Economist Richard Murphy takes down Starmer’s DWP cuts with one insightful point

Political economist Richard Murphy has taken to social media to point out that the public spends as much on subsidising wealthy pensioners as it does on Department of Work and Pensions (DWP) disability benefits. This is another lense that exposes the reverse robin hood impact Keir Starmer’s cuts will have.

Sure, Starmer may have exempted people who currently claim personal independence payments (PIP) from the cuts. But the DWP’s own assessment has found the changes will still bring at least 150,000 people into poverty. And that’s only before 2029/30.

DWP cuts: going backwards

In a Twitter thread, Murphy notes that the total DWP expenditure on disabled people is around £70bn. That’s the same amount that the public spends on tax breaks for predominantly wealthy pensioners through income and corporation tax breaks as well as tax free growth within pension funds.

The key point here is who benefits. The wealthiest 20% of the country own 62% of pension wealth. Meanwhile, the least well off 50% own less than 10% of the total pension wealth.

It’s different to disabled people claiming what they need to support them where they can work and where they cannot.

So Labour could rebalance the economy to the tune of around the entire DWP disability spend through reforming pension tax breaks.

The real scroungers

That’s before you get to the people claiming way more without any disability: landlords.

Positive Money has calculated that between 1990 and 2022 landlords in England made £400bn because of real house price rises. And that doesn’t include the rent people have been paying them. The ‘value’ of homes in England sky rocketed by an average of 432% over this period. It means a landlord who bought a property in 1990 and sold it in 2022 would make an average of £240,634 per house.

That’s literally taking away the housing stock, calling it an asset and sitting on it while the bank balance increases. It’s the total opposite of Starmer’s mantra of ‘make work pay’.

On top of that, capital gains tax is less than income tax. So landlords are not only making an absolute fortune from doing precisely nothing, they are taxed less on it as well.

Indeed, despite housing being a common necessity to all that could be organised at cost price, Real Estate is the most profitable industry in the UK. Top companies average an astonishing £686,000 of profit per year per employee. That’s a private tax on homes at 23 times the UK average salary, per employee. No wonder housing is so expensive, the system is rigged.

There are multiple ways Starmer could rebalance the economy in a way that doesn’t foster such grotesque inequality. But he’s going in the opposite direction with his DWP cuts.

Featured image via the Canary