Do these numbers actually work?

It is “not fair” that people who have contributed £100,000 in National Insurance over the course of 30 years receive the same state support as those who have been paying tax for just two years, according to Liam Byrne.

In an interview with The Sunday Telegraph, Mr Byrne says young people would be forced to wait and work for longer before becoming eligible for benefits if Labour wins the next election.

And when older workers lose their jobs, they will receive higher rates of unemployment benefit and a “premium service” to help them back into work, he says.

I thought that pretty much everyone (except for the very highly paid that is) got more out of the welfare state than they put in.

For example, that £100,000 figure. On current annuity rates that just about pays for the old age pension. So if that’s all you have paid in NI then you’ve also had the safety net of unemployment pay and the NHS for free. Even if you’ve not used either of those: you’ve still had the insurance of you perhaps needing either or both.

25 comments on “Do these numbers actually work?

  1. It’s one of those “clue’s in the name” issues. If everyone gets back what they put in, it’s not insurance.

    Next he’ll be saying annuities are unfair because some people die younger than others…

  2. Since when has social support been a savings plan? On it’s own terms I thought the welfare state was supposed to be based on needs, “cradle to grave”. So with youth unemployment being higher than the national average, with young people being disproportionately locked out of the housing market, Labour decides to offer freebies to…the group most likely to vote at the next election.

  3. It just shows how little understanding of basic economics is contained in the heads of ex treasury ministers.

  4. “In an interview with The Sunday Telegraph, Mr Byrne says young people would be forced to wait and work for longer before becoming eligible for benefits if Labour wins the next election.”

    Imagine home insurance where you had to wait and pay for longer before you’d become eligible for a pay-out if your house burns down. You’d rightly conclude it’s better not to bother with the ‘insurance’ and put aside what it would cost into a savings account instead.

    I wouldn’t have expected Labour to be undermining arguments in favour of the welfare state like this. But then again you don’t need arguments when it’s a self-evident truth in your world-view.

  5. Of course everyone gets more out than they put in, the Magic Money Pixie pays the rest… which is why every ‘civilised’ Country is trillions in debt.

  6. I thought that pretty much everyone (except for the very highly paid that is) got more out of the welfare state than they put in.

    I am not sure that is true. It is all so poorly administered, with the full range of lesbian bereavement officers, that I would think you would have to go a long way down the income ladder to find people who benefited. Although the wealth of middle class welfare makes that hard too. It may be that the upper middle benefits and the working poor do not.

    What matters is that people think they are net beneficiaries.

  7. Why on earth fuss about NI as distinct from Income Tax? Only if it qualifies you for something – of which an obvious example is Old Age Pension. I dare say there are others, but assuredly not the NHS. Christ, the NHS doesn’t care if you are a rich tourist: “free treatment for all the world” appears to be its motto.

  8. would be forced to wait and work for longer before becoming eligible for benefits if Labour wins the next election.

    Um, isn’t the point of a benefits system to provide a means of survival to those without an income? If so, how do you make people “wait” for it? If they can wait, why would they need it in the first place?

    How do you force somebody to “work for longer” if they haven’t got a job?

    I mean, either you have welfare or you don’t. If you don’t, some people are going to starve to death without an income. I’m too lazy to look up the current unemployment figure, but let’s say you’ve got a million unemployed. That means, there are a million too few jobs in the economy for the labour available, thinking in aggregates.

    No amount of shouting at people to get a job will actually change that figure. Being aggregate again, it basically means the economy has a million too few production slots in it. There are too few employers. A small number of unemployed people might leave the dole to start a business- thus adding some production slots- but most are not equipped- either with capital or ability- to create the means of production.

    So, it’s a general problem. A libertarian like me thinks that production is strangled by the State, but whatever the reason, the lack of the means of production is the problem. These bottom-end “talking tough” bollocks is the equivalent of shouting at the people on the station platforms because the trains are full. It’s the wrong end of the problem.

  9. It is called National *Insurance*
    So it starts when you pay your first premium (aka contribution). And all the contributions I paid covers many times over the JSA that my son drew in the weeks between leaving university and getting his first job.
    New Labour created the highest level of unemployment since the 1930s and now they want to strip youngsters of unemployment benefit?!?

  10. @john77,

    The bulk of the rise in inacapacity benefit etc dates back to late Mrs T and John Major. Throw in the unemployment rate and New Labour isnt technically responsible for the highest rate of u/e even under your definition (they get the blame for being idiots who didnt repair the roof when the sun was shining)

    http://www.parliament.uk/briefing-papers/SN01420

  11. @ ken
    New Labour had unemployment a million *higher* than Mrs Thatcher had in 1982. In 1982 IB was less than half current levels, JSA and equivalent less than half a million higher. 3+1=4 2.6+2.6 > 5
    A quote from *your* reference
    “The number of claimants in Great Britain rose sharply during the late 1980s and early 1990s, from under 1¼ million to around 2½ million (see chart 1)”
    So with all due respect you are *wrong* flat wrong.

  12. Technically the level is roughly similar in absolute numbers on your basis in 1994: u/e 2.9 + ib 2.3 > 5. So I’m not convinced the absolute number is higher(although its similar enough).

    in addition the total population of working age was around 34 million in 1985, 35 million in 1994 and is now around 38 million. So in percentage terms Major is definitely worse, Also, 1986 with 3.4 u/e +1.2 ib = 4.6 is pretty close in percentage terms.

    Since we cannot rationally be talking about absolute numbers (in which case we long ago surpassed 1930s u/e of 3 million), I’d suggest that the highest rate occurs under John Major.

    Also not everyone would treat all IB etc as hidden u/e – although there is an element of this.

  13. @ ken
    Mrs Thatcher left office *before* the 1992 election so figures from 1994 do not apply to Mrs Thatcher.
    I am well aware that it is traditional to blame Mrs Thatcher for everything that went wrong under Labour governments both before and after she took office.
    However on Tim’s blog people who care about the truth facts have the opportunity to point out real facts.
    I did not hunt out the peak unemployment rate under Brown – I just picked the easiest date to combine JSA and ESA etc for the same date (as distinct from your adding Major’s peak ESA to Mrs Thatcher’s peak JSA) which gave me a total over a million greater than the peak under Mrs Thatcher.
    You may be incapable of talking rationally about absolute numbers – I have no problems.
    I *excluded* the large number of hidden unemployed who were persuaded to stay on at school and even undertake useless degree courses because there were no jobs for young people under New Labour. Including those would have pushed the number past *six* million and far worse than either 1986 or 1992, whether in absolute or percentage terms.
    If you want to talk rationally about unemployment ratios rather than absolute numbers you need to take as a denominator take those available for and wishing to work, which excludes those who have retired on comfortable pensions and those in full-time education. The former is now 17% of the economically inactive population and is clearly far higher than in 1994 and the latter reached 2.5 million post-Lehman, so while you may “suggest that the highest rate occurs under John Major” and claim “in percentage terms Major is definitely worse,” that is simply by using invalid numbers.

  14. John77

    On the official u/e numbers, Mrs T has the highest rate of u/e. You were the one who then changed the basis to include IB etc. I then noted that the bulk of the rise occurred under Mrs T and John Major. You then made the claim that it was highest using (as it happens the peak of Brown’s JSA + IB is around 5.1ish – 2.5ue + 2.6IB in Feb 2010). I am taking the JSA + IB in 1993 for my calculation, I am not adding peak numbers from different years.

    The workforce numbers I took take into account all people of working age – so excluding pensioners. It seems logical to include all possible workers and use it to divide the JSA + IB numbers. Even taking into account your numbers, the denominator for 1993 is unlikely to be larger than the one for 2010 (the gap is 4 million (38-34) and the difference between those in full time education in 1994 and today (call it 2.5 million – 1.1 mn + 17% of economically inactive – (?) is not going to be greater than 4 million). (Economically inactive is 30%ish, call it 10ish mn).

    So I call it a total win for me.

  15. @ ken
    What the hell are you talking about?
    It is totally obvious to anyone who *chooses* to read that as I started the comment on unemployment on this thread, I chose the basis not changed it. If you want to talk about changing basis to include/exclude IB other than on this thread then you have to blame Wilson who chose to exclude IB to conceal the extent to which unemployment increased on his watch (60%ish first time, over 100% second time), not me.
    Secondly anyone who *chooses* to read will note that *I*, not you, pointed that IB rose after, well after, 1982 which you had inaccurately claimed to be the peak level of unemployment (it wasn’t even if you use the Labour’s formula). IB numbers rose *more* under Tony Blair than under Margaret Thatcher. Once again, an incompetent attempt to blame Mrs Thatcher for all the evils that happened in her absence!
    You did NOT take workforce numbers – you took “people of working age” which is *very* different. It did *not* exclude those retired on occupational pensions, so *does* include pensioners. Secondly it included 2.5 million of university students and a couple of million children at school. Your attempt to claim that workforce numbers rose by a lot (I did not deny that they rose a little) by excluding from the numbers in full-time education all the 16-18 year old children who stayed at school rather than go straight onto the dole is transparent trash.
    You quote as a “peak” figure for Brown something which is less than the first one I picked up from Google without searching for a peak. Perhaps you should buy a dictionary, or an adding machine, whichever you lack. If you have both, then can I introduce you to the inequality 5.2>5.1?
    *You* claimed that unemployment peaked under Mrs Thatcher in 1982. That wasn’t even her peak.
    The number of retired people in the 16-24 age group is 1.6 million. The increase in the number in full-timer education is 1.4 million. So, ignoring the increase in the number of mothers with babies, or who choose to be full-time mothers, the increase in potential workers is less than 3%. The increase in unemployment from 4.6m to 5.2m is more than 10%. So John Major is *not* worse than Brown on unemployment (nor anything else that I had noticed, but that is beside the point).
    The point is that Liam Byrne wants to blame school/university leavers for the lack of jobs which is a consequence of the monumental failure of the New Labour government to which he belonged.

  16. Hi John
    ” 1982 which you had inaccurately claimed to be the peak level of unemployment ”
    You are the one that used 1982 not me. I said unemployment peaked in the 1980s under Mrs T.

    Normal people mean unemployment = unemployment, not including IB, but you want to claim a different thing, that’s fine, we can use your odd definition.

    “IB numbers rose *more* under Tony Blair than under Margaret Thatcher”
    IB (+SDA) rises from 1.2 to 1.7 under Mrs T (approximately) and from 1.7 to 2.5ish under John Major. The total rise under Labour is 2.5 to 2.75ish. (see the link I gave above). I dont know where you got your it rises more under Blair than Mrs T from, but it is wrong.

    That’s two to me. (apologies for both will be accepted)

    “You quote as a “peak” figure for Brown something which is less than the first one I picked up from Google without searching for a peak. Perhaps you should buy a dictionary, or an adding machine, whichever you lack. If you have both, then can I introduce you to the inequality 5.2>5.1?”

    I actually bothered looking up the underlying figures rather than trusting a random number I took from the internet and believing – Brown’s peak is 5.1:

    UE + IC+SDA
    2009 NOV 5034
    2010 FEB 5102
    2010 MAY 5066
    2010 AUG 5030
    2010 NOV 5043
    2011 FEB 5022
    2011 MAY 5065
    2011 AUG 5180
    2011 NOV 5206

    Now you can claim that it was Brown’s policies that got us to 5.2 in Nov 2011, but it doesnt fall into his time in office. I wont insist on an apology for that, since you could have believed Brown was responsible for 5.2, but note I am right.

    I’m afraid I dont follow your bizarre stuff on how the denominator changes, but I think we can trust you are wrong. Alternatively can you actually provide some real comparable numbers? (your estimate of how large pop is in 1994 and how much in 2010 and how you got there).

  17. Sorry, about 1982 – I had picked that up from Grauniad not you and forgot.
    Anyone who knows what it means will include those on ESA as well as JSA when thinking about the number unemployed. You define as “normal” someone who thinks anyone who can’t get a job because he is ill or injured is employed. Come off it.
    The data shown by *your* reference gives IB at 1.4 to 1.5 in 1990, so a rise of 0.25-.3m under Mrs Thatcher, rising to 2.4m under Major and peaking at over under 2.8m Blair (page 4 says 2.82m in November 2003).
    If you mis-state start and end numbers you get the wrong number for increases.
    Bizarre? You said “the number of people of working age” went up from 34 to 38 million so Major must have been worse despite Brown having more unemployed. I made two corrections to your blatantly false argument.
    I didn’t believe that the number unemployed at a not-quite-randomly selected date within Brown’s term of office was the peak of unemployment – I merely believe that the peak cannot be less than that so your claim that it was higher under Mrs Thatcher was instantly shown to be blatant rubbish. There was no need to hunt down any more data.

  18. John77,

    Actually, the whole point is that if you take the numbers under Brown (the IB numbers are reported quarterly) and the u/e numbers monthly it is not possible to come up with a 5.2 during Brown. Go on just try. Alternatively you can admit that your stupid 5.2>5.1 is wrong. In which case, the 1993 John Major number of 5.2 is greater than the peak under Brown. So you are wrong even on the basic numbers. As for the pop numbers you just threw out 2.5 million students + 17% pensioners amongst working age non economically active. I pointed out that the increase in students + the total number of pensioners (1.3 + 1.7ish) is still less than the increase in working age population – and this assumes that the whole increase in pensioners should be included. You then burbled about mothers. The increase of 4 mn is bigger than the 3 mn from your two numbers even assuming that the pensioners are wholly a post 1994 growth.

    Anyone reading the numbers can see that Major had a smaller pop. You are wrong on all counts – if you want to refute this, I suggest finding some real data (not the I googled it and it was 5.2).

  19. It is awfully unfair of me to quote what you actually said “in addition the total population of working age was around 34 million in 1985, 35 million in 1994 and is now around 38 million. So in percentage terms Major is definitely worse, Also, 1986 with 3.4 u/e +1.2 ib = 4.6 is pretty close in percentage terms.”
    5.2 divided by 4.6 is 113%. You claimed that because 38/34 is nearly 112% that the result is virtually as bad but you were *not* taking population available for work – I named two factors that reduced the ratio to 34.5/34 =101% so it is *not* nearly as bad.

  20. @ ken
    Your weird graph is formed of non-comparable data. It excludes sickness benefit in 1979 but includes sickness benefit claimants recategorised as Invalidity Benefit in the 1980s.
    For an honest dataset try
    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/203316/2013-1604.pdf
    This shows a higher figure for the rise 1980-90 than I had previously estimated – either because the graph was badly drawn or because there was a fall between 1979 and 1980.

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