Thursday, July 22, 2010

Taxpayer's Alliance: cut benefits for the poor, more benefits for the rich

The Taxpayer's Alliance have a new report out about how to reform welfare. They claim to have spent a lot of time on the report, and it includes detailed calculations for things like the computation of negative income tax (if rG – T >= 0, then N = M – rG + T and so on). It is an attempt to simplify the benefits system and improve financial incentives for people to take a job, while reducing the overall cost of the system.

The way that it seeks to do this is by making lots of middle and lower income taxpayers considerably worse off. There are pages of pseudo-scientific gibberish and hand waving designed to obscure this point, but the report couldn't find any space to set out, for example, how many people would see their income reduced or by how much under their plans. But using their figures, it is clear that very many families with children would see huge cuts in their income, as would anyone in an area where housing costs are high.

They are very keen to claim that one problem of the welfare system is that it looks at relative poverty (defined as 60% of the median earnings), and that instead we should look at measures of absolute poverty. For all the work they put into their research, however, they didn't realise that the Joseph Rowntree Foundation has already done a lot of this work, developing a "minimum income standard based on what people said is needed to achieve an acceptable standard of living in Britain today". Instead, the Taxpayer's Alliance use examples about how to measure absolute poverty taken from America. (It is worth noting that more taxpayers were involved in the Joseph Rowntree Foundation's research than in this or most other pieces of Taxpayer's Alliance research).

When the Joseph Rowntree Foundation asked people how much people in Britain needed to have an acceptable standard of living, the people came up with an amount which is far higher than the amount that the four (wealthy) authors of the Taxpayer's Alliance report think is enough for millions of people to live on.

Just one small example of the principles underlying the Taxpayer's Alliance proposals to reform welfare. They appear unconcerned with the problems caused by slashing support for families with children, or making people homeless when they can no longer pay the rent. But they are very concerned about the lack of support from the welfare state for people who have assets over £16,000, and propose to scrap asset tests which reduce benefit payments for people who have lots of money saved.

So someone who has tens of thousands of pounds in the bank and who owns one or more homes will be entitled to receive more than £6,000 through their "negative income tax", the same as someone who is out of work and who doesn't have a penny in savings. And if you think that is fair, you are probably rich enough to be one of the tiny number of people who the Taxpayer's Alliance actually speaks for.


At 10:53 am , Anonymous Liam Murray said...

I share your reservations about the TPA but not your readiness to accept at face value the worth of things like the JRF MIS project.

I'm slowly reading through the latest version but an early reaction here:

At 11:32 am , Blogger donpaskini said...

The MIS programme is a work in progress, but I think that this particular criticism is unfair - as I understand it, the suggestion that something was a need because the government provides it was one which was made by one of the members of the public involved in the deliberative exercise.

The idea behind the MIS project is to try to get consensus about how much people need to live on, based on people's opinions rather than statistical calculations.

Necessarily, this will include people with quite different opinions, including disagreements about examples of what evidence of need is. If you start excluding people on the basis that you don't like the examples that they give, it becomes quite problematic.

Better to get lots of people together, all of whom have different views, and attempt to get consensus, then to do something like the TPA report which is written by four people with the same ideological outlook, and appears only to have looked at reports by other right wing think tanks.

At 11:53 am , Anonymous Liam Murray said...

Sorry Don but I have to disagree.

The quote I pulled out was used in a paragraph justifying the extension of the budget to include home internet access for primary school children (the 2008 MIS excluded them).Yes, it was just one opinion by a group member but as you point out, the entire MIS project is based on such opinions.

In actual fact the entire exercise is based on nothng more than the discussions & opinions of c.70 people who met for 5.5 hours earlier this year. Now I'm happy to acknowledge the ideological bias of the TPA but I'd wager if they adopted the exact same methodology (3 peer review groups, 3 meetings each etc.) and facilitated it according to that bias they could generate an equally 'authoritative' report about welfare waste and abuse of taxpayer funds. And if they did the left-wing blogosphere would probably slaughter them for it - not unreasonably.

My issue is the JRF exercise is no less idelogical and no more scientific than much of what comes from the TPA - it's just that the ideology & outlook chimes with some people so they lend it more credence.

At 12:14 pm , Blogger donpaskini said...

I don't think you can compare the JRF and the TPA's methodologies - the JRF used existing budget standards methodologies, involved people from a range of backgrounds, and had experts in areas such as nutrition as advisers. The TPA report had four people, two from the Institute of Directors, one strategic consultant and one of their employees, none of whom have any expertise in welfare policy.

I'm not aware of the TPA ever doing a deliberative exercise which involves people who might not share their worldview, and they don't even seem to read research which isn't produced by their ideological fellow travellers. The problem (I suspect) that the TPA have is that this kind of exercise might not fit with their message, as actual taxpayers might not share their ideological preoccupations.

Are there any actual examples from the MIS report which you think are way out of line? Presumably if the JRF had produced a report which had a left-wing bias, it should be relatively easy to spot examples of where their findings were informed by this bias?

At 12:54 pm , Anonymous Liam Murray said...

"I'm not aware of the TPA ever doing a deliberative exercise which involves people who might not share their worldview."

But that's not what the JRF have done with the MIS.

OK, I'm pretty sure they didn't canvass for social democrats or Labour supporters only but they had c.70 people, recruited explicitly for a project aimed at determining a minimum income required "to
have the opportunities and choices necessary to participate in society"
and facilited by a leading, reasonably well-known left-wing think tank.

That short brief would be enough to make sure I stayed well clear (and I'm married, 1 kid, household income just above national average) - if for some reason they got me in the door they'd have lost me by the time they started debating whether £42.16 pw is enough for 'Social & cultural participation' (p19) - perhaps we need more? Does that include sweets when we get there or are we our own?

You get the picture Don? It's littered with this sort of nonsense; whatever methods were used in recruitment the idea that the outcome of that type of research is somehow 'independent' or less ideological is clearly nonsense.

In terms of other examples I'm still trudging through it and hope to blog on it but off the top of my head; discussions around whether or not people should be able to shop in Tesco rather than Lidl, apparently a basic cable TV package is now 'essential' etc. etc.

I'm not some hard-right absolutist in terms of poverty; I accept relative inequality is important and exercises like the MIS are important & worthy in terms of understanding our society and informing debate. I just don't think they should be beyond challenge or accepted at face value.

At 1:56 pm , Anonymous Chris Goulden said...

At JRF, we welcome challenge and discussion of the research that we publish.

Members of the public who took part in MIS (in about 60 separate focus groups in total since 2008)are purposively selected to ensure
a mixture of socio-economic circumstances.

Also, the initial groups themselves came up with the definition of what a minimum standard of living should be. So, they weren't recruited on that basis either.

Budgets are drawn from the ground-up, so people discuss actual items and activities that are needed, and only later are things costed by the research team and final checks done.

I agree that ideology informs all research, including drawing up what the research questions should be. But it is still tapping into an external reality - it is not purely determined by ideology. Otherwise you could never achieve any compromise, as the groups in the MIS research do on what an adequate standard of living should be.

At 3:23 pm , Anonymous Liam Murray said...

Thanks Chris and a useful clarification, in the acknowledgement that ideology informs all research; in short that's the point I'm trying to press here.

Also of interest - there appears to be no loop whereby, having then costed the items & drawn up a budget the initial participants have an opportunity for additional review or challenge. This is particularly key when the focus is so broad (e.g. broadband - is speed of connection a factor, or the Tesco / Lidl thing).

At 6:31 pm , Anonymous Brian Smith said...

I don't understand two things about this thread.

How can 60% be a usable benchmark and why can't the left take the outpourings of the right without the vituperation?

If any mechanism uses 60% (of median earnings, in this case) won't we all inevitably join it as what is being measured (earnings) continues to rise?

If average earnings were to decline across the entire economy, poverty would diminish (provided welfare payment levels weren't reduced).

This is not just counter intuitive it's a clear nonsense.

An example of vituperation is the reference to "the four (wealthy) authors of the Taxpayer's Alliance report". Why the reference to wealthy? How wealthy does the writer think the Ballses are, or the Millibands?

This sort of casual rage disfigures so much of what comes from the left while you just don't see it from the right. Why is this?


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