PMQs debating how benefits operate to ‘subsidise’ low-paying employers

In my report on the British Corporate Welfare State, I pointed out that tax credits and housing benefits subsidise employers. In the report, I estimate that tax credits and housing benefits make up almost half the incomes of the poorest employees. Tax credits were worth around £20bn in 2011 and housing benefits a further £4bn. That’s £24bn worth of help to the poor, or subsidies to employers. It seems that both Jeremy Corbyn and Theresa May both support the latter interpretation.

In PMQs on the 25th October 2017, Jeremy Corbyn stated:

“The welfare state wasn’t created to subsidise low paying employers and over-charging landlords.”

Theresa May retorted:

“That’s exactly what Labour’s tax credit system did.”

Of course, someone needs to point out to the Prime Minister that wage subsidies existed long before New Labour. And that the best way of reducing reliance on wage subsidies is by introducing a real living wage and using the tax system to lift wages of those facing higher risks (e.g. families).

This blog post was written by Kevin Farnsworth.