I was very disappointed by an article by Michael White (of the Guardian) for the Health Service Journal which quoted our examination of the progressivity of taxes and transfers in the UK. Talking about the recent debates here and in Scotland on what proportion of people are net recipients or net contributors of the state, he said:
"The wider political context was provided by Mitt Romney, no less, when he argued that 47 per cent of Americans (Democrats) live off the state by taking more in benefits than they pay in taxes. The Thatcherite Centre for Policy Studies tried the same pitch here, claiming 53.4 per cent of Brits are net benefit recipients....Such claims are basically flawed, for example the beneficiaries include pensioners and the taxes exclude VAT."
This is just wrong.
It's true that Mitt Romney's quote was about the proportion of Americans who pay no federal income tax. But the work that both we, and then the Scottish Tories did, was examining the number of households who received more from the state in benefits and benefits in kind than they paid in taxes. As such, it did include all other taxes such as VAT, all household benefits, and the value of benefits in kind such as health and education services.
Whilst the 53.4 per cent figure presented does include retired households, this doesn't make the claims 'flawed', for several reasons:
a) because it still has value in showing the number of homes dependent on the state with an ageing population, which has implications for how we look at balancing our budget
b) because over time this has increased significantly, up from 43.8 per cent just ten years also
c) and related to b), because this is not just a demographic effect - even when our statistics merely look at non-retired households we see the proportion of net recipients has jumped from 29% to 39.6%
The huge increase is of course, in part, driven by the financial crisis and subsequent recession. But if you look carefully at the numbers in our report, you can see that over the past ten years the net contributions, particularly of the middle income quintile, had fallen even prior to the crisis - highlighting the deteriorating fiscal position which Gordon Brown's Chancellorship bequeathed us on the eve of the crash.
Now, we can debate how we deal with our deficits. But the aim of the Factsheet was to provide, you know, 'facts'. It's a shame that Michael White didn't read the full factsheet (it's only 13 pages!) before writing his article and misrepresenting the statistics in this way.