Wednesday, 18 August 2010

War on benefit cheats + Cameron's bare-faced lies.

It may have been around a week ago now, but I thought I'd get around to talking about David Cameron's tough stance on benefit cheats. It's not new, as the poster below shows, but it is interesting what he chose to include, and more interestingly what he left out.

Here's some of what he wrote:

“Simply shrugging our shoulders at benefit fraud is a luxury we can no longer afford – which is why Iain Duncan Smith is working on the radical steps we can take to deal with it.”

Powerful stuff as he declared a war on these frauds. I don't think anyone will argue that it isn't wrong for people to illegally claim benefits which they aren't entitled to, and we should do all we can to root them out. But what he seemed to happily skip over is that we have a much larger two problems which combined costs us the amount we lost to benefit fraud many times over.

Firstly, of the £3 billion pounds that wrongly goes out in benefits each year, only £1 billion is because of fraud. the rest is because of system failures. And of the £2.1 billion wrongly going out in tax credits, less than £500 million is because of fraud. The rest of the losses from both is due to system failures, nothing to do with individual fraud.

And then we have a bigger problem still. The problem of tax avoidance. In the UK, the difference between what we should make in taxes and what we actually receive, the tax gap, was £40 billion in 2007-2008. (The latest figures that are available) Of that, only £3 billion is down to system errors, with £5 billion from criminal attacks, £7 billion from tax avoidance and £7 billion from tax evasion. The gap includes a £9 billion gap from corporation tax and £3.1 billion through avoidance from 'very big business'. Indeed, these figures may be optimistic, some accountants have put the tax gap at closer to £120 billion.

Now there were a lot of numbers there, so I'll put it into context in a graph:

Just to point out, the bit David Cameron insists is so important is the red bit on the left hand bar. The whole of the right hand bar and the blue from the left was ignored when it came to talking about losses through tax and welfare.

Now it's right to tackle fraud, but let's have a sense of priority shall we? The Lib Dem's even included several billion pounds worth of anti-avoidance measures in their manifesto but have been pretty quiet ever since. It might appease the Daily Mail, but David Cameron's definitely going after the small fish in this case.

Edit: Whilst I'm at it talking about politics maybe now would be a good time to include this, David Cameron's latest 'promise' which has gone tits-up:

“And let me say very clearly to pensioners if you have a Conservative Government your Winter Fuel Allowance, your bus pass, your Pension Credit, your free TV licence all these things are safe. You can read my lips, that is a promise from my heart. Don’t believe the lies you’re being told by the Labour Party just because they’ve got nothing positive to say.”

Well, just over 100 days into government and it seems that a 'promise from David Cameron's heart' means absolutely f**k all. I was anxious at the time when Labour carried on talking about winter fuel payments despite Cameron being so clear on the matter, but it seems we were justified.

And to all those Tory's who will no doubt complain that 'we're in a financial mess and can't afford these benefits to be going out to the middle class', I say this. It is one thing to question whether you would make these benefits universal as Labour did, it is quite another to unequivocally promise that they are in no danger of being removed and then put them in a review! He will no doubt wriggle and squirm but the fact of the matter is that David Cameron is a bare-faced liar.

The bit at the end only makes it worse, he makes absolutely clear that not only will they be kept, but they won't be altered in any way, 'we will keep what we inherit'. Like I said, bare-faced lies.

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