Welfare reform

Influencing policy is rarely straightforward. Sometimes it takes a while for it to sink in. This week James Purnell, the Work and Pensions Secretary, has decided it was time to cut incapacity benefit, making it a “temporary benefit, not a permanent snare” and introduce the private sector into back-to-work programmes. Policies we have been advocating for quite a while.

When the Adam Smith Institute released Why Unemployment and Why Not Work? A Radical Solution to Unemployment - published in 1985 and 1991 respectfully - welfare needed to be changed dramatically. Alas, despite tinkering with the system, the boat continued to head in the wrong direction, disincentivizing people to work. In 1979 there were 700,000 people on Incapacity Benefits, now the number is in excess of 2.5 million.

Last year we released a paper entitled Working Welfare. This called for all working age people not meeting national disability criteria to face immediate work requirements and the delivery of welfare to be devolved to local agencies, which would be paid according to results. Agencies would be rewarded for getting people into work for a set period of time, ensuring an ongoing and personalised service for jobseekers.

Decentralizing the system was essential to the policy proposals in Working Welfare and is key to its success. Yesterday, Frank Fields MP in The Times echoed this point. Let us hope that this government, or the next, heeds this message and that we don’t have to wait another twenty years this time.

Not adressing the root causes
written by Marksany, July 23, 2008

Two root causes need to be addressed:

1) lack of quality jobs in the economy- primary secondary manufacturing jobs have massively reduced in the last 30 years and these jobs paid more than average and provided training and advancement and a work that suited young men. New jobs in the economy are either menial with no possibility for training or advancement or are desk or shop based that do not suit young men.

2) The benefit system pays people to not work. Withdrawal rates of 85% reduce the minimum wage to 75p an hour - would you work for 75p/hour? Why expect the poor to do so.

If the withdrawal rates are reduced, it will be more worthwhile to work and job agencies will find they have customers who want to work instead of being part of a system of coercion that is doomed to fail, while wasting yet more taxpayers' money.

...
written by Mark Wadsworth, July 23, 2008

What Marksany says. MW's policies on 1) and 2) summarised here:

http://markwadsworth.blogspot.com/2008/07/end-for-sicknote-uk.html

Gilded Traps
written by Rory Meakin, July 24, 2008

Marksany raises interesting points, but:

1) With robots becoming ever more capable and advanced, the old skilled manufacturing jobs are unlikely ever to return, unless we stop caring about high quality and low price when people buy things. People should not be entitled to anything simply because similar people in the past were privileged. That goes for “quality jobs” which “paid more than average”, too. After all, one man’s “quality job” is another man’s unwelcome expense

2) It depends what the alternative was – if the alternative were to burden someone else, then perhaps I would. Or at least I like to think. Obviously, homo economicus certainly would not! The immediate solution is two-fold: first, raise personal allowance tax thresholds so that no one in ‘poverty’ would pay any tax. Second, reduce benefits to a minimum level so people would not want to stay on them and lower the withdrawal rate so marginal income is ‘taxed’ tolerably.

Written by Philip Salter
Wednesday, 23 July 2008
Influencing policy is rarely straightforward. Sometimes it takes a while for it to sink in. This week James Purnell, the Work and Pensions Secretary, has decided it was time to cut incapacity benefit, making it a “temporary benefit, not a permanent snare” and introduce the private sector into back-to-work programmes. Policies we have been advocating for quite a while. When the Adam Smith Institute released Why Unemployment and Why Not Work? A Radical Solution to Unemployment - published in 1985 and 1991 respectfully - welfare needed to be changed dramatically. Alas, despite tinkering with the system, the boat continued to head in the wrong direction, disincentivizing people to work. In 1979 there were 700,000 people on Incapacity Benefits, now the number is in excess of 2.5 million. Last year we released a paper entitled Working Welfare. This called for all working age people not meeting national disability criteria to face immediate work requirements and the delivery of welfare to be devolved to local agencies, which would be paid according to results. Agencies would be rewarded for getting people into work for a set period of time, ensuring an ongoing and personalised service for jobseekers. Decentralizing the system was essential to the policy proposals in Working Welfare and is key to its success. Yesterday, Frank Fields MP in The Times echoed this point. Let us hope that this government, or the next, heeds this message and that we don’t have to wait another twenty years this time. Bookmark Comments (3) Subscribe to this comment's feed Not adressing the root causes written by Marksany, July 23, 2008 Two root causes need to be addressed: 1) lack of quality jobs in the economy- primary secondary manufacturing jobs have massively reduced in the last 30 years and these jobs paid more than average and provided training and advancement and a work that suited young men. New jobs in the economy are either menial with no possibility for training or advancement or are desk or shop based that do not suit young men. 2) The benefit system pays people to not work. Withdrawal rates of 85% reduce the minimum wage to 75p an hour - would you work for 75p/hour? Why expect the poor to do so. If the withdrawal rates are reduced, it will be more worthwhile to work and job agencies will find they have customers who want to work instead of being part of a system of coercion that is doomed to fail, while wasting yet more taxpayers' money. ... written by Mark Wadsworth, July 23, 2008 What Marksany says. MW's policies on 1) and 2) summarised here: http://markwadsworth.blogspot.com/2008/07/end-for-sicknote-uk.html Gilded Traps written by Rory Meakin, July 24, 2008 Marksany raises interesting points, but: 1) With robots becoming ever more capable and advanced, the old skilled manufacturing jobs are unlikely ever to return, unless we stop caring about high quality and low price when people buy things. People should not be entitled to anything simply because similar people in the past were privileged. That goes for “quality jobs” which “paid more than average”, too. After all, one man’s “quality job” is another man’s unwelcome expense 2) It depends what the alternative was – if the alternative were to burden someone else, then perhaps I would. Or at least I like to think. Obviously, homo economicus certainly would not! The immediate solution is two-fold: first, raise personal allowance tax thresholds so that no one in ‘poverty’ would pay any tax. Second, reduce benefits to a minimum level so people would not want to stay on them and lower the withdrawal rate so marginal income is ‘taxed’ tolerably. Write comment This content has been locked. You can no longer post any comment. Powered by Azrul's Jom Comment for Joomla!