The Government’s failure on social security spending – my article on Politics Home with Rachel Reeves

George Osborne promised to balance the books in this Parliament, but it’s now clear he will totally fail.

As the OBR has said stagnant wages and too many low-paid jobs has led to shortfall in tax receipts and more borrowing.

And now figures from the House of Commons Library show the government has also spent £25 billion more than planned on social security. In other words, if we’d had a welfare cap in this Parliament the Tories would have breached it.

This isn’t because George Osborne and Iain Duncan-Smith haven’t cut vital support for families. They’ve certainly done that. Over the last few years we’ve seen the unfair and cruel bedroom tax, cuts to tax credits for working families and even cuts to maternity pay.

But savings from those decisions have been outweighed by their total failure to tackle the root causes of rising social security spending.

Because the £25 billion of overspending comes despite changes to benefits and taxes that have left families on average £974 a year worse off and despite recent falls in unemployment.

A key cause of the Tories’ overspending is their failure to make the economy work for working people, leaving thousands more reliant on housing benefit.

House of Commons Library analysis shows that the Tories have overspent by £1.4bn on housing benefit for people in work – an amount over four times the amount they have saved in housing benefit from people moving into work.

The number of people needing to claim housing benefit in work to make ends meet has increased by over fifty per cent since 2010, and is set to double by 2018/19.

And at the same time the Tories have created a culture of waste at the DWP, with key reforms mismanaged, and failing to deliver the savings they promised.

The government has spent over £8 billion more than they planned on incapacity benefits due to their chaotic delivery of reforms and failure to help disabled people into work.

Delays to the delivery of the Personal Independence Payment have meant not only uncertainty for thousands of disabled people, but a mounting cost to the public purse, with £1.7 billion more spent than planned over the parliament.

And £130 million has been wasted on failed IT for Universal Credit, which is still only reaching less than one per cent of its intended caseload.

Labour has been clear that we need to control social security spending, and have committed to an overall cap on social security spending.

But you can’t get the social security bill under control unless you’re tough on the causes of rising social security spending.

That’s why Labour’s economic plan will tackle low pay and earn our way to higher living standards for the many, not just a few.

Our approach is rooted in tackling the root causes of spending, boosting pay and tackling high housing costs.

So our plan will make work pay by increasing the minimum wage to £8 an hour, introducing tax incentives for firms that start paying the living wage and expanding free childcare for working parents to 25 hours a week

We’ll scrap the bedroom tax and shift funding from benefits to bricks by getting at least 200,000 new homes built each year and introducing stable rental contracts in the private rented sector.

We’ll back the next generation by boosting apprenticeships and ensuring there is a paid starter job for every young person out of work for over a year – which they’ll have to take or lose benefits, paid for by a tax on bank bonuses.

And we will get a grip on the shambolic management at the DWP, to ensure that we can deliver a fair safety net for all those who need it.

That includes calling in the National Audit Office to review universal credit to ensure it delivers value for money and a better system for claimants. And it means getting a grip on disability assessments with tougher penalties when contractors get decisions wrong, and clear oversight of the process by disabled people themselves.

This government has failed to deliver an economy that works for the many and not just a few. This failure isn’t just hurting millions of working people, it’s costing the exchequer too.

And having failed to balance the books in this Parliament, George Osborne is now talking about £12 billion more cuts to social security after the election. But he’s over-spent by more than twice this amount in this Parliament – casting real doubt on his ability to make those promised savings.

Only a Labour government will be tough on social security spending by being tough on the causes of rising social security spending. That’s the way to back working people and get the deficit down in a fairer way.

Ed Balls MP is the Shadow Chancellor and Rachel Reeves MP is the Shadow Work and Pensions Secretary.

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Posted November 17th, 2014 by Ed