The Welfare State We're In, The website of the book by James Bartholomew
August 23, 2006
Wednesday
Why can't we do it here?

Ten years ago, President Bill Clinton was faced with a difficult decision. For the third time, Congress, dominated by the Republican Party, had sent him a welfare reform bill to approve. He had vetoed the previous two.

The Democrats - his own party - were overwhelmingly against this reform. Left-wing commentators warned that the poor would become destitute. But Clinton, for all his faults, knew a lot about the welfare system and the damage it was doing to America. After some indecision, he signed the bill. It was probably the best act of his presidency.

A decade later, the terrific success of America's welfare reform is there for all to see. The number of people receiving welfare benefits has fallen by 60 per cent. That is a staggering figure - a major change in the nature of the lives of millions of people. There has been a 70 per cent rise in the employment of single mothers. Welfare grants from the central government to the states have been cut by 30 per cent in real terms.

As for the poor, far from becoming penniless, as some said they would, their condition has considerably improved. The rate of officially-defined poverty among blacks has fallen from 31% to 24%. Among Hispanics, it has has fallen from 31% to 23%. The toughening up of welfare has made poor people better off. It is a paradox which many on the Left struggle to understand or accept. But it is not hard to explain: work is the best route out of poverty.

The benefits of the major changes have reverberated through the country. Since the amount of benefits paid by government have been reduced, taxes are lower than they would otherwise have been. As a result of lower taxes and more employment, economic growth has been faster.

Most Americans recognise the success of the reforms and are glad of them. Last week I was riding in America. A retired man who had administered food stamps - one of the major welfare benefits - remarked that the rules had been tightened up considerably and it was better. He used to do home visits to people on welfare and had seen how those who claimed they were not working often had a job on the side. Men who supposedly were not part of a single mother's household turned up when the welfare cheque arrived. There was a ripple of agreement.

Why can't we have the same sort of reform here? Why can't we have a similar transformation? The answer is that we could.

True, at present it seems impossible that a politician of any political party could manage it. Tony Blair talked a lot about welfare reform on coming to office, but funked it. Gordon Brown was effectively in charge of welfare but did not understand it. He bodged the entire thing, creating tax credits and numerous employment plans which have added greatly to the bureaucracy and left the underlying problems little changed. The discouragement to saving is actually worse. And we still have, by the government's own admission, over a million people on incapacity benefit who could be working.

Meanwhile the new Tory leadership, in awe of the way Tony Blair achieved power by being a centrist, has adopted a similar stance. It does not appear to have the guts to reform welfare.

Yet in the 1970s, it seemed equally impossible that overwheening trade union power would ever been contained. No one predicted the events which then took place. As with the trade unions, a powerful force is pushing for reform: the problem itself is causing major damage to our country. More than that, an increasing proportion of the population is aware of the fact.

We all know that there are millions of people 'working the system'. We know that single parenting is unpleasant for the mother, fails to socialise the father and often damages the children. It contributes, in the long term, to crime. We all know that incapacity benefit is often a cover for unemployment. We know, too, that lives spent in dependency are miserable. As Lord Beveridge, the man who wrote the report that led to the modern welfare state, said, "Complete idleness even on an income demoralises".

Eventually welfare reform will have to take place. The only question is when and how. The way things are going, welfare reform is happening so slowly that our society will continue to deteriorate. Crime will continue to rise. Our economy will lag further behind that of America and the rising countries of the Far East. More people will be so poor they are means-tested in their old age.

But if we took radical steps, like the Americans, we could change our nation's future. True, It would take political bravery and skill. Some of the measures would be angrily criticised as harsh. In America, for example, a single parent on benefits is required to seek work once her child is three months old. In Britain, she can continue on benefits until the child is 16.

In America, the bill that Clinton signed introduced a requirement that no one should live on welfare benefits for more than five years. That would be strong medicine by British standards.

But anyone who cares about this country must support radical reform such as America has had. Welfare is probably more influential on the nature of Britain than the church or the media. We must get our poor off benefits and into work. In doing so, we can make the poor richer. We could then reduce taxes. And in all this we would be doing major work to arrest the decline of civility and decency that has been the bane of our country in recent decades.

We need to fight for welfare reform not in order to be mean or hard but to give people back their dignity and to make Britain a better society.

(The above is the unedited draft for an article which appears in today's Daily Express.)

Posted by James Bartholomew • Indexed in Reform • Welfare benefits

Comments (6) TrackBack (7)


Comments

Even if Gordon Brown were intelligent enough, he could not replicate the US success by designing a similar system here. Why? Because in a high tax economy like ours, even low earners start paying income tax before they have enough to live on - which hugely reduces their ability to get out of poverty.

In a relatively low tax/high tax threshold economy like the US you can do this - here you can't unless you raise income tax thresholds hugely and reduce income tax levels. But given Brown's need for mor and more of our taxes he can't/won't do this.

Posted by: HJHJ at August 24, 2006 11:11 PM

This sounds to me like the stick-and-carrot approach: stick for the poor and carrot for the employer.

Isn't it about time we thought about chivvying employers by force of law to hire benefit claimants in the public interest?

Posted by: Michael Petek at August 25, 2006 06:34 PM

Michael,

I would agree with you this far only. There are 1m able bodied people claiming JSA. They can look for work on three days of the week and give the other two to their communities, doing the menial jobs we currently pay people to do through our taxes.

Sweep the streets, tend the parks, answer telephones, supervise children crossing the road. All that would be needed would be a co-ordinator/trainer/supervisor and the job still gets done, we just don't pay twice.

Lower taxes then can be used to lift tax thresholds.

HJHJ

It can be done here, but no politician has the courage to lift the thresholds and then apply a single tax rate above the new, higher threshold as this would have to be about 40%. However, the benefts of this could be enormous and the savings huge, so it ought to allow for the rate to fall pretty quickly.

Posted by: John Moss at August 26, 2006 01:22 PM

HJHJ - Couldn't have put it better myself. For a party that claims to care about the poor, Labour do like helping themselves to our money! Michael - Depends what you mean by chivvying. There are already a number of 'carrots' available to employers, eg. letting claiments work for a week while still claiming so an employer gets to see exactly who they're taking on without spending any money. The onus*, however, needs to be on the (potential)employee, it's no good forcing employers to take on people who just sit around or mess about, knowing they can't be fired.

*Sorry, did I spell that right?

Posted by: Darren at August 28, 2006 06:17 PM

According to Besharov, the impact of this is oversold and the reforms have lead to the stealthy development of Welfare Lite. A lot of these families are still on welfare, coming from different budgets, but still welfare.

"So, yes, welfare reform reduced welfare dependency, but not as much as suggested by the political rhetoric, and a great deal of dependency is now diffused and hidden within larger social welfare programs."

Some states are looking at 'hiding' their dependent families in state-financed programmes to avoid the federal rules.

Posted by: Happystance at September 12, 2006 12:05 PM

How can a quarter of people in povery as opposed to a third be considered a success in an affluent country like USA??? They can afford a war but not to lift ALL out of poverty.

Children(and adults), living in poverty, in Western countries in the 21stCentury is truly a sin.

Posted by: Laura McLaren at June 2, 2008 05:57 PM

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