The Condem Demolition  Tory-Tory general wankers government’s spending cap apparently has widespread support amongst the population according to BBC sources today.  The figure of £26,000 effectively represents 2 adults working 40 hours a week at the minimum wage of £6.08 an hour.  Apparently there are many people surprised that we were not already capping payments at this level, as if surprised that the people on benefits should earn minimum wage at all. [This is already below the living wage campaign figure of £7.20 an hour outside London which would work out at £30,000 for 2 adults earning.  The Living Wage Campaign quotes David Cameron as having said “An idea whose time has come” in 2010, of course in 2010 David Cameron was looking for election so is likely to have said whatever it was he felt people wanted to hear.] According to the Office of National Statistics (a government department) the average weekly expenditure for a family is £552.30 in London, £387.20 in the North East and £467.50 as a national average.  Extrapolating the figures out for annual expenditure in London this makes £28,719.60 already above the government’s proposed cap of £26,000 unless they’re planning to have some London Weighting scheme.

Given that there are nearly 3 million unemployed in the UK, although the TUC estimates that the true figure is over 6 million taking into account those off the radar such as in short-term and part-time contracts.  The Office of National Statistics (We’ll call it ONS because we’re going to refer to it a fair bit!) estimates 8.4% of the population.  The population of Metropolitan London is 14 million, which taking the ONS figure of 8.4% makes 1,176,000 people unemployed.  Let us assume that there are a lower percentage of unemployed in London than some deprived areas of the North so we’ll lessen the figure to 1 million.  Taking the UK population as 60 million, which is the usually accepted estimate, this means that around 2% of the entire population will not have enough to live on in London alone and with the average income of the South East as a whole being over £27,000 annual expenditure the 2% is a conservative estimate.  According to the Joseph Rowntree Foundation with the recent years rises in utility bills, transport costs the average family actually needs an annual income of £29,000, their report says that official inflation over the last decade has amounted to 23% while food has gone up by 37%, bus fares by 59% and council tax by 67%.

I’ve tried to do some basic calculations which are in no way exhaustive but I wanted to get an idea as to how problematic the government’s plans would be rather than merely being annoyed that they should cap them at all.  I have looked on Right Move for the monthly cost of a 3 bedroom house or flat within 5 miles of Lewisham as many of the areas there are cheaper than more central parts of London or others that are not frequently on fire.  The cheapest I found was a flat for £895 a week in Lee SE12, this would be an annual expense of £10,740.  Let us assume that Housing Benefit pays all of this money.  Unemployment benefit currently pays £67.50 a week which makes £3510 x 2 for 2 adults in the average family – £7020.  A Guardian article in May 2011 used a Halifax report itself using ONS data on family spending which said that the cost of maintaining a home was a little over £9000 a year however this was including £3500 a year as mortgage payments (I envy those paying only £291 a month for their rent/mortgage!) so removing the mortgage expense that leaves £5500 cost of running a home leaving £1500 left over from the £7000 we calculated earlier.  Are you still with me?  £1500 /52 then divided by 5 for the working days in a week makes just over £5 a day which makes £2.50 per adult per day (nothing at weekends better stay at home).  Ah shit but the Guardian/Halifax/ONS statistics don’t include food, or transport, or clothing or anything at all to do with children, that’s a bit of a shitter isn’t it?  You’d better not work in Central London either because a weekly Travelcard for Zones 1-2 (assuming that if you live in our flat in Lee you walk to Lewisham to save that £5 a week extra you’d be paying for Zone 3.)  So £29.20 for the travelcard is unfortunately more than the £28 odd that you have for the week between you, so you need to work locally, and walk everywhere.

Now I know the whole country’s figures seem skewed towards London and the majority of the population do not live in London and besides we’ve already demonstrated that the total benefits don’t cover London expenditure so let’s look at somewhere else.  How about Burnley?  Leaving aside the fact that I wouldn’t live in Burnley if you paid me £6750 a week there are some who do so let’s examine their costs.  The council tax is much the same as it is in London with the cheapest in Burnley borough being £1225 annually.  Rent is a great deal cheaper with the lowest 3 bedroom place I could find at £365 a month but of course we’ve already sectioned off housing costs to housing benefit so that doesn’t really matter as a change in our calculations.  Assuming that the household bills for a 3 bedroom house anywhere are roughly the same we’re still left with the same sort of expenditure as we were in London.  Jobs might be easier to find within walking distance but food is unlikely to be cheaper nor clothing hence you’re still down to £2.50 a day for each adult without food, clothing, transport costs or something like a TV licence.

Let’s go a step further and say that the household does earn the maximum £26,000 and removing the £5500 for household maintenance, moneysupermarket estimates that a family of four would spend around £100 a week on an average shopping trolley.  This of course would mean £5200 a year, whilst you might be able to make some economies on that let’s take the figure for convenience and round down to £5000 a year if you’re being a little thriftier each week.  So with your £5500 household expenses and £5000 food costs we’ve spent £10,500 this sounds more like it, we’ve over £15000 left and paid the main stuff.  Of course we’ve not yet paid transport so let’s say we live in Burnley where the cost of living is cheaper than London.  A 1 day pass for the busses in Burnley is £4 a day, now obviously you need to travel a little to look for jobs, do the shopping and collect benefits and the like.  So that makes £1040 per person so we’re down to £13000.  The Joseph Rowntree Foundation estimates that the average amount of money spent on children is £57 a week, which may seem a lot for people who do not have children but factoring in uniforms, books, general clothing, school trips and other extra curricular activities the figure becomes fairly likely, unless of course we want ou children to suffer for the “sins” of their parents.  We’re going to presume that the children are not of nursery age or needing nappies or more than average childcare due to disability and special needs so let’s take this £3000 a year figure off our total and we’re down to £10000 a year which is just under £100 per adult per week.

Now before we go on we need to tackle the ‘But’, there always is one.  You have to bear in mind that the £26,000 figure is including ALL benefits available, many of which you would only receive if you meet all the criteria for them so let’s see what we can build to make up this figure.  If you take the Income Support/Job Seekers Allowance or whatever the feck it’s called now. £67.50 per week x 2 adults makes only £7,020 per year and we’ve already established that this alone would not be at all sufficient to survive anywhere in the country, even in Burnley!  The standard Child Benefit figure of £20.30 for the first child and £13.40 for any subsequent one would give you a total of £1752.40 a year [remember though the Joseph Rowntree figure of £57 a week – the same report states that Income Support allowances provide between 57 per cent (children under 11 years) and 82 per cent (children aged 16 years) of what is actually being spent on children in families who are on Income Support.]  To build our total benefits we also have to factor in Housing Benefit.  So it’s back to our terraced house in Burnley where this eats up another £4750 of our money, coupled with our Income Support and Child Benefit we’ve found £13,500 odd for both adults and their 2 children so far only half of the amount being capped.  Somehow we need to find some reason for the other £12,000+, knowing the benefits system in the past this will be no mean feat especially given the culling of benefits for the disabled.

If we go back to our calculations of the maximum £26,000 to start with which we’ve whittled down £5500 for household maintenance, £4750 for rent, £5000 food costs, £1000 transport,  £2600 conservative estimate for our children, we’re nearly at £19000 in total so far so already well above the £13,500 we’ve found on standard benefits.  We’ve not looked at clothing yet which obviously is difficult to get a real figure on but the ONS family spending study gives the figure of £23.40 making £1200 odd so we’re now over the £20,000 mark.  The same study includes £5 per week for health and £10 a week for education, we’ll consider this as £7.50 since we have already added money in for children, this makes just under £400.  What we’ve looked at so far I would certainly classify as the bear essentials and that makes a whisker under £20,500.  As it stands then with £5500 remaining this works out to £7.50 per adult per day with only the basic essentials paid in a home that has to be at the very bottom end of the rental market.  Taking into account the Halifax/ONS figures do not include replacement of any appliances or those unforeseen things that come with a big hit we’ve some elements of random expenditure that might occur but in my figures here I’ve tried to stick to thinks that would be unavoidable expenses at this point.  If you were to include other “normal” costs then the picture starts to become much more complex.

Were you to factor a car into the equation the AA estimate that the standing costs (Tax, MOT, Insurance, Breakdown cover) of a car worth under £12,000 when new to be around £2500 and 22p per mile for fuel, tyres, replacement parts etc.  If you were to live 10 miles from work this would mean £982 per year for the commute alone.  The ONS study seems to back this up with an estimate of £64.90 a week on transport (personal and public) which adds up to just over £3300 per year.  It would be as well if you didn’t smoke, were you to have 2 packs a week this would set you back £780 a year if a pack of 20 costs £7.50, if at that price you smoked 20 a day that would be £2737.50 so you’d probably have to cut out some food or sell a child since chimneys and mines are no longer an option.  Don’t forget these figures are effectively only for one person.  If these two things were brought in we’re over our threshold of £26,000 again so let’s leave them out for now.

We are yet to consider entertainment (let’s presume the amount we’ve calculated for children includes their entertainment) the ONS 2011 study on family spending gives weekly figures of recreation and culture at £58.10 and restaurants and hotels at £39 and alcohol, tobacco and narcotics at £11.80 per week.  This seems high on the restaurant side, as this would represent one trip to a restaurant a week and there are many of us not on the minimum wage who can’t afford that, it seems reasonably generous on the entertainment side too (by which I mean the way it will be viewed by those who think the £26000 figure is acceptable).   You can’t have your cake and eat it in this scenario though because that figure on entertainment comes out at over £3000 a year whilst the restaurants total is over £2000.  Drugs of any legality come to over £600 which bearing in mind some smoke and/or drink whilst others do not seems about right to take as a lowish estimate which I’m trying to do to avoid any accusation of artificial inflating of the numbers.  It doesn’t take a professor of Mathematics to work out we’re already over the threshold again if we factor in the non-essentials in combination with each other.  And this is using the example of the lowest costs of essentials such as rent.  Doubtless the supporters of the cap will claim the economic austerity means that entertainment is a luxury the tax payer can’t afford since benefit payments cost the country £150 billion a year, more than is made in total tax revenue.  Somehow the money has to be found and if it is at a deficit then savings must be made somewhere.

So how might we prevent this deficit?  How about the tax evasion for starters?  Figures range from £15 billion at the conservative end of total benefit expenditure (tax evasion being around 3% of total tax liabilities – while benefit fraud accounts for 0.8%) to nearly £70 billion at the top end according to the Tax Justice Network.  Even if you take a billion to be 1000 million (rather than 1 million million) the 15 billion divided by 3 million unemployed would enable a payment of £500 a year to each person.  However you’ll not be shocked I’m sure to know that the same columnists who call for capping benefits also make quotes like “Tax avoidance isn’t morally wrong. It’s perfectly sensible behaviour.” [Toby Young – The Telegraph February 2011].  Nice work if your accountant can get it.  On the same BBC program the 2011 figures for the Royal Bank of Scotland, one of the banks bailed out by the taxpayers which made pre-tax losses of £766 million and at the same time paid out £785 million in bonuses.  Again do we need the professor of Mathematics?  I suppose this is really chicken feed when you look at the total bailout of the banks which at it’s peak comes to £1.162 trillion, enough to pay for the benefits at their current level for a good many years without any tax revenue at all.

This would appear to suggest that whilst the current government is in charge simple arithmetic just isn’t going to cut it.

Song Of The Day ~ The Joy Formation – Whirring