come from? Especially as there is a guaranteed 2.5% increase per annum in the state pension.

Oh – and older voters and pensioners vote in far higher numbers than the young. On the basis that turkeys seldom vote for Christmas, you can guess why politicians are wary of doing anything to affect that demographic.

One thing is certain, fiddling at the margins is not enough. But whether politicians have the will to make the sort of changes needed to the UK’s tax and welfare system, is one of those questions to which there is no glib answer.

Which do you prefer, after all, higher taxes or cuts targeted at those least able to defend themselves?

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Politics

Communities First had impossible task

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THE WELSH Government should ensure councils identify all programmes currently being delivered by Communities First that should be delivered by other public services and that they are transferred across to the relevant public service as soon as possible, according to a National Assembly Committee.

The Equality, Local Government and Communities Committee also found it has been difficult to make an overall assessment of the success of the 15-year, £432m Communities First tackling poverty programme because of insufficient performance management.

Communities First was the Welsh Government’s flagship tackling poverty programme. The Cabinet Secretary for Communities and Children Carl Sargeant AM announced that the programme would be wound down in February this year.

The report also highlights that uncertainty for staff caused by the way in which the announcement was made has had a detrimental impact on their work, and affected the people using the services.

The Committee also recommend that the Welsh Government outline how long legacy funding will be available for as soon as possible.

Committee Chair John Griffiths AM said: “For many people, Communities First has had a life-changing impact, and we know it has done great work in communities across Wales.

“We are concerned that the Welsh Government must learn lessons for future tackling poverty activities, ensuring progress is measurable, based on evidence of what works, and that the successful elements of Communities First, which could be delivered by other public bodies and are valued locally, are transferred to other public services to deliver.

“The need for these services hasn’t disappeared, but faced with uncertainty, we have heard that Communities First staff are already leaving for other jobs. Their expertise and relationships cannot easily be replaced.”

A key criticism in the report is that the Welsh Government had no baseline from which to assess success and without such a measure, it was impossible for Communities First’s successes – if any – to be adequately measured as delivering anything like value for the money invested in the scheme.

Evidence from Carmarthenshire County Council not only makes that criticism express, but continues: ‘Measuring the long term impact that the programme had on the individuals was not carried out in the initial years of the programme. As a result, there was limited recording of statistics and outcomes achieved during this period’.

Indeed, the committee states that its own work was hampered by lack of transparency by the Welsh Government. ‘On the day that it was announced the programme would definitely be ending (14 February 2017), all performance measurement data was removed from the Welsh Government’s website’.

The report mordantly notes that: ‘However, we were told in very stark times by a witness that having 102 performance indicators means in practice you have no performance indicators’. It goes on to warn that new indicators put in place by the Welsh Government are so broad as to be almost meaningless and recommends that the Welsh Government adopt the approach recommended by the Bevan Foundation, a social welfare think-tank.

The report notes that the Communities First programme was set the ‘near impossible task’ of reducing poverty, which could never be achieved through one single programme.

In written evidence to the Committee, the Cabinet Secretary for Communities and Children, Carl Sargeant said that “….the underlying premise of the programme that it was possible to improve area characteristics by influencing individual-level outcomes – was (and remains) untested.”

In addition to the broad aims of the programme, it remains unclear and un-evidenced as to whether interventions to improve individual circumstances lead to changes in a geographical area’s characteristics. This was accepted by the Cabinet Secretary in his written evidence.

Although it is unclear how well a place based approach works and it remains the approach for some other programmes such as Communities for Work, Flying Start, Lift, and others. The committee recommends review of these programmes ‘to ensure they are working to optimum benefit’.

The Committee expresses concern that Communities First programmes were used to deliver services that statutory bodies should have delivered, noting that Communities First schemes ‘were delivering projects and support in important areas, including health and education’.

As Herald readers in Carmarthenshire will recall, it is almost impossible to conceive that a local authority would misuse funds for a targeted project to subsidise delivery of its own services.

Other recommendations include:

• That the Welsh Government considers removing postcode barriers to families accessing Flying Start where there is an identified need and capacity to support them

• That the Welsh Government ensures that all advice and guidance to local authorities is available in written form to supplement information that is provided in person or orally

• That the Welsh Government That the Welsh Government makes it clear in guidance to local authorities that employability support should encompass all stages of the employment journey, including support to a person once they are in employment

Mark Isherwood, the Conservative spokesperson for Communities, joined in the Committee’s criticism.

“Despite repeated warnings, the Welsh Government has failed to deliver what the Communities First programme originally intended, which was to deliver community ownership and empowerment to drive positive change.

“An article by the Bevan Foundation achieved a far more perspicacious insight into why Communities First achieved such little success, by stating that community buy-in is essential and that if people feel that policies are imposed on them, then policies simply don’t work. The Cabinet Secretary should take note.

“However, it is not too late to do things differently. We can still unlock human capital in our communities and places to develop solutions to local issues, improve wellbeing, raise aspirations and create stronger communities.”

The Bevan Foundation has welcomed the recommendations of the Equality, Local Government and Communities Committee’s report.

In particular, it welcomes the Committee’s inclusion of the Bevan Foundation and Joseph Rowntree Foundation’s proposals to reduce poverty through a whole government strategy for reducing costs and raising incomes, rather than its current focus on employability, early years and empowerment.

The Bevan Foundation also welcome’s the Committee’s adoption of other Bevan Foundation proposals including:

• The recommendation that the Welsh Government work with the Bevan Foundation and Joseph Rowntree Foundation on a dashboard of indicators,

• The recommendation that the Welsh Government explore further the role of assets in generating income and wealth

• The comment that the Welsh Government needs to provide a robust framework for local action

Director of the Bevan Foundation, Victoria Winckler, said: “We were delighted that the Equality, Local Government and Communities Committee has listened carefully to our written and oral evidence and included so many of ideas in its recommendations. The Committee’s inquiries into poverty are vitally important, and we hope that the Welsh Government heed the Committee’s recommendations. We look forward to working with the Welsh Government and the Committee in taking them forward.”

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Politics

Aber academic to advise on Brexit

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Professor Nicholas Perdikis: Advising on Brexit

A LEADING expert on international trade policy from Aberystwyth University is providing specialist research advice to the National Assembly for Wales on how Brexit is likely to impact the Welsh economy.

Professor Nicholas Perdikis has taken up a five month Academic Fellowship with the National Assembly for Wales Research Service to explore the potential implications of the UK’s departure from the EU on key sectors of the economy.

His appointment is part of a pilot Fellowship scheme that enables senior academics at Welsh universities to spend time at the Assembly Commission working on a project of mutual benefit.

Llywydd of the National Assembly for Wales, Elin Jones AM, said: “I am very pleased that the considerable expertise and experience of Aberystwyth University has joined the fellowship programme. This will help Assembly Members to gain a better understanding of the implications of Brexit for key sectors of the Welsh economy, which will be vitally important so that they can scrutinise the policies of the Welsh and UK Governments.”

From August 2017 until January 2018, Professor Perdikis will divide his time between the National Assembly’s home in Cardiff Bay and Aberystwyth University.

As part of his brief, he will examine how a range of scenarios could impact on trade in Wales, including no deal or trading on World Trade Organisation terms as well as membership of the European Economic Area as a transitional arrangement.

Professor Nicholas Perdikis, who is Professor of International Business and a specialist in International Trade and Trade Policy at Aberystwyth Business School, said: “Nobody yet knows how leaving the EU will affect trade in Wales or the UK as a whole and Brexit remains the focus of political debate and discussion. This fellowship is a fantastic opportunity to work in an advisory capacity to the National Assembly for Wales at a time of significant change to Wales’ international economic environment.”

In addition to his academic research on trade, integration and the European Union’s trade policy, Professor Perdikis has acted as a consultant to international and national organisations.

These include the United Nations Committee on Trade and Development (UNCTAD) and the UK Foreign and Commonwealth Office and British High Commission in India.

Professor Perdikis is also co-author of a report on the proposed EU-India Free Trade Agreement.

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Politics

Calls to suspend ‘racist’ UKIP member

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A UKIP Assembly Member has been heavily criticised after a recording of a phone call in which she called a prominent Labour MP ‘a coconut’ was released.

A Labour Assembly Group spokesperson called for Michelle Brown, who represents the North Wales region, to be suspended immediately after the tape was released by her former senior adviser Nigel Williams.

During the course of the conversation, in which she also referred to former Labour MP and current Director of the Victoria and Albert Museum Tristram Hunt as a ‘t**t’, Ms Brown said: “Chuka Umunna is a f***ing coconut.

“He’s got as much understanding of an ordinary black man’s experience as I have.

“He may be black but his mother or his father was British from a very, very influential family.

“He is a coconut – black on the outside, white on the inside, and Barack Obama’s exactly the same.”

Former detective Nigel Williams, who was sacked by Ms Brown in May this year after working for her since her election, told the Daily Post that he had been ‘appalled’ by the recording, which he discovered in his records a year after the conversation took place.

“It’s bad enough coming from anybody, but to come from a newly appointed Assembly Member is absolutely appalling,” he added.

“I’ve seen swearing and I’ve been called all sorts of names myself, but I’ve actually never seen it from somebody in such a position.

“This wasn’t a meltdown. This was just a conversation that Michelle Brown was having, which she thought was OK.”

Labour and Plaid Cymru AMs led criticism of Ms Brown. A spokesperson for the Labour group said: “This is absolutely outrageous language and lays bare the disgusting racism at the heart of UKIP.

“Anything less than immediate suspension would be a clear endorsement of Michelle Brown’s racist slur.”

Plaid leader Leanne Wood said: “This racism reflects poorly on our parliament – the National Assembly for Wales – and that’s why her party should take action on this.”

Speaking to the BBC, Leader of the Welsh Conservatives Andrew RT Davies said: “The language is completely unacceptable and it’s regrettable in the second decade of the 21st Century that that type of language is held by people who hold public appointment.

“From my view, if that person was in the Conservative Party – they would be suspended.

“As I said – it is completely unacceptable language.”

UKIP Chair Paul Oakden said UKIP ‘obviously does not condone the personal views expressed by Michelle Brown’.

“We will conduct an investigation into this matter, the findings of which will be passed through to our National Executive Committee so that they might consider disciplinary action,” he added.

However, Mr Oakden also noted that the party would also be investigating ‘whether a UKIP member and official surreptitiously recorded a private telephone conversation with Michelle Brown and then disseminated it without her consent, more than a year after the event’.

In the meantime, two of UKIP’s remaining five AMs criticised Ms Brown’s language.

Caroline Jones said that ‘inappropriate language is not condoned by myself or anyone else in the party,’ while David Rowlands ‘thought we’d put that racist language behind us as a party’.

Responding, Ms Brown said: “The point I was making is that, because of his considerable wealth and privilege, Chukka Umunna cannot possibly understand the difficulties and issues that the average black person faces in this country any more than I can, and I stand by that assertion.

“I do however accept that the language I used in the private conversation was inappropriate and I apologise to anyone that has been offended by it.”

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