Lots of lines – what do they tell us?
This graph shows the weekly rates of certain benefits payable to claimants. This is the amount that an individual was paid, but not necessarily the amount they actually got to spend. Some people claimed multiple benefits; and many came under taxation as time went on. The focus on disability benefits is because the data are taken from my PhD research.
Here are a few bullet points, explaining the reasons for the fluctuations and what we might learn from them:
- On the main interpretation, we can show that on the whole the real value of benefits declined substantially in the 1980s, recovering by the early 2000s. At the same time (not on this graph), the expenditure on welfare benefits continued to rise, suggesting that far more people were claiming even as benefits became “less generous”.
- In the sixties benefits were only “uprated” every two years, creating a cool shark-tooth pattern.
- But the rate was linked to average earnings, so the real rate of the benefits rose considerably over the decade.
- Inflation hit people hard in 1970/71, and the government moved to an annual uprating system. This produced an even more considerable rise over the 1970s.
- Inflation was so bad in the mid 70s that spending cuts and rising prices forced the real value of benefits down.
- Almost all benefits reached their “peak” rate in 1979/80, the last financial year of the Callaghan Labour Government. After that, rates were controlled by the Conservative government, resulting in a more steady rate of change. The earnings link was abolished for many benefits as the decade went on, with inflation the only concern.
- After 1985/86, harsher measures saw the real value of benefits take a big hit.
- You’ll notice how war pensioners and industrial injuries claimants received far more than the general invalidity and incapacity benefits.
- Note also that there are only two benefits worth more in 2002 than in 1980 in this graph. The first is the war pensions, which were greatly increased under Major to support veterans. The other is retirement pension, which was not wedded to inflation at the time – in 2002, we actually had deflation in the UK.
When Major took over, benefit rates increased substantially. However, both Major and Blair appear to have had similar approaches to benefit rates, with prices stabilised at just under the 1979/80 levels by 2002.
My overall point would be that gross expenditure on benefits is misleading – the Conservatives regularly claimed that they were generous based on the billions their governments spent on social security. On the other hand, you could use this argument to criticise Labour for having more generous benefit rates that served fewer people. (Ignoring, of course, issues such as an ageing population, unemployment rates, awareness of entitlement, and so on).
The issue is how much each individual receives and whether that amount is adequate. It is not enough to spend money – it’s where you spend it. Both the right and the left need to look beyond headline statistics and actually examine whether coverage is adequate. Not cherry pick the figures that make them look good.