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We’re all in this together (Part II)

August 11, 2010 Leave a comment

So this is what societal regression looks like.

Cost of benefit fraud to the UK economy (2008-09): £900m (all figures approximations per annum)

Cost of the tax gap to the UK economy: anything from £40bn to £120bn

Demonising the poor, encouraging widespread cronyism, pursuing a discredited, economically illiterate agenda and ruining any chance of recovery: erm…priceless?

The unequivocally appalling rhetoric emerging from Cameron himself over the weekend is that, rather than challenge the vast amount of potential tax revenue lost through tax avoidance (not a crime, albeit socially irresponsible) and tax evasion (accounting for the overwhelming majority of the tax gap and a criminal act), they would rather attack some of the poorest members of society. Benefit fraud is undoubtedly a (relatively minor) problem but accounts for a minimal amount of the total fraudulent activity in the UK each year. Of the £5bn figure quoted by Cameron, a significant majority is in the form of benefit error, rather than fraud.

This is all illustrated strikingly by the following rather interesting graph from Left Foot Forward, and reinforced by this damning indictment of the Tory’s misguided focus from Richard Murphy at Tax Research UK.

In addition to attempting to denigrate and stigmatise those on low incomes for pretty much their entire duration in office thus far, the Tories have made a further disgraceful decision over the monitoring of this alleged rampant benefit fraud. Through incentivising credit reference agencies to seek out cases of benefit fraud (surely a move that will only encourage individuals to use cash rather than credit), there is a serious risk of accusations been levied at perfectly innocent people. By all accounts, over 80% of current allegations of benefit fraud are found to be malicious – a figure that will only rise under the new system. There is an absolute necessity for regulation of the credit reference agencies within this context, although this will almost certainly not be forthcoming.

It’s also fairly unsurprising to discover that there are vested interests between certain credit reference agencies and the Tory party themselves. Experian, one of the UK’s leading credit reference agencies, already has a contract to inspect housing benefit claimants and, with Michael Spencer as its founder, has a major Tory party donor as one of its leading lights.

It’s ultimately a classic illustration of Tory politics. Attack the most vulnerable in society through protecting the interests of the wealthy, replacing state services with unregulated and incompetent private sector provision, a fair amount of cronyism if not corruption itself, and an outcome which only damages society and the economy further. It really has been remarkable to watch just how low the Tories will sink. New depths are reached with every passing week and the downward trajectory shows little sign of abating. Should they not successfully manage to achieve the most blatant and undemocratic piece of gerrymandering in recent decades, they will incur serious damage to their credibility during this first term of office.