Government Ministers are fond of saying that they want to repay those who made the biggest sacrifices; hence: tax cuts. They have also stated that they want to target the ‘squeezed middle’ which they define as the income group between €35,000 and €75,000. This is an interesting figure. A household with two people working at the upper end of this ‘middle’ could earn nearly €150,000. This government wants to reward them because it is obvious that their current income level is a terrible sacrifice.
For me, those who have fallen into deprivation – now that’s a sacrifice. And there are a lot of people who have been sacrificing.
In 2013, there were over 800,000 reliant on social protection payments in these three categories, both recipients and beneficiaries. Deprivation has increased from 45 percent to 76 percent.
However, in the Government’s discourse of sacrifice, these people never feature. They have been effectively air-brushed from the social debate. The standard response of Ministers is that they have ‘protected’ basic social protection payments but they have done nothing of the sort. They have frozen these payments, which means that the value of the payment has fallen due to inflation. Since the Government took office:
- A single person has suffered a real cut of 3 percent, or €5.69 per week
- For a couple, the real cut has been €9.45 per week
So how much have the unemployed, lone parents and the disabled and sick lost out on since the cuts commenced in 2010? Let’s look at the nominal (i.e. the actual amount in Euros and cents) and the real cuts (factoring in inflation. We will take this out to 2016, using the Government’s projected growth in inflation, to get a sense of what would have to be spent to compensate people’s sacrifice.
These are substantial sums. To return basic social protection payments prior to the cuts would require increases of €16 and €24 per week for single people and couples respectively. If inflation is taken into account, the increases necessary would be €27 and €40 per week. And it should be remembered: these increases would only return the status quo in 2009; it would not represent a real increase at all.
No wonder deprivation has increased so substantially. Of course, this is for categories of recipients. Actual people may not have actually experienced this. For example, someone unemployed in 2010 may have found a job, emigrated, or retired since. However, many would have suffered these cuts – especially long-term recipients such as the disabled or sick, along with many lone parents.
There is little appreciation of the scale of social repair that is necessary after years of recession, stagnation and austerity.
And the cost would be significant. Based on this Parliamentary Question – which doesn’t include lone parents but includes carers – I estimated the cost (in very approximate terms) to be:
- Restoring the nominal value of the cuts: €715 million
- Restoring the real value of the cuts: €1,045 million
And this doesn’t count the cost of restoring the cuts to young people’s Jobseekers’ Allowance which the Minister estimates to be €161 million – and that only brings the payment back to the current standard. Nor does it include the myriad of cuts to secondary benefits (earnings disregards, telephone allowance, etc.).
So we’re looking at a ballpark figure of around €1 billion and even this doesn’t include the cuts coming down the line to Lone Parents.
The problem, though, is that the disabled, the unemployed and lone parents don’t have a voice in the debate. They don’t feature in the opinion pages when commentators talk about ‘pay-back’. In the wider debate, increasing social protection is just money going down a black-hole – somehow making us ‘uncompetitive’ or recipients described as ‘interests groups’.
Campaigning for social equity can be a difficult endeavour in this climate and with this Government in charge. However, progressives – working to elect a Left-led government – can turn this discourse on its head by supplementing the argument for social equity with the argument that increasing social protection payments is a ‘job-creation’ and an ‘entrepreneur-promoting’ undertaking.
The Nevin Economic Research Institute estimates that increasing social protection payments by €1 billion could create over 8,000 jobs and increase consumer spending by over €1 billion (factoring in second round effects). The ESRI show slightly more modest but still positive numbers. Indeed, both institutes show that increasing social protection and cutting tax have similar economic results.
Social equity, job creation, and promotion of business fortune – that’s a strong platform. It certainly puts clear political water between progressives and the combined right-wing forces of the Government and Fianna Fail.
In short, fighting poverty is a fight that the economy and society can win.