A spokesman for Iain Duncan Smith has accused Sarah Teather, the LibDem MP for Brent Central, of being 'hugely misinformed' about the government's benefit cap policy, which she criticised in an interview in today's Observer http://www.guardian.co.uk/society/2012/nov/17/benefit-cap-immoral-sarah-... . The spokesman goes on to say: 'It's not fair or right that benefits claimants receive higher incomes than hard-working families who are striving to get on in life.'
I'm afraid it's the spokesman who is spreading misinformation here. Benefit claimants do not receive higher incomes than comparable working families. It is only by rigging the comparison that that claim can be made.
The chart shows the incomes of couple families of different sizes in and out of work. Consistently with the government's propaganda in favour of the cap, incomes are shown before housing costs. I've set in-work take home pay at £500 a week, as this is the basis for the benefit cap. The figures are from the DWP's tax and benefit model for 2010 http://statistics.dwp.gov.uk/asd/index.php?page=tbmt, so they show the situation when George Osborne announced the benefit cap policy that year. It's assumed that all the families are renting in the private sector. (The only change I've made to DWP's figures is to exclude the value of 'free school meals and welfare foods' from the incomes of the out of work families, for consistency with the figures they give for in-work families.)
What should be obvious is that each family is considerably better off in work than on benefits on this measure, so how can Mr Duncan Smith's spokesman claim that claimants are receiving more than working families? Easy: by making misleading comparisons. I've drawn arrows to show the sort of comparison the government has based its case for the cap on. Following the arrows directs you away from most of the relevant information, which I think is a fairly accurate representation of government's presentation of its rationale for the cap.
If you compare the take home pay of a childless couple without children with the benefit income of an out-of-work couple with three, four or five children, the latter is higher. But their income in work is higher again. This is because the benefit system redistributes income to working and out of work families with children through child benefit, child tax credit and extra allowances for housing costs. The way these benefits are structured means that families are better off in work, however many kids they have and however high their rents.
Families are not better off on benefits than in work: if this is the basis for the assertion that hard-working families are being treated unfairly, then that claim is simply disingenuous. Sarah Teather has stated that the aim of the benefit cap policy was to 'demonise the poor'. Whatever the intentions of ministers, that is certainly a more convincing explanation for the policy than anything the government has offered.