43 Bishops led by the Archbishop of Canterbury are to oppose Iain Duncan Smith’s Welfare Reform Bill. At least I hope they are. I saw one report that Justin Welby had described IDS as brave for attempting such a reform after IDS came out fighting against last Sunday’s anti-cuts church statement. I do hope this golden opportunity is not wasted, but even if the Bishops do stick to their Christian guns, their efforts on behalf of vulnerable children will be wasted unless they talk about the crazy tax arrangements and means testing.
In my blog post on 7th December, ‘Citizens’ Income not Tax Allowances’, I pointed out that to increase the personal tax allowance to £9,440 at the same time as pegging benefit rises to 1% was a poor to rich transfer. Here it is again:
To the unemployed, the £9,440 personal tax allowance is worth nothing. To someone who earns £5,000 (£96 per week) with a standard tax rate @20%,it is worth £1,000 (£19pw). To anyone earning more than £9,440, the allowance is worth 20p in the pound on the top £9,440 of their income. In other words, it saves them £1,888 in tax – £36pw. If your top rate of tax is 40%, your allowance is worth 40p in the pound. You are£3,776 better off, – £73 per week. (£82 for the 45% Tax rate.) For comparison, Jobseekers Allowance is £71pw. If this were to be shared equally between everyone, it would make a start on a Citizens’ Income of about £26per week. Add this to £71 per week to everybody, with no tax allowances, but raising the standard tax rate a bit, and you would have the beginnings of a fair tax and benefit system.
Of course at this point Caroline Lucas will throw up her hands in horror at such loose talk. But we are not seriously talking detailed costings at this stage. What I want the Bishops to do is raise this whole issue in principle in parliament. The details will come in due course once these intelligent people have explained the principle to Iain Duncan Smith. The bishops can quote the devastating critique of means testing in the first part of
Dynamic Benefits (2009)
in support, and ask why his workfare-linked Universal Credit falls short of even the inadequate proposals in that report.
I have no end of difficulty getting people who really need means testing to be abolished to understand this principle, so to reiterate why means testing is wrong, here it is again:
Taxes are taken from people by public bodies; benefits are given to people by public bodies. Therefore, the withdrawal of benefits due to means testing is a tax. I am told the graph at the top of every blog post and page is hard to understand. All it does, is show as a picture the fact that means testing is taxation. This tax is massive if you are on a small income, but vanishingly small if you are on a massive income. I have sent this simple message to the Archbishop, and also to the Rev. John Packer, Bishop of Ripon and Leeds. They are busy men, so may not get this message in time for the Lords debate next Tuesday. If anyone out there has a more direct line than I have, please use it.
What follows is a number of comments on a Financial Times report on the Archbishop of Canterbury’s announcement last Sunday:
Mr Welby has a point that we should support “the vulnerable and in need”. Problem is that the welfare state supports not just the vulnerable but also the fecund and wasteful. We should only support the really needy, and even they should be expected to make a contribution, as we are all in this together.
The Church is probably right that its role is to advocate for those in poverty or vulnerable, but it would be far more credible if it balanced this with a message that personal responsibility is at the heart of the Christian message, too.
Who pays? (oh, yes, of course English private sector workers.
[End of comments]
I have pointed out again and again that what this government is doing should appear preposterous. The contribution by the Bishops could be devastating. But these responses show how badly blunted their onslaught will be if they simply oppose the cuts. IDS and his enemies are demonstrating that it is impossible to distinguish between the deserving and the undeserving poor. If means testing is involved at all, then you cannot avoid doing one of three things: giving to people who don’t need help; taking from desperate people who do; or falling between the two stools, and doing both.