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Benefits haven’t kept up with inflation – good, excellent work

Summary:
Citizen’s Advice has a new report out claiming that those on benefits have been affected by the benefits freeze. This sounds logical enough to be honest, if benefits haven’t been upgraded for inflation then they will be worth less in real terms. The question is, well, should this be so? Benefits freeze leaves a third of claimants 'with £100 to live on a month'That’s not actually true, it’s not even close to being true.More than a third of people affected by the Conservative government’s freeze on benefits have less than £100 a month to live on after they have paid rent and bills for food, council tax and gas and electricity, according to the Citizens Advice service.That could well be, the interesting question being should it? The actual claim itself is weaker again:The charity is calling

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Citizen’s Advice has a new report out claiming that those on benefits have been affected by the benefits freeze. This sounds logical enough to be honest, if benefits haven’t been upgraded for inflation then they will be worth less in real terms. The question is, well, should this be so?

Benefits freeze leaves a third of claimants 'with £100 to live on a month'

That’s not actually true, it’s not even close to being true.

More than a third of people affected by the Conservative government’s freeze on benefits have less than £100 a month to live on after they have paid rent and bills for food, council tax and gas and electricity, according to the Citizens Advice service.

That could well be, the interesting question being should it? The actual claim itself is weaker again:

The charity is calling for increased financial support for people claiming benefits as it finds almost two in five (39%) people who claim have less than £100 at the end of each month, after paying for rent or their mortgage, food, council tax and household bills.

We can look at this in absolute terms. £100 a month is £1200 a year, which is in the top 50% -ish of all global incomes. How appalling is it that people get, after all the bills are paid, pocket money greater than the total incomes of half the planet?

We can also look at this in relative terms. As ONS tells us:

Earnings, excluding bonuses, are lower than before the 2008 to 2009 recession after adjusting for inflation

Sure, we can argue that if everything had been done differently then this wouldn’t be so. But if everyone’s incomes are lower in real terms then shouldn’t those on benefits also be? After all, the benefits do have to be paid out of the incomes of those not on benefits.

And then to the truly interesting question. What evidence do we have that the previous level of benefits, before they diminished in real terms, was the correct one that people should have been getting?

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Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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