George Osborne’s tax summary initiative falls under criticism

5 November 2014

The chancellor’s latest tax summary has fallen under scrutiny from public sector economists, trade unions and campaign groups, which call into question the government’s emphasis on the “welfare bill” as “the largest drain of taxpayers’ cash”, reports The Guardian.

HMRC’s visual breakdown of where tax payer’s money is going is an initiative championed by George Osborne to increase transparency over spending. A key criticism to emerge is the definition of “welfare” and “benefits” in which the latest government summary has included public sector and state pensions as well as a broad sweep of other benefits. James Ball writing for The Guardian argues that broadening the category of “welfare” for the purposes of this tax breakdown can be “misleading” and does not account for what is usually meant by the term i.e. jobseeker’s allowance, incapacity benefit or housing benefit. Ball states that JSA accounts for “less than 0.6% of tax revenues – and much less than goes to topping up people in low-paid jobs.”

Moussa Haddad, senior policy and research officer of The Child Poverty Action Groupstated that “selective transparency isn’t really transparency at all” accusing the government of “playing with” the public’s growing confusion about the welfare bill in his recent article forThe NewStatesman. The breakdown estimated that welfare accounts for a quarter of all spending which Ball notes is “hardly detrimental to the Conservative party, which is approaching the election pledging further crackdowns on benefits culture and payments.” This has lead to criticisms in a recent Guardian article that the tax summaries are “politically motivated”.

The same article reports that Declan Gaffney, a social security researcher, has calculated a “more conventional figure” for total welfare, not including state pension expenditure, and concluded that “the government’s choice of definition inflates the published welfare spending total by around 40%.”