How much do you think it costs us to pay benefits to the non-needy? A new report from think tank Reform offers the answer: £31bn. To put that in perspective the size of the UK’s deficit (the amount we add to our national debt every year) is somewhere in the order of £165bn. That means that around 20% of our current financial predicament can be laid at the door of payments to cover child benefit, statutory maternity pay, tax credits and the like to the middle classes.
But even that number could be low. What of the free baby massage classes I attended in Paddington when my first child was born? Every attendee I met was a City wife.
The same goes for Sure Start – having the taxpayer finance what Alice Thomson in The Times calls a “subsidized crèche and climbing wall” might make sense if it really helped only small children born into poverty. It makes less sense when the middle classes meet there for coffee before heading to John Lewis.
Thomson also points to a few other odd uses of public money: in Devon, she says, if you live more than two miles from your local school you get free transport to it. So every morning “minicabs and minibuses cross the countryside ferrying more than a quarter of children to lessons” regardless of how many cars their parents own. This is clearly nuts.
Still, the middle classes aren’t the only scroungers about. Next up, says Anatole Kaletsky, are the pensioners with their free bus passes, fuel allowances (which make up part of the £31bn above) and their block voting for spending on health and pensions. The old appear to think that they should be prioritised over the young (who could surely better do with free bus passes as they crisscross the country looking for jobs) because they have “paid their dues” via the tax system. But “this is simply untrue”. The average value of a baby boomer’s benefits is around 120% of the taxes they have paid.
If we want to survive financially as a nation, we are going to have to accept serious cuts in our living standards. Eclectica’s Hugh Hendry says that when deflation is done with the UK – so our debt is under control, public spending has hit sustainable levels, asset prices have hit bottom and the false growth of the credit bubble has been leached from the system – we’ll be back to the 1970s in lifestyle terms.
That’s going to be quite a shock. Consider a woman quoted in London’s Evening Standard this week. She was discussing the sacrifices she and her partner have made to fund a house. “We’ve already given up nice little treats like vine tomatoes, freshly squeezed orange juice and Parma ham,” she says. And if her finances deteriorate? “We’ll find it difficult. It will mean only going out to dinner once a week.” I don’t remember many people going out to dinner once a week in the 1970s.