Are you a contributor to or a burden on the nation’s finances? Ed Monk asked the question in The Daily Mail a few weeks ago when a new study came out from the Centre for Policy Studies (CPS) showing that some 53% of households took in more in benefits than they paid in tax in 2010/11. In 1979 that number was 43.1%.
The numbers in question are all averages of course, but using them, it seems that you have to get into the top two quintiles of income in order to be paying out more than you take in. If you are in the top 20-40%, you are paying in around £4,000 more than you get back. If you are in the top 20% you are paying in an extra £20,000. And if you are in the bottom 20%? You are getting out £10,000 more than you put in.
This was an argument picked up by Ruth Davidson, leader of the Scottish Tories last week. She told a fringe event at the party conference that only 12% of households in Scotland are net contributors in that “the taxes they pay outweigh the benefits they receive through public spending”. That didn’t go down particularly well.
The opposition – and some in her own party – jumped on her for having something of a ‘Romney moment’ (two weeks ago Mitt Romney claimed 47% of Americans were benefit junkies for whom he could do nothing). Her numbers were also put under some keen scrutiny. But while you carp here and there at her use of data (and many have) the basic point stands.
The UK – and Scotland – are fast becoming client states in which the majority of people receive services for which both they and someone else pays. People don’t necessarily want to take more than they contribute: they get services whether they (or the person making up the difference in tax) want them or not. And that matters.
As Gillian Bowditch points out in the Scottish edition of the Sunday Times, “ it is not free money which government largesse dispenses to tax payers in a series of treats, which is how the Scottish government somehow portrays it – it is hard-earned cash taken from people struggling to make ends meet to feed the growing demands of the state”. How big the state should be is a question that all governments will grapple with for ever more, but right now the answer seems pretty clear – not this big.
Whatever your ideology, it is hard to argue with the fact that a country in which more people (voluntarily or not) are financial takers than givers and in which the state accounts for more than 50% of GDP is just not sustainable. As Bowditch says, “we may not like the message, but shooting the messenger isn’t going to make it disappear”.