Monday, 15 April 2013

This overdue benefits cap may just restore credibility and faith in our beloved welfare state

Today the cap on benefit payments kicks in across London. This marks the beginning of a serious approach in tackling the worst cases of welfare dependency in Britain. It is the government which is ensuring, despite a tough economic climate, that it always pays to work, whilst also fostering the conditions which promote work.

The Coalition arrived in 2010 needing serious policies to address serious problems and injustices which developed in our welfare system. Whilst Labour buried their heads in the sand during their 13 years of government and escalated the problem of growing dependency and worklessness, Cameron and Iain Duncan-Smith are paving the way for a culture shift which gets to the very root of the causes of benefits and unemployment culture. They are promoting sustainable employment and opportunity by cutting government dependency and supporting the private sector to provide jobs. Over a million jobs have been created, and numbers of people in employment are highest ever since records began.

The rewards from working diminished under Labour. Labour hiked welfare spending by a massive 60%, whilst at the same time neglecting to link the minimum wage with inflation. This meant that the benefits of being in work reduced throughout Labour's 13 years, and the gap between those working and those out of work eroded. It became increasingly the case that people out of work were better off than those in work, trapped by wage depression. This injustice was confounded by Labour’s increased taxes on working people. This essentially meant that those on more modest income in work were subsidising the benefit rises of those out of work. This is hardly the legacy of a self-titled ‘One-Nation’ Labour Party. They left a nation divided between those who work hard and pay their taxes and those trapped into costly welfare dependency, with little incentive to seek work.

What this government has done is cut taxes for the least well off in work. The threshold by the time of the next election for those exempt from income tax will be £10,000. No longer will those on the lowest income but doing the right thing, subsidise those out of work-40,000 of whom claim more than double in benefits than what those on the lowest income bracket earn.  This is an admirable way of reducing the burden on people doing the right thing whist also addressing this bitterly-felt injustice.

The cap is not going to save significant money in the wider scheme of things- One hundred million pounds out of a cut to the welfare budget of eighteen billion pounds, but it does send out a strong and necessary message that the government is serious about ensuring that it always pays to work, rather than to stay on benefits. This has been too major a disincentive for far too long for many to go out and find work when they know they will be worse off in work than being on benefits. It is this emphasis that will reconnect the working man with the Tory party.

The cap of £500 per week for single parents and of £350 for single people without dependents makes common sense. The government estimates that 40,000 households will be affected when it comes into nation-wide implementation in July. The average loss to these 40,000 is estimated to be £93 per week.  This will be a difficult loss for these households but the reality is they should never have been trapped in such costly dependency in the first place. It is this dependency which is more costly to such people, who are limited in their aspirations, dreams and social capital which welfare dependency consumes. A £93 loss per week can be offset by increased conditions conducive to promoting work. It already seems like this is working.

The government claim that 8,000 people in households who receive in benefits more than the average pay have been moved into work. This is quite an achievement during economic hardship and one which surely increases the life chances of children in such environment, where worklessness is too easily normalised.

The strategy of making work pay is given further credibility by the fact the benefits cap will not affect those who are in work most struggling to make ends meet, but determined to do the right thing, like single parents desperate to ensure they bring their children up in a working household. For all of Labour's talk of concern for children being brought up by long-term unemployed parents, almost 2 million children were living in workless households during Labour's 13 years. The Coalition are promoting the rewards of work, a necessary influence to ensure that less children grow up in workless households, which increases their chances of being similarly dependent in adulthood, trapping them in welfare and cultural poverty .

This shift into work can only increase the respectability and life chances of children in such households longer term, beyond the challenging but necessary short-term cost of benefits cuts. Clearly this government is reversing Labour's legacy, but what about measures to ensure future generations are not lost and wasted in welfare dependency and worklessness?

Youth unemployment is one of the biggest crises in social policy we face in Britain. The young people most vulnerable to this are people brought up in workless households. A big obstacle to finding employment is lack of work experience. Employers prefer older candidates who have a proven record in the work place. Young people need work experience to improve their employability. Iian Duncan-Smith has introduced the Work Experience Programme. The Work Experience Programme is a scheme which gives young people the opportunity to work under an employer for 2 months. Employers are incentivised to take part in this or provide apprenticeships in the form of a Youth Contract subsidy. As of last year, half of the young people who took part were off benefits within 5 months of starting the programme.  This has so far proven to be a massive success.

The Conservatives are quietly tackling dependency and the causes of dependency with a serious programme of welfare and employment reform. They are addressing the inherent unfairness of an excessive and counter-productive welfare state which causes working people so much resentment, whilst at the same time has damaged the lives and capital of those trapped on benefits. I do not wish to celebrate the benefits cap for the sake of punishing the most vulnerable, but I cannot help but feel a great sense of optimism that this government is finally addressing a problem that for so long has just been talked about yet never acted upon. This could just save the welfare state from itself.

No comments:

Post a Comment