Here are six good things about the Centre for Social Justice's report on reforming welfare benefits - and one worry. (This is based only, so far, on the summary):

1. The idea that no person on benefits should face a tax and benefit withdrawal rate of more than 55 per cent by working.

2. The idea of 'dynamic analysis' of welfare benefits. It is absurdly the case that people in government for decades have liked to think that benefit rates do not affect behaviour. (Thus it was that Edward Heath's government was the first to make invalidity benefit higher than unemployment benefit. It did not occur to them that the result would be hundreds of thousands more people claiming the benefit.)

3. The report aims to remove the existing discouragement that the benefits system gives to couples living together.

4. The report aims to remove the discouragement which the benefits system gives to poorer people to save.

5. It suggest simplification of benefits so there are two instead of over 50. This could be more important than it sounds. Imagine you are thinking of taking a job but it would be insecure. The idea of trying to make sure you get all your benefits back if you lose your job might be daunting. Or perhaps it is just too complicated to try to work out how much better off you would be working. I would suggest that every year ten or so employees at the ministry apply for benefits as if they were unemployed and experience all the hassle it involves.

6. The report also deserves praise for trying to make sense of housing benefit. This has been one of the most intractable problems in welfare reform. It is the elephant in the room that usually people don't want to talk about, it is so difficult to put right. I don't know how well the proposals manage the task, but the CSJ deserves marks for trying at least.

One worry: from the four page summary I have seen, there appears to be no mention of substantially raising the personal tax allowance. This seems to me to be a much simpler and less bureaucratic way of making work pay for the low paid than tax credits. People will object that the benefit of larger tax allowances would be enjoyed by the rich. It need not be if you re-jig tax bands and rates.

Posted by James Bartholomew • Indexed in Reform

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