Thursday, May 27, 2010

Radical welfare reforms

Under the new government, the cost of the welfare state will increase, unemployment will go up, and so will the number of people living in poverty. It is worth bearing this in mind when reading the spin about Iain Duncan Smith's "radical welfare reforms". Here's three reflections on his speech today:

1. Duncan Smith's big idea for getting people into work is to pay them more benefits. Under his plans, everyone who is in low paid work will also get paid Jobseekers' Allowance, and possibly also Housing and Council Tax Benefit. He hasn't yet managed to persuade the Treasury of the advantages of this policy (surprise, surprise).

In some ways, this is a good idea. It is an extension of the principle of tax credits, and a recognition of the fact that for most people in low paid work, their wages are not enough to live on. It is also revealing that the outcome of years of research by right-wing think tanks about how to reduce poverty came up with the conclusion that we need to give more money to people in poverty (rather than, say, to cut benefits).

But the cost will be much more than £3 billion. This is an expensive way of trying to reduce in work poverty.

2. Duncan Smith's welfare policies involve Big Government forcing individuals to change their behaviour through a mix of sanctions, financial incentives, and payments to external contractors based on performance against closely defined outputs.

There is a pretty massive gap here. Reducing unemployment and poverty can't be achieved just by the state and individuals - the role of employers and of civil society is crucial. As someone once said, there is such a thing as society, it's just not the same as the state. And the spirit of "we're all in this together" means that employers need to recognise their responsibilities and do their bit, rather than just relying on government and unemployed people to behave differently.

Reducing in-work poverty requires action on issues such as employers hiring workers on zero hour contracts and requiring them to wait by the phone to see if they have any work for them; and action to prevent employers requiring workers to do a four week unpaid work trial before starting work. Big companies which make billions of pounds in profit and even some anti-poverty charities don't pay their staff enough to live on.

Whether it is replacing minimum wage jobs with apprenticeships, or requiring unemployed people to do community work, the Coalition is actually increasing the number of people who are working, but not earning enough to live on.

3. The rest of Duncan Smith's policies - whether it is Christian fundamentalist moralising by advisers who thinks prayer can cure gay people; or forcing sick people into looking for jobs which don't exist; or massive corporate welfare payments to companies to meet poorly designed targets, are as vicious as they are ineffective.

I know that the media and politicians have this view of Duncan Smith as a Noble Man who cares about the Poor, but I don't think that view will be shared by anyone on the receiving end of his policies. By all means, Labour and lefties should welcome his conversion to the cause of increasing the wages of low paid workers, and should support him against the Treasury when the rest of his party resists the cost of what he is proposing.

But Labour should also draw on the expertise of MPs like Andrew Smith and Alastair Darling - the last ministers who reduced poverty and increased employment - and Kate Green, the former head of Child Poverty Action Group, to craft a genuinely radical set of welfare reforms. Britain needs a modernised welfare state where everyone looking for work gets personalised support to help them get a job, with reforms to council tax and other taxes which hit the poor hardest, with quality services including free childcare, and where employers recognise their responsibilities and pay all their workers enough to live with dignity.


At 8:19 am , Anonymous Anonymous said...

The Tories have to do this since New labour under it's great leader Gordon lard ass Brown stopped income support the method used to increase wages.

Whether or not it works the simple fact if your earning 5.86 a hour you get the same money on benefits, so telling people it's better to work because it gives you dignity does not work well.


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