The Welfare State We're In, The website of the book by James Bartholomew
December 09, 2010
Thursday
The welfare state versus happiness

What makes people happy more than any other phenomenon?

According to a poll commissioned by Radio 5 Live, the answer is 'family'.

What has happened to families in the past fifty years?

They are more dismembered than at any time in Britain's history. There is less marriage and more divorce. There are many more people living alone.

It follows that what appears to be the most profound source of happiness in people's lives has been seriously damaged.

I argue in The Welfare State We're In that the welfare state is a major cause of 'broken families'. And through this mechanism, the welfare state has indirectly undermined the greatest source of human happiness.

Posted by James Bartholomew • Indexed in General • Parenting • Welfare benefits

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November 12, 2010
Friday
Some bad news about the welfare reform and some good

As so often with government documents, some of the real meat is near the end.

The bad news:

The key bad news is that the much heralded 65% rate of benefit withdrawal is only benefit withdrawal. It does not included the impact of tax or national insurance. So people can still face a combined rate of benefit withdrawal with tax and national insurance of well over 65%.

Page 55. For low-earners but who nonetheless earn enough to pay tax, the incentive to increase their pay has been improved but still not to a really attractive level. Yes, there are 0.1million who will cease to face a tax/national-insurance/benefit-withdrawal rate (known as the Marginal Deduction Rate) on increased earnings of over 90%. Thank goodness for that. There will also be 0.4million people who won't face a rate of 80-90% which is also good. But the numbers facing a rate of 70-80% will increase from 1.7million to 2.0million. I think that rate is still much too high. I wonder if a big increase in personal allowance - with adjustment to the tax bands and perhaps a higher standard rate - would go some way towards fixing the problem?

The good news:

p54 For really low earners - those whose income is not taxable at all - the tax/national-insurance/benefit-withdrawal rate on increased earnings for 0.1million people has been over 90% and another 0.1million have been facing 80-90%. Now no one will face a rate above 60-70%. Excellent.

p56 Those who are currently unemployed will not longer anything like such penal rates of tax/national-insurance/benefit withdrawal rates (know as the Participation Tax Rate) on taking work for 10 hours a week. At present 0.6million are facing a rate of over 90%. That is a scandal - an appalling failure of past governments. Another 0.6 million face 80-90% which is also far too high. Under the new system, a modest 0.2million will face a rate of 70-80%. Some 1million will have a rate of less than 60-70% and an even bigger number, 3.0 million will face less than 60%. A big improvement.

p57 It will very clearly be worthwhile for a lone parent to work under the new system, partly because of the universal credit and partly because of a 'more generous earnings disregard'.


Measuring incentives to work is a complex business. On some measures things look as though they will improve a lot. On others, less so. In every case, though, I expect the attraction of working would be a lot greater if the government could put the money into improving the benefits withdrawal rate to 55%.

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Summing up the benefits reforms

Some of us – including myself, I must admit – thought that David Cameron was just a Tory version of Tony Blair. He could sweet-talk and put on a great look of concern but he was not going to do anything radical or worthwhile. He would just let this country continue to drift. But now, against these expectations, his government has announced something dramatic and important. The welfare benefits system really is going to be reformed.

Governments are always announcing ‘the most radical reform of the welfare state since Beveridge’. It came to seem like an annual event under Labour. But it really is happening this time.

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November 11, 2010
Thursday
The importance of Clegg and other notes on the welfare white paper

Notes on the press conference, the Commons debate and a few other things:

It was very noticeable that Iain Duncan Smith gave special thanks to Nick Clegg for his support. He said that it would have been more difficult to get to this point - bringing in this welfare reform bill - without Mr Clegg's support.

Also striking was the way that the Labour shadow secretary of state suggested that Iain Duncan Smith would have liked to have a tax and benefits withdrawal rate of 55% but had had to settle for 65% because of lack of support by George Osborne. Duncan Smith of course replied that it was Labour who left the cupboard bare. The implication, of course, was that yes, in an ideal world Duncan Smith would have liked the rate to be 55%.

The changes being announced really put an end to the Beveridge concept of a welfare system. His idea was an insurance system - rather like that of many Friendly Societies. He wanted a flat rate contribution for a flat rate benefit. Simples, as the advertisement says. He intended and expected that means-tested benefits not dependent on contributions would be a minor part of the system since everyone would be covered by their insurance contributions. Well, that idea has been gradually disassembled. Now it is even less important.

The 65% rate does not include certain passport benefits like free school meals. If you are unemployed your child gets them. If you are employed, he or she does not. No taper. So the incentives to work are not quite as good as they at first appear. I believe the passport benefits might have been kept because some others in government - perhaps No 10 - wanted 'no losers'.

On the same tack, in his commons speech (see previous posting) Duncan Smith refers to top rates of tax and benefit withdrawal rates that are much higher: over 95% before the reforms and over 76% after. It is not clear to me at the moment how these are calculated. Those figures certainly make the reforms appear desperately needed.

It was noticeable that three or more Labour MPs congratulated Duncan Smith on his Commons statement. It was as if much of the political elite knew in its heart that this sort of reform was needed. Twenty years ago, these reforms would have caused an uproar from Labour. Now the whole attitude to benefits has changed. There is much more awareness of how they have gone wrong. Duncan Smith said in his press conference: "as a political class we have got this wrong for too long".

I spoke to Polly Toynbee of the Guardian after the press conference. She commented that the reforms were 'incremental' and 'technical' and that the tax credits introduced by Gordon Brown had gone a long way to make work pay. She said the old taper was 70% and the new one was 65%. A good change but not a revolution. I think this is unfair. For a start, the new taper includes housing benefit - a major issue. I don't think the taper she is referring to did. Also there were different kinds of taper for different benefits. I doubt that the overall rate was 70%. There are also the host of other reforms being brought in at the same time, including the restrictions on housing benefit and the work placements. The hard truth is that Labour did some incremental changes but took 13 years doing them. Duncan Smith has not gone as far as I would like, but he has covered a huge area and made work pay more clearly than for a generation - all worked out in about six months. It is a vastly better performance.

I remember one Labour secretary of state for work and pensions saying on the radio that the big difficulty was getting money out of the Treasury to help make work pay. Duncan Smith appears to have had precisely that difficulty. But through his determination and his preparation before taking office, he has done better on this than anyone before. One can only hope that if or when money gets easier, the government will go further to make work pay.

In the house, Duncan Smith spoke approvingly of the drive to increase the personal allowance. This helps make work pay for the low paid in a very direct and easy way without any paperwork. It was what Labour ignored, preferring complicated tax credits. Incresing the personal allowance is very much a Liberal Democrate policy and it is interesing to hear Duncan Smith speak approvingly of it.

I spoke to David Freud, one of the DWP ministers, after the press conference. I used to work with him at the Financial Times many years ago. He said 'We've got your book. We're doing what you said aren't we?'. Well, as he well knows, that is an oversimplification, to put it mildly. The book was not prescriptive, for a start. But it is nice to think it might have had some influence.

Duncan Smith is the man of the moment. But as Tolstoy argued in War and Peace, even the Napoleonic wars were not really just the work of one man. Those wars depended on many others - perhaps a great mass of the population. Similarly, these welfare reforms derive from many people. The change in attitude on the Labour side is crucial. So too among the Lib Dems. Peter Lilley was at the beginning end of the change in attitudes. And the public, though such things as opinion polls and in phone-ins, have shown a changed attitude. The background was right.

Here is a link to the white paper: http://www.dwp.gov.uk/docs/universal-credit-full-document.pdf

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"Even as 4 million jobs were created over 63 quarters of consecutive growth, millions of people in Britain remained detached from the labour market"

Below is the speech given by Iain Duncan Smith to introduce his White Paper on reforming welfare benefits:

Introduction

Mr Speaker, with permission, I’d like to make a statement on welfare reform.

In this House in October I set out our resolve to secure a welfare system fit for the 21st Century where work always pays and is seen to pay.

Following consultation a broad positive consensus has emerged – from Citizens Advice to the Institute for Fiscal Studies and across the political divide.

The White Paper we are publishing sets out reforms to ensure people will be consistently and transparently better off for each hour they work and every pound they earn.

We will cut through complexity to make it easier for people to access benefits.

We will cut costs, reduce error and do better at tackling fraud.

The detail is published today and the White Paper is available in the Library – let me take this opportunity to thank all who have helped build and write these reforms.


Context for Reform

Let me remind the House what the problem is we are trying to solve:

• 5 million people of working age on out of work benefits
• 1.4 million people who have been on out-of-work benefits for 9 of the past 10 years
• 2.6 million working age people claiming incapacity benefits of which around 1 million have been claiming for a decade
• almost 2 million children growing up in workless households – one of the worst rates in Europe.


Some have said recently that it is jobs – not reform – which is important. But in doing so they miss the point.

This is a long-standing problem in Britain.

We have a group of people who have been left behind, even in periods of high growth.

Even as 4 million jobs were created over 63 quarters of consecutive growth, millions of people in Britain remained detached from the labour market.

4.5 million people were on out-of-work benefits before this recession even started.

These reforms are about bringing them back in – I want them to be supported and ready to take up the 450,000 vacancies which are currently available in our economy.

If we solve this problem, we begin to solve the wider social problems associated with worklessness.


Measures

The measures in the White Paper get this process underway – they are the first key strand of our welfare reform.

• By creating a simpler benefit system we will make sure work always pays more than benefits.
• By reducing complexity we will reduce the opportunities for fraud and error – which currently cost the taxpayer £5bn per year


Mr Speaker, work is the best route out of poverty.

At present, some of the poorest who take modestly-paid jobs can risk losing £9 or more out of every £10 extra they earn.

The Universal Credit puts an end to some of these perverse disincentives that make it so risky for the poorest to move into work.

The highest marginal deduction rates for in-work households will fall from 95.8% to 76.2%.

And there will be a single taper rate of around 65% before tax.

This means that around 1.3 million households facing the choice to move into work for 10 hours a week will see a virtual elimination of participation tax rates of over 70%.

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November 08, 2010
Monday
Did Channel 4 know what it was doing when it commissioned this film?

A TV programme is coming up on Thursday evening in which I expect I will appear. It is a 90 minute film by Martin Durkin about the huge national debt that has piled up and his solution. He will be arguing against Big Government and he interviewed me about the NHS and about welfare and social housing. Apparently the film also includes interviews with four former Chancellors. I believe he also filmed in Hong Kong.

I wonder if Channel 4 knew what they were in for when they commissioned this film since these kind of arguments - presented at length - are not usually seen on British TV. If the channel knew what it was doing, then all credit to it. Maybe something really is changing in Britain. There was a time when most of the media elite would not contemplate giving airtime to such ideas.

Here is a link to the programme details.

Posted by James Bartholomew • Indexed in Behaviour & Crime • Housing • Media, including BBC bias • NHS • Parenting • Reform • Tax and growth • Welfare benefits

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"Only 30% of young offenders grew up with both parents"

It is a pretty stunning statistic. It is only now, with a secretary of state willing to say these things - even to look at them - that the truth is being allowed out. For many years, ministers and some civil servants, too, perhaps, have been unwilling to look at or even measure the relationship between lone parenting and crime. Now at last some figures are being allowed to emerge.

The figure is from an Iain Duncan Smith speech last week. This is the key extract:


But when government abandons policies that support families, society can pay a heavy price.

Take poverty:

* lone parent families are more than twice as likely to live in poverty than two-parent families

Or Crime:

* children from broken homes are 9 times more likely to become young offenders
* and only 30% of young offenders grew up with both parents.

And overall wellbeing:

* Children in lone-parent and step-families are twice as likely to be in the bottom 20% of child outcomes as children in married families

So this is not some abstract debate.

The full speech is here.

Posted by James Bartholomew • Indexed in Behaviour & Crime • Parenting • Welfare benefits

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October 27, 2010
Wednesday
Three-quarters of claimants deemed to be capable of work

Frome the Daily Mail today:

"Three-quarters of people who applied for new benefits for the long-term sick failed tests to prove they were too ill to work.
Out of about 840,000 who tried to obtain the £95-a-week Employment and Support Allowance, 640,000 were told they were fit for work, or withdrew their applications before they took the tests – suggesting they were ‘trying it on’."


Full article: http://www.dailymail.co.uk/news/article-1324035/75-incapacity-claimants-fit-work-Benefits-test-weeds-workshy.html#ixzz13Y9m26kp

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Have the housing benefit changes been thought through?

Yesterday The Times had a useful commentary on problems that could be created by housing benefit. Unfortunately there is a charging barrier at Timesonline. But here are a few excerpts:

"...the Government’s proposals seem extraordinarily simplistic and hasty. From next April, there will be a national cap on housing benefit. Anyone living in a property that costs more than the upper limit (£250 for a one-bedroom flat rising to £400 a week for a four-bedroom home) will either have to pay the difference or move out. From next October, the rate at which housing benefit is set will be lowered so that it is based on the cheapest third of properties in an area rather than the average rent. Farther down the track, the coalition is also planning to cut 10 per cent from the housing benefit of anyone who has been unemployed for more than a year.

In London, where rents are higher than most other parts of the country, the changes will be devastating for many people. Last week, a group of councils warned that 82,000 families could be forced to move out of the city centre as a result of the reforms. They have already taken block bookings at bed and breakfasts in towns within striking distance of the capital. Like Paris, London could soon become a wealthy enclave, surrounded by impoverished banlieues."

"...The National Housing Federation, which represents housing associations, estimates that 1.3 million households will be affected across the country and that many of these families will be at risk of losing their homes. Paul Rees, the assistant director, says: “We fear an explosion of homelessness with more people sleeping on the streets than at any time in the past 30 years.”

"Boris Johnson has condemned the “draconian” housing benefit reforms. In evidence submitted to a committee of MPs, the Citizens Advice Bureau says it is “highly regrettable that the housing implications of these cuts do not appear to have been given any consideration in advance of decisions being made”.

"...The Government accuses critics of the policy of “scare-mongering”. It puts the figure for the number of families who will be affected by the changes closer to 17,000. But officials admit that there is no accurate figure. Nobody knows whether landlords will lower their rents to keep the reliable housing-benefit tenants or keep rents the same and fill their properties with young professionals who cannot afford to buy a home.

There are other unanswered questions. If a family cannot pay the difference between the housing benefit cap and their rent, and get thrown out by their landlord, what happens? Does the local authority have a duty to rehouse them in the area? Or, having defaulted on their rent, will they be seen as responsible for their own homelessness and so beyond the protection of the State?"

The full article for those willing/able to pay the charge is at: http://www.thetimes.co.uk/tto/opinion/columnists/rachelsylvester/article2781534.ece

Posted by James Bartholomew • Indexed in Housing • Welfare benefits

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October 22, 2010
Friday
The shameful distorting of what Duncan Smith said

Here is a link to the interview on Newsnight last night in which Iain Duncan Smith referred to a recent programme in which it appeared that some jobless people in Methyr Tydfil were not aware that there were jobs available in Cardiff which was an hour's bus ride away.

He was asked whether this was an 'on yer bus' moment similar to Norman Tebbit's 'on yer bike' moment in the earily 1980s. In fact, of course, Norman Tebbit never used those words (see box in this link) but was asked whether rioting was a natural response to unemployment. He said no. His father had been jobless in the depression. He did not riot. He got on his bike.

Iain Duncan Smith answered the question by saying 'no'. He explained that what he was saying was the there were relatively poor people who were taxed to support other people who were out of work. He thought it was right, in that situation, that if there were jobs available (an important 'if') that those who were out of work should make a 'reasonable' effort to take them.

These comments have been distorted to a shameful degree by some union leaders who have made him out to be a brutal person.

It is remarkable that these leaders take such an aggressive approach to such reasonable comments. They did not do so when Labour ministers such as David Blunkett made similar comments. They do not seem to care for those poor people who are taxed to pay for a jobless person who will not make a reasonable effort to get work.

Here are some quotes by Duncan Smith from the interview:

Referring to a recent programme, "...there were jobs in Cardiff but many of them [meaning jobseekers in Methyr Tydfil] had become static and did not know that if they got on a bus - an hour's journey - they would be in Cardiff and they could look for the job there....Sometimes you need to go to the job"

"...Right now, people who in work on low marginal incomes are paying quite significant sums in tax to help people who are in really difficult circumstances through the benefit system....We need to see some fairness for them, too...This is all we are asking... when work is available you make a reasonable effort to take that work."

Incidentally, Esler was a good interviewer - much better than Paxman.

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October 21, 2010
Thursday
Where the money is being saved in welfare benefits and pensions

Which are the welfare measures that save the most money?

I have taken a look at the table of savings from welfare changes. The most striking thing is how slowly they kick in. The saving in the next financial year is a mere £320m. The next year it rises to £2.6bn, then comes another big jump to £6bn and the final year of the review brings a saving of £7bn.

The biggest items in the final year saving of £7bn are

1. £2.5bn through not paying child benefit to families where there is a higher rate taxpayer.

2. £2.0bn Contributory Employment and Support Allowance: time limit for those in the Work Related Activity Group to one year.

3. £1.8bn increase of contributions to their pensions by public sector workers.

Source: Table 3 on Page 12 of the Comprehensive Spending Review

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The section on welfare benefits and pensions in Osborne's Comprehensive Spending Review
So in this Spending Review, while the HM Revenue and Customs budget will be expected to find resource savings of 15% through the better use of new technology, greater efficiency and better IT contracts – we will be spending £900 million more on targeting tax evasion and fraud.

This additional £900 million is expected to help us collect a missing £7 billion in tax revenues.

Nor will fraud in the welfare system be tolerated anymore.

We estimate that £5 billion is being lost this way each year.

£5 billion that others have to work long hours to pay in their taxes.

This week we published our plans to step up the fight to catch benefit cheats, and to deploy uncompromising penalties when they are.

That brings me to the wider welfare budget.

A civilised country provides for families, protects the most vulnerable, helps those who look for work, and supports those in retirement.

That is why one of the first acts of this coalition government was to re-link the basic state pension to earnings, and guarantee a rise each year by earnings, inflation or 2.5% – whichever was higher.

Never again will those who worked hard all their lives be insulted with a state pension increase of just 75 pence.

But this guarantee of a decent income in retirement has to be paid for at a time when people are living much longer than anyone predicted.

We should celebrate that fact, but also confront it.

Lord Turner’s Report on pensions, commissioned by the last government, acknowledged that a more generous state pension had to be funded by an increase in the pension age.

Even since its publication, life expectancy has risen further than it predicted.

Before the summer we launched a review on increasing the state pension age, and that has now concluded.

As a result, I can today announce that the state pension age for men and women will reach 66 by the year 2020.

This will involve a gradual increase in the State Pension Age from 65 to 66, starting in 2018.

And it will mean an acceleration of the increase in the female pension age already underway since this April.

From 2016 the rate of increase will be three months in every four rather than the current plan of one month in every two.

Raising the State Pension Age is what many countries are now doing, and will by the end of the next Parliament save over £5 billion a year – money which will be used to provide a more generous basic state pension as we manage demographic pressures.

Earlier this month, we also received the interim report from John Hutton’s Public Service Pension Commission.

I am sure the whole House will want to thank John for this excellent and independent piece of work.

I welcome his findings – and I hope it will form the basis of a new deal, that balances the legitimate expectations of hard working public servants for a decent income in retirement with the equally legitimate demands of hard-working taxpayers that they do not pay unfairly for it.

The elements of this new pension deal are clear.

We should accept that public service pensions continue to provide a form of defined benefit, and that there is no race to bottom of pension provision.

We want public service pensions to be a gold standard.

At the same time, we should accept that they must be affordable.

When these public service pension schemes were established in the 1950s, taxpayers made half the contributions.

Today they make up two-thirds of contributions, and the unfunded bill is set to rise to £33 billion by 2015-16.

So I think we should accept, as John Hutton does, that there has to be an increase in employee contributions, although I also agree with John that this should be staggered and progressive.

That means the lower paid – and those in the armed forces – are protected and the highest paid public servants, who get the largest benefits, pay the highest contributions.

The full speech is here.

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October 18, 2010
Monday
Cutting housing allowances

From an article in the Guardian:

Almost 300,000 people are at risk of being squeezed out of their properties in London because of the government's plan to reduce housing benefits paid to some of the most vulnerable people in the country, campaigners warn today.

The exodus, says the National Housing Federation, the main voice for the country's housing associations, would follow George Osborne's plan to peg housing allowances next year to the bottom third of private sector rents. At present claimants get allowances calculated on the bottom half of private rents.

The federation calculates that, if enacted, the changes would see the rent charged on 114,000 homes occupied by benefit claimants in London become unaffordable – leaving more than 250,000 people "at risk of losing their residences". Osborne's move would not just affect wealthy areas such as Westminster but also poorer parts of the capital such as Lambeth and Southwark.

The research, which is based on official government figures, backs the claim that poor and vulnerable people will no longer be able to live in the capital – forced instead to go to London's fringes or pushed into "overcrowded conditions".

The Federation suggests more than 250,000 would be 'at risk'. So by implication, fewer which actually change their housing arrangements.
But even if far fewer moved out of London or lived in more crowded conditions, it could be a pretty traumatic time in the lives of many people. I wonder exactly how this will be enacted and how people and rent levels will respond? I would be interested to hear of any individual cases - good and bad.

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Trying to end subsidized council rents

From article in Telegraph:

In what is being described as the biggest shake-up in housing policy since the Second World War, a host of other policies designed to ensure more people receive housing on the basis of need will be unveiled.

But the most controversial is the plan to end the current situation that means tenants effectively have a “council house for life” if they reach the top of the waiting list, even if their personal situation changes and they can afford to buy privately.

In an attempt to end the era of heavily subsidised rents, the Coalition’s new system will lead to tenants paying as much as 80 or 90 per cent of the market rate.

“This is still about there being affordable rent, but it needs to be more realistic. At the moment, if you get a council house you are really winning the jackpot,” said a source.

“In terms of the rent you pay it is very, very heavily subsidised. You may pay only a third or a half of the market rate.”

Lower down the article it is indicated that some of this will apply only to new council tenants. It would indeed be a massive upheaval - a political dynamite - to raised rents at all existing properties to a market rent and, at the same time, to limit housing benefit to £500 a week. That would mean evicting thousands of tenants who could not pay. So I assume it will all be for new tenants. The detail on this will be very important.

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Children of lone parents are disadvantaged - further evidence

This appears to be a major, long-term study which is already providing powerful evidence.

It is important, however, to try to distinguish between the effect of lone parenting and the effect of being poor. The section below does not make that distinction. I would expect that the original research does. Why is it important? Because some people will say, "No, it is not the lone parenting that harms. It is being poor."

Previous studies provide plenty of evidence that this is not the case (see The Welfare State We're In) but it is an issue that must always be looked out for. Actually I see the disproportionate level of lone parenting among the poor as a direct result of the welfare and housing benefits system. Richer women still - on average - gain financially from getting married. Poorer women, at least initially, do not gain from getting married. They might even lose. Financial considerations are not everything, of course, but they do influence behaviour to some extent. If this is right, then the welfare benefits system has encouraged more poor women to become lone parents. This has ultimately led to them being poorer than they otherwise would have been. The result is that their children have been both poor and in a lone parent family. The children have thus been less advantaged twice over. So in this way, the 'lone parenting' versus 'being poor' argument over how children are damaged does not matter since the welfare and housing benefits system causes both.

The finding - according to this news report - that really stands out is the one about stepchildren. They have a tendency to have even more troubles that children of lone parents. How to interpret this?

I think it possible that in a household with a lone parent, usually a mother, the child has a reasonable chance of feeling secure and settled. But if the woman remarries, the child has a new parent imposed on him or her. This new stepfather inevitably will not care so much about the children since they are not his (see The Welfare State We're In in the parenting chapter). The children will know this instinctively. The child will also have a rival for the love of the mother. Often the interests of the stepfather and the child will conflict. Yes, of course there are stepfathers who do everything they can to give love and be the best possible stepfather and such people are to be applauded. But on average it will be a difficult situation for the child with results that are shown by the study.

However there is a good thing about stepfathers: they have married the lone mother. That provides some stability. What I suspect is far worse for the child is when the lone parent has a boyfriend who lives in or, worse still, a succession of boyfriends. They have made much less commitment to the child (as well as the mother).


Researchers are tracking children’s behaviour, school choice and cognitive development as part of the on-going Millennium Cohort Study, which is funded by the Economic and Social Research Council.

Two major analyses of the data – published today – chart the impact of parenting on children born at the turn of the millennium.

In one study, researchers surveyed 13,500 mothers to gage children’s behaviour. They were asked to rate their hyperactivity, conduct, emotional problems and relationships with peers. Researchers then grouped children into three categories ranging from “normal” to “serious behavioural problems”.

It found that stepchildren and children with lone parents were most likely to be badly behaved. Fifteen per cent of stepchildren and 12 per cent of children with lone parents fell into this category, compared with six per cent living with both natural parents.

Behavioural problems were less likely among children living in families with higher levels of parental qualifications, it was disclosed.

Academics insisted further research was needed into the link between single parents and children’s behaviour.

But previous studies have found children raised by lone mothers are likely to have less economic security, less attention and guidance and more likely to live in deprived areas.

A separate analysis of the Millennium Cohort Study – based at the Institute of Education – tracked the effect of mothers’ age on children’s early development.

It found those with mothers aged under 30 had to cope with “far more upheaval than other children during their first seven years”.

Four in 10 children with younger mothers experienced a significant family change, such as the arrival of a stepfather, compared with only 13 per cent of youngsters with mothers aged 40 and over.

The full story is here.

Posted by James Bartholomew • Indexed in Parenting • Welfare benefits

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October 09, 2010
Saturday
'800,000 more working age adults in poverty than in 1998/99'
there are actually 800,000 more working age adults in poverty than in 1998/99. 1.4 million people have been on out-of-work benefits for nearly all of the years Tony Blair and Gordon Brown were in office.

Extract from speech of Iain Duncan Smith at the Conservative Party conference.

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October 07, 2010
Thursday
The UK has one of the highest ratios of workless households (ie those in which no adult member is working) in the EU.

New publication by the Centre for Policy Studies.

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October 04, 2010
Monday
Chris Grayling on getting people into work

This sounds rather similar to what Labour said it intended to do, several times. It is hard to tell from the outside whether this will be significantly different:

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Some changes to welfare benefits - ones in the news and out of it

Most of the publicity this morning was given to the decision of George Osborne to stop paying Child Benefit to higher rate taxpayers. Indeed I am due to be interviewed just after 8pm tonight on this subjct on the BBC News channel.

But another significant reform announced in George Osborne's speech was this:

So I can announce today that for the first time we will introduce a limit on the total amount of benefits any one family can receive.

And the limit will be set according to this very simple principle: Unless they have disabilities to cope with, no family should get more from living on benefits than the average family gets from going out to work.

No more open ended chequebook.

A maximum limit on benefits for those out of work.

Set at the level that the average working family earns.

Money to families who need it – but not more money than families who go out to work.

That is what the British people mean by fair – and we will be the first Government in history to bring it about.

I am not sure how many people this could potentially affect. It could also be difficult to administer. However it does send out a signal. It is reminiscent of the Clinton reform package which included a limit on the number of years during which people could live on welfare benefits.

Another change that has been announced but not discussed a great deal is the change in the requirement on lone parents to seek work when their youngest child reaches a given age. It is to be reduced this month from 10 to 7. The Labour government made a first reduction (from 16?) and now there has been a further reduction. These reductions are of great importance because they assert to lone parents that having a child is not a ticket to living at the expense of others for 16 years.

I think that in the USA a lone parent is obliged to seek work when his or her child is aged three months.

This sort of measure does not attract huge attention, perhaps because most reporters do not really follow welfare and do not see its significance. They can grasp Child Benefit but actually that is probably a reform that will have very little effect on the shape of British society. Reducing the vast numbers on welfare benefits could have a far more profound effect.

Postscript. The following is from the Spectator blog:

...this benefit cap is probably more about politics than public finances. It will be set around £500 a week and, according to the numbers being put around by his team, will affect only 50,000 families, if not fewer. For some, apparently, that could mean losses of £300 a week – but I imagine the majority of savings will be far more modest than that.

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September 24, 2010
Friday
Duncan-Smith versus the Treasury

I cannot be sure whether or not this is true but it sounds credible and I wonder if anyone can confirm it? I was told recently that Iain Duncan Smith wanted those on benefits to keep 50% of anything they earn despite withdrawal of benefits and taxation.

The Treasury, apparently, said it would cost too much and wanted a much lower figure. In the end, they compromised on 35%.

Supposedly the Treasury wanted to know what evidence there was that people who kept more money from working would be significantly more likely to work.

I guess the question is not wholly unreasonable. And yet their own studies have shown that increasing income tax for high earners significantly reduces the amount of money declared to be taxable at that level. They know very well that tax changes the behaviour of the rich. Why should they think that it would not also change the behaviour of the poor?

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July 20, 2010
Tuesday
Workhouses - the untold upside

I visited the Workhouse, Southwell near Nottingham last week. It is a historical relic now looked after by the National Trust.

It is, unsurprisingly, a grim place that you really would not want to be in. That, as the audio information guide and the introductory film repeatedly said, was part of the point. This workhouse - and perhaps this was not emphasised enough - was distinctive among workhouses in adopting with great enthusiasm the idea that being a 'burden on the rates' should be something that no one would do unless it really was a last resort. An aspect of it that seems particularly hard is the breaking up of families into separate accomodation for women, men and children.

I certainly do not endorse that part of the deal. I also do not suggest we should go back to them.

But there seems to me no doubt that the Poor House or Workhouse system had major advantages which, in our horror at the tough conditions, are easy to ignore and generally are ignored:

- It did not create a vast class of people living on benefits.

- It did not encourage the creation of children outside marriage.

- It did not cause the many adverse consequences of these things which I won't describe in detail here (having done so at length in The Welfare State We're In) but which include misery on a massive scale, deep psychological scars, crime, child abuse and suffering and debasing of culture and civilised behaviour. There is misery here, but usually behind private doors, not on view in an institution.

- It did not encourage fraud and dishonesty.

- It did encourage saving.

- It did encourage mutual support within families and the creation of Friendly Societies which, in turn, strengthened mutually helpful and civilised behaviour.

What struck me most was the tiny proportion of the population in the workhouse. It was built for a maximum capacity of 158 people as at 1881. We were told that the majority of these were the old and infirm who were treated 'tenderly. Workhouses were at the origin of many local authority hospitals. In fact this one had an extra wing created for the old and infirm in 1871.

With a capacity of 158, the maximum number at the workhouse that were unemployed was 78. More probably the number was nearer 50 or 60. Meanwhile the population of the 49 parishes it served in 1871 was 20,352 according to a table in the entry hall (the number of parishes served increased after this date eventually to 60). So that suggest that the number who were on state benefits for unemployment amounted to 0.3% of the total population. The total number in the workhouse when full - including the old and infirm - was less than 0.8% of the population.

I guess that most people at the time were considered to be of working age given that children were expected to work from 11 and life expectancy was much lower than today. But even after adjustment for that, the unemployed on state benefits would seem to have amounted to less than 0.5% and the unemployed plus those of working age considered infirm would surely not have been less than 1%.

Compare this with the numbers who are claiming benefits as being incapable of work or unable to get work today. In many 'advanced' countries, there are about 10% claiming unemployment benefits and between 5 and 12% of working age claiming incapacity benefits. The rate for births outside marriage has, notably in Britain, exploded.

The Work House system was harsh and I do not believe any democratic society today would want it. However if one calculates the misery and crime and other suffering and the moral and cultural decay caused by the present benefit-dependent society by millions of people, is it better than the hardship and misery in workhouses suffered by a tiny proportion of Victorian society? It is a calculation that cannot easily be made. But it is moral cowardice not even to consider it.

One other point:

The National Trust presentation is reasonably fair for the vast majority of the tour. The fictional manager of the Work House in the audio guide is depicted as callous and incompetent but, on the whole, the presentation does try to suggest what they were trying to achieve. However in the final room, an exhibition gives the impression of huge progress since then. In a 'then and now' presentation, it appears that the workhouse was all there was for those in trouble in Victorian times. No mention is made of the vast Friendly Societies or the charities with budgets bigger than those of other countries at that time. Nor is there mention of family support. In contrast, the state welfare provision is presented as being totally fine and having no adverse consequences. There is also no mention of the fact that some comparisons are totally unfair since economic growth has created a society that is vastly richer than that of 1871.

The final page of the guide book makes a modest attempt at neutrality but the room at the end of the tour is absurdly and scandalously one-sided.

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July 19, 2010
Monday
Lessons from Zurich

In Britain we are now glumly entering the age of austerity and everyone expects unemployment to go on rising. It is normal here for a lengthy lag between growth starting and unemployment falling.

But Switzerland is different. There, unemployment is already falling. It is down from being relatively low in the first place to being even lower. It has fallen from 4.5pc to 3.8pc since January.

If you go to Zurich and ask the reason why, you have a good chance of being told: “employment is picking up fast because it is cheap to sack people”. It is a classic paradox and not the only one to be found in this part of the world.

In recent years, British policy-wonks have looked at how things are done in the USA. Meanwhile the Left has long had a warm glowing feeling about Sweden – usually unsullied by much research into the place. However there may be more to be learned about good social policy in little Switzerland. The country may not, apparently, have invented the cuckoo clock, but it has made a better fist of a welfare state than most countries. That is to say, it gets better results and, just as crucially, it avoids causing as much collateral damage.

The boom in lone and unmarried parenting is one of the ways in which our own welfare state has damaged our society - not only the children involved but also the women and men. Of course I am not blaming all lone parents, only saying that the research shows it is a less than ideal way of bringing up children and the effects on the children are well-documented. In Britain, 46pc of our children are born out of wedlock. In Switzerland the figure is vastly lower at 16pc.

So what happens, I asked, if you are, say, a young mother in Switzerland with a little baby but no husband or similar on the scene and nowhere to live? There is no countrywide answer to this question because it is not dealt with on a national basis at all. It is not even dealt with by one of the 26 cantons. It is dealt with by your local commune. There are 2,900 of these and the population can be anything between 30 and over 10,000.

Officials from this ultra-small local government will come and investigate the circumstances individually. The father will be expected to pay. The mother’s family, if it is in a position to, will be expected to house and pay for her. As a last resort, the young mother will be given assistance by the commune. But the people who pay the local commune taxes will be paying part of the cost. You can imagine that they will not be thrilled at paying for a birth or separation that need never have taken place. Putting yourself in the position of the mother – and perhaps the father – you can imagine that you will be embarrassed as you pass people in the street who are paying for your baby. Instead of feeling you have impersonal legal rights, as in Britain, you are taking money from people you might meet see at your local café. No wonder unmarried parenting is less common.

A similar system applies if you need means-tested benefits. Those made redundant receive, for a while, generous unemployment insurance payments from the cantonal governments. But once these payments run out, people depend again on their local commune. You would be cautious of claiming fraudulently because, if you worked in the black economy, your chances of being spotted would be high. And so it is that Switzerland has the second highest rate of male employment in the OECD. Britain’s rate is about 50pc worse.

Switzerland has arguably the most successful system of healthcare in the Western world. It is an insurance system with a twist. You are obliged to take out health insurance but you can choose which company to use. There is no state monopoly. So you can choose an insurance group which is connected to your line of work. Or you could go with a trade union-run insurance cooperative. Or a private, commercial company. That means there is some competition among these companies to provide the best possible service for the lowest possible price. Then these companies, in turn, have some choice over which doctors and hospitals they commission to work for them. So again, the doctors and hospitals have to compete to offer the best facilities and treatment at the lowest possible cost. The pressure is on and the performance is one of the best in the world. Poorer people get credits which enable them, too, to choose insurance.

The Swiss health service is decidedly superior to that in Britain, too. It has more doctors per capita, more advanced scanners, better cancer outcomes and so on and on.

All right, it is not perfect. Costs have been running ahead because, effectively, people get treated for free and since the service is easily available and good, they tend to overuse it. Thus the costs have been rising worryingly, as with other social insurance systems. However, it is still one of the best systems around. It provides less of a barrier to employment than most social insurance systems. The cost of the premiums is borne by individuals, not shared with companies as in Germany.

Swiss schools are also better, on average, than British ones. That has, again, surely got a lot to do with local control – not the fake kind that we are used to. Primary schools are run by the little communes and secondary schools and universities by the cantons. It means there are villages where the officials in charge of a school will all know the headmaster and many of the students. There is much less wasteful bureaucracy and much more direct accountability. But I should add that I gather home-schooling is virtually illegal. Those of us who care about the freedom of the individual versus the state do not like this part of the system one bit.

But the Swiss system really scores over ours when it comes to preparation for work. We have got used to Labour politicians and some Tory ones, too, spouting that university education is vital for economic success. This theory was comprehensively debunked in Alison Wolf’s book Does Education Matter? The Swiss example is an illustration that it is nonsense. While Tony Blair was claiming that half of young people must go on to university for economic success, Switzerland was and remains content to have a mere 24pc doing so. It has, at the same time, achieved much greater economic prosperity. Education is only compulsory until the age of 15 but actually the vast majority keep going voluntarily because the schools, colleges and universities are pretty good.

Most of the other three-quarters of students progress from school to vocational training. They don’t do airy-fairy theory. The training typically consists of one and a half days a week at college and the other three and a half at a commercial company. This truly prepares people with the skills and attitudes desirable for a successful career. The result? Switzerland has only 4.5pc youth unemployment compared to 18pc in France where they have the supposedly economy-boosting 50pc of students at university. It seems that writing essays on Racine does not make you a shoe-in at a pharmaceutical company. Funny that.

Let’s be honest. No welfare state is perfect. All of them do damage of one sort or another. And there are some claustrophobic, controlling elements in the Swiss system that are unappetising to British taste. There is a continuous pressure there towards centralisation and regulation. But there are plenty of lessons worth learning amid those lakes and mountains. The Swiss way of welfare is a darn sight better than the British.

The above is the unedited version of an article which appears in this week's Spectator magazine. I would simply link to the Spectator website but I can't locate the article there.

Posted by James Bartholomew • Indexed in Education • NHS • Parenting • Reform • Welfare benefits

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July 07, 2010
Wednesday
Britain is not the only welfare state

Some people in Britain have the impression that this country's welfare state is a unique creation. Actually, nearly all democracies have a welfare state.

This morning I heard a talk by Profesor Neil Gilbert from the University of California at Berkeley (given under the auspices of the Foundation for Law, Justice and Society). Here are a few notes (please forgive my uncertainty about a lot of significant details. I think the ideas are worth mentioning even though my notes are not as good as they should be):

- The share of expenditure on welfare (did he say welfare or social security?) as a proportion of GDP in OECD countries nearly doubled from the 1960s to the 1980s. (I am not sure whether he was measuring from 1960 to 1990. I suspect he meant a shorter period of 20 years)

- After the 1980s, there was a wave of work-oriented reforms across the OECD - particularly relating to unemployment and disability. I think he said that this was a reflection of the ballooning costs and a realisation that there had been unintended consequences resulting from welfare benefits.

- He quoted a German academic who has argued that during this period there was a profound change of psychology so that work became expected.

- I think he said there was a 'Purple' coalition in Holland whose programme was 'work, work and work again'.

- The Dutch pro-work reforms were radical. There were also reforms in Norway, Sweden and so on and on. There were a few instances where reforms went in the other direction but not many.

- In Holland, there had been one out of five [working age?] people on disability benefits. That seems an amazing figure. As part explanation at least, he said that as a disabled person you used to get 70pc of your salary for life! The figure for disability was a great deal higher than in neighbouring Germany.

- He said that it was easier to do pro-work reforms as an economy was growing. OECD GDP grew at an average 2.6pc a year from 1994/2007 and that rate was remarkably consistent. [One sidelight: remember how Gordon Brown used to boast that Britain was producing unparallelled, consistent growth? It turns out if was the normal sort of experience in the advanced world during this period.] Unemployment fell from 6% to 5%. The percentage of working age people in work rose from 64% to 66%.

- He regards the economic downturn starting in 2007 as a 'gamechanger'. Now, unemployment in the Euro area [did he mean the Eurozone or the EU?] is 9.9%. That hides a big range from 19% in Spain to 4% in Denmark. He said that GDP fell by 3.4% [I am not sure over what period exactly]. No wonder, incidentally, that some fear that Spain will default on its debts.

- In France, co-payments for healthcare are increasing. (Co-payments are payments by individuals that are not covered by the state health insurance and perhaps, in France's case, not even covered by the usual additional insurance).


I asked him if he thought that the attempted pull-back of the welfare state across the OECD was something that would last or whether the democratic pressure would always lead to welfare states being up against the ceiling of what states can afford. I don't think I can do justice to his reply but among other things he said there was a large build-up of obligations that had been promised and that therefore the cost would continue to be very high. He mentioned pensions, in particular.

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July 06, 2010
Tuesday
The welfare state's link to crime

What drives people towards or away from crime?

I have been dipping into Understanding Criminal Behaviour by David Jones which seems to summarise recent research and ideas. He mentions J.C.Coleman writing an article in 1988 using the notion of 'social capital'. Did this Coleman create the concept? Anyway, two others, Sampson and Laub (1993, building on the concept went to suggest that,

Those with loose social bonds - occurring through such things as weak family ties and insecure employment - will find it easier to deviate. Their behaviour will be less governed by those around them, and they will have less to lose if convicted. (page 96)

They then went one to argue,

that positive events in people's lives such as getting married or finding long-term employment can act as a 'turning point', allowing an individual to have access to a different life.

They gave an example of 'Charlie' who was criminal as a child and teenager but, when he was 18, got a job and began going out with a woman who would become his wife. He changed and came to lead a stable, law-abiding life.

Another academic, Warr (1998) went on to use longitudinal data to argue that marriage was a very significant factor in leading criminals to change their lives.

This is work in progress and academic books - or certainly this one - is written in a way that is complex and precise. It is not easy to draw firm, large-scale conclusions. But my early impression is that marriage and employment are both factors which can help turn people away from crime.

I would argue, of course, that the welfare state has - by the incentives and disincentives it has created - reduced the amount of marriage and employment. By these routes (as well as others) it may have also increased the amount of crime.

Posted by James Bartholomew • Indexed in Behaviour & Crime • Parenting • Welfare benefits

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July 05, 2010
Monday
Welfare reform: the backlash is only just beginning

It seems inevitable that there will be a growing chorus of bad publicity about the welfare reforms. It has already started. The cuts to housing benefit and the tightening of tests for incapacity benefit are the the first in line. At some point there will be hard luck stories that really get the attention of the public. There will be a 'Cathy Come Home' moment. ('Cathy Come Home' was a TV programme about a young homeless mother. She was shown in a pitiable condition and I believe it probably influenced social policy for years.)

I hope that Iain Duncan Smith and his advisers are thinking carefully about this.

There are undoubtedly some people who are going to lose out in the benefits changes. It is important that the reasons for the changes are kept to the fore.

Here are some of the stories about how people could lose out:

The National Housing Federation warning about homelessness as reported by BBC Online.

The Times had an article on Friday headlined 'Housing benefit cut by £1,0000 per family' and then, in quotation marks, 'Osborne is hitting 600,000 poor households'. Unfortunately I cannot link to it as Times Online now has a paywall. The material came from an analysis by the Chartered Institute of Housing. Here, though, is an earlier article in the Telegraph headlined 'thousands could be evicted because of 80 per cent cut to housing benefit' which also quotes the same institute.

On Incapacity Benefit, the Times again had a story about what could go wrong (in this case, he seemed to be projecting forward what the Labour government had already done.) Here is a report of the Times report(!) by the Press Association:

The architect of a new benefits system has said radical changes must be made to avert serious problems for vulnerable people, according to reports.

Paul Gregg, Professor of Economics at the University of Bristol, told The Times serious adjustments are necessary before 2.5 million incapacity benefit claimants are moved onto the new employment and support allowance (ESA) in October.

In its current form, the system leaves large numbers of failed claimants to languish on jobseeker's allowance with no prospect of work, he said.

Reflecting on perceived errors in the process, he told the paper: "To go ahead with these problems is not just ridiculous. It is, in fact, scary."

Such reports are building up a background of impressions of welfare cuts that are likely to hurt a lot of people. It is very likely that sooner or later, a concrete case of a decent person being hurt through no fault of his or her own will hit the headlines. Then it will be the usual thing: BBC interviewers will take a righteous, angry tone with ministers when talking about welfare cuts; uninformed comedians on television and radio (one of the most potent and irritating sources of propaganda combined with ignorance) will make 'jokes' about the cruelty of the government; the defence of the reforms by certain newspapers will get more cautious and the attacks from the Guardian and the Times will get more aggressive.

This is when the reform process will get really difficult.

Posted by James Bartholomew • Indexed in Media, including BBC bias • Reform • Welfare benefits

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Social security spending more than doubled in real terms


The primary need for reform is the damage that is done to the culture of a country when a large minority lives on benefits. But the financial need for reform is now forcing the pace. Here is a remarkable recent statistic on the cost:

“Allowing for inflation, social security expenditure in the UK increased by 122 per cent from £69bn in 1978-79 to £152bn in 2008-09.”

This is from Social Trends and was quoted by the Telegraph.

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July 01, 2010
Thursday
This is a unique opportunity for welfare reform

The pace and breadth of welfare reforms that Iain Duncan Smith is attempting have not been seen in a couple of generations. This is the first time that I know of that a new Secretary of State in this field is one who already knows the subject in depth. He has hit the ground running which means the chances of getting things done are much greater than before. Also the Prime Minister, in appointing him, must have known what he was doing. So Duncan Smith is less likely to be undermined than previous ministers such as John Hutton whose ambitions were limited by Gordon Brown - a man who never understood welfare and what can go wrong.

Someone at the conference yesterday remarked that there had been nine different Secretaries of State for Work and Pensions during the Labour administration (which lasted about 13 years). No wonder progress was halting and uncertain.

But now must be an exciting time at the Department. These are likely to be the biggest reforms since the Attlee government. I have to admit a touch of jealousy about the opportunity they have to improve the operation of the welfare state in fundamental ways.

In an impressive speech yesterday, Duncan Smith went beyond the printed text several times. Among other things, he remarked that, in private, members of all parties acknowledged that reform was overdue. He is finally taking this one on.

The prime reason we need reform is that the benefit is so valuable to certain people that it is almost impossible for them to be able to find work which would pay well enough to pay their rent. So they are obliged to stay unemployed and stay on benefit.

Duncan Smith said that 75,000 people get more than £10,000 a year in housing benefit, presumably in addition to other benefits. It is impossible that they would be better off taking a low-paid job. So they are inevitably going to remain jobless, living off the taxes paid by others.

But Duncan Smith gave another reason why reform is desperately needed. The cost, he said, has risen by £5bn in five years and is projected to amount to £21billion in 2014/15. It is a staggering sum.

He said the task ahead of him was 'frightening' and that, once in government, he realised it was like trying to turn a super-tanker round. He said he was sometimes asked why he was moving so fast. He said he was 'in a hurry not to be late'.

With so much going on, it is sometimes hard to pick up on what is not being reformed. But one thing seems to be the Pension Credit. Steve Webb, the pensions minister, also spoke at the conference. I asked what he thought of Pension Credit and whether he intended to reform it. This is a credit which many poor elderly people do not collect simply because they are elderly and do not manage the paperwork. This is a kind of obscenity if ever there was one. Meanwhile the benefit also has been a substantial discouragement to saving for those who are less well off. This needs reform urgently but Mr Webb seemed quite content for it to stay.

The text of Duncan Smith's speech is here and also follows here....

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June 30, 2010
Wednesday
Are there any jobs around?

It is all very well pushing benefit dependents into work but are there any jobs to be had?

At a conference today organised by Reform, the think tank, this question was asked. Perhaps surprisingly I came across two people in the audience at the front end of job search who said 'yes'.

One was from the Prince's Trust. He said that some of the jobs were low end and the people who said they wanted to work were not willing to take on such jobs. He said there were plenty of vacancies that were advertised but not filled. He also said that the Prince's Trust helps 2,500 young people each year start businesses of their own. What sort of work did they do, I asked. He said services such as decorating and building.

A second person works in a poor part of London and said that the evidence that there is work to be had came from statistics showing the large proportion of young people who were working for cash in hand.

Meanwhile one of the panellists involved in getting people into jobs said that some people refuse to take jobs such as being a low-paid intern.

I don't suggest that these brief conversations and remarks prove anything. I was just interested, when so many people on the Left say that there are no jobs around, that a few, at least, of those involved in job search maintained that it was not true.

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June 28, 2010
Monday
Invalidity, incapacity and something else

Just for reference, there was once Invalidity Benefit which was for 'invalids' (as in the sentence, 'he was invalided out of the army'). However this was replaced by something very similar called Incapacity Benefit which meant, presumably, that someone was considered 'incapable' of work. And then, in its latest incarnation, the benefit is called Employment and Support Allowance, an Orwellian name which offers little clue to what the benefit is actually about. This phrase is not readily catching on. Yesterday I was interviewed on BBC Radio Wales and the interviewer referred to it by the old name, Incapacity Benefit. Again it is referred to by the old name in this morning's Independent.

Here is an introductory sentence from the Department of Work and Pensions - another Orwellian name except for the 'pensions' part. It used to be called the Department of Social Security which was a bit more honest. (If a spade were called a spade, the Department might be called the Department of Welfare Benefits. )

From 27 October 2008 Employment and Support Allowance replaced Incapacity Benefit and Income Support paid on incapacity grounds for new customers.

Any entry point for the Employment and Support Allowance on the DWP website is here.



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June 27, 2010
Sunday
Beveridge would now be regarded as a right-wing fanatic

This morning I appeared on Broadcasting House, a BBC Radio 4 programme. I was discussing what had happened to state welfare since William Beveridge's famous report. A Labour MP, Kate Green, was there taking a more favourable view of how things have developed than I do. It was a good, civilised, if brief, discussion.

I was honoured when Kate told me after the programme that she had read The Welfare State We're In. Sometimes people ask me what influence the book has had and I am never sure. I know that a signicant number of Conservative MPs and ministers have looked at it. But this is the first time a Labour MP has told me that she has read it. I am delighted by this since influence lasts better if it reaches both sides of the political divide. Not, of course, that Kate Green is likely to have agreed with it all by any means.

Among other things, I said that if Beveridge brought forward his plan today he would be regarded as a right-wing fanatic. The modern welfare state is a travesty of what he proposed. If his system had been put in place and persisted, much of the damage done by the welfare state would not have taken place.

He wanted a system of flat rate contributions for flat rate benefits. Means-tested benefits were designed be a tiny part of the system. In fact the very opposite has developed. Means-tested benefits are vastly more significant than unemployment benefit.

He did not specify any particular favours for lone parents. He was, provisionally, against special payments for housing benefit. He never even dreamed of those who became too ill to work being given more money or different conditions from those who are unemployed. The modern welfare state has very little to do with Beveridge. It is a corruption brought about by vote-seeking politicians - notably during the governments of Macmillan, Wilson and Heath - who knew and cared little about what could go wrong in welfare.

Beveridge proposed that the insurance flat rate payments should be at 'subsistence' level and that the non-insurance, means-tested assistance should be "something less desirable than insurance benefits; otherwise the insured persons get nothing for their contributions" (section 369). So the insured benefits would be 'subsistence' and the means tested benefits would be significantly less than that.

More on this, of course, is in The Welfare State We're In (chapter 2).

But here is a quotation on pensions and retirement that is not quoted in the book:

"...the conditions governing pension should be such as to encourage every person who can go on working after reaching pensionable age, to go on working and to postpone retirement and the claiming of pension." (Section 245)

Posted by James Bartholomew • Indexed in Housing • Media, including BBC bias • Pensions • Reform • Welfare benefits

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Nearly six million working age people claim benefits

Here are the latest (May) quarterly headline figures for welfare benefit claimants from the Department of Work and Pensions press release. The most striking one comes first:

• There were 5.9 million working age benefit claimants at November 2009. This is an increase of 453 thousand in the year to November 2009.

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June 26, 2010
Saturday
Child poverty: what works and what doesn't

Lord Freud on child poverty: what works to reduce it and what demonstrably has not worked.

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June 24, 2010
Thursday
One way to do the politically impossible

The welfare reforms in the budget were bolder than I imagined they would be. Many people, myself included, would have thought implementing the sort of cuts proposed would incur so much opposition that no government would consider attempting them. We would have been wrong.

Our democratic process is a funny thing. The politically impossible is sometimes possible. And how has it been done in this case?

1. Long preparation of public opinion over many years by many people, gradually bringing home to middle-of-the-road people that welfare is not working very well and has had all sorts of perverse consequences. This got to the point where all parties were committed to reforms, often unspecified, of welfare benefits.

2. Barely mentioning the whole subject during the election.

3. Consequently not having to make promises that would be broken such as "we will not cut housing benefit".

4. Suddenly bringing in measures after the election that were never mentioned except in very general terms.

A similar pattern was shown when Labour came to power in 1997. It produced a sudden tax on pension funds and made control of monetary policy a matter for the Bank of England instead of the Chancellor. Both policies were radical. One was very much against the interests of millions of people. Neither was mentioned beforehand.

The "politically impossible" is achieved in a variety of ways. This is one of them.

This is a link to the Treasury's main entry point for information about the emergency budget.

Here is the press release from the Department of Work and Pensions about the welfare benefits changes announced in the budget...

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June 23, 2010
Wednesday
Localism as a way of reforming welfare

Localism as a way of reforming welfare: an article by Dan Hannan.

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June 22, 2010
Tuesday
What Labour did to the benefits system

Whatever else Labour did, they certainly made benefits more complicated.

The Child Poverty Action Group annually publishes the Welfare benefits and tax credits handbook.

How many pages do you need to read to get the picture? Well, I just bought the out-of-date 2009/10 edition because I could buy it much cheaper, second-hand, than its cover price of £37.

The total number of page is 1,601. The benefits system has become ludicrously complex.

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June 14, 2010
Monday
Welfare states can damage behaviour

(Based on a talk at the Liberales Institut, Zurich 10/6/10)

The England team was preparing recently for the football World Cup championship and had a ‘friendly’ game. During the game, one of England’s outstanding players, Wayne Rooney, disagreed with the referee and told him so in foul language. The local referee was disgusted. He gave Rooney a yellow card and took the unusual step of revealing that Rooney had said to him ‘f--- you!’

The British press was appalled. But not appalled at the fact that Rooney was criticising and insulting the referee. No, that did not bother them at all. They were concerned, rather, that Rooney’s fits of temper made the England team vulnerable. Several former players and managers voiced their opinion that opposing teams would be well advised to ‘wind him up’ and thus get him to commit a foul or an assault which would cause him to be sent off.

Terry Butcher, a former played quoted in the Sun, suggested

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June 12, 2010
Saturday
Which works: cash or conditionality?

I went to a lunchtime talk earlier this week given by Lawrence Mead at Civitas. Mead is a distinguished academic and author of Government Matters, a valuable book about welfare reform in the USA - in Wisconsin in particular.

He has strong views about what really makes a difference - what really brings the numbers dependent on benefit down. What is more, he says he has a great deal of data to support his view, including experimental data (which is generally harder to come by in social sciences). So which policy works? Is the key thing always to make it clearly financially worthwhile to work? Or is it to have strict conditions and encouragement for claimants to get work?

He says it is very definitely the latter. He says that even if claimants talk about money, what shapes their behaviour is the conditionality and encouragement.

Being one of the many who has thought that the financial side was surely important, too, I suggested that perhaps Britain was different in that possibly our benefits were higher in relation to low pay, so that the discouragement to work was stronger. Perhaps at this level, the low paid and those on benefits were very conscious of the financial disincentive and more responsive to it.

He firmly resisted this idea although he seemed to agree that the benefit levels in the USA were lower than those in the UK.

Other people in the audience contributed some evidence that people in the UK were being influenced by the financial disincentives. Mead was far too good an academic to imply, even, that he did not care about the evidence here but he was firm in demanding that the evidence be really good. Meanwhile he had plenty of evidence the other way. I guess this is a debate in the US in which he has been accustomed to fighting his corner.

I hope to have more on this issue in the future.

ps An adviser to Ian Duncan Smith, the Secretary of State for Work and Pensions, was in the audience. Ian Duncan Smith's view, of course, has been that the financial disincentives to work matter a great deal. The new reform he plans are centred on this idea though they also involve much more conditionality and encouragement, too.

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June 06, 2010
Sunday
They save in 'communist' China but not in 'capitalist' Britain. Why?
A limited formal social security system means the Chinese save like crazy.

This is from a long article on the economic situation in China by Liam Halligan in the Sunday Telegraph.

The unintended consequence of the welfare state is that people save very little.

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May 28, 2010
Friday
An estimate that 1.8m of the 'sick' could do some work
According to figures from the Department for Work and Pensions, initial assessments found two-thirds of new ESA claimants were capable of some kind of work, including those who left the system before tests were complete.

If the same results applied to the 2.6million people currently on incapacity benefit, 1.8million would be able to do some work, including 860,000 who would be fully fit. But the DWP said it did not expect the total figure to be as high because many claimants are likely to have been out of work with long-term health problems.

Of those whose tests were finished, 91 per cent were capable of some work – 68 per cent fit to work immediately and 23 per cent needing support now, but able to do something in future. Only nine per cent qualified for lifelong maximum ESA support.

This story is in various places including the Express.

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The man with a plan

Right now, we have a rare chance to change Britain. Many of us feel there has been a steady, decline in its culture, behaviour, crime and more besides. This has been accompanied – I would say largely caused – by the growth in welfare dependency. At last there is an opportunity to start reversing all that.

The man who, potentially, could turn our country round is Iain Duncan Smith, the new Secretary of State for Work and Pensions. He is an unusual man. He looks and talks as though he were still in the Guards. But he is the one Tory MP who has, in the years of opposition, dedicatedly studied our ‘broken society’. He has looked at the root causes and developed a plan to make things better.

David Cameron has had the guts to put him in charge of welfare benefits. We all remember that Tony Blair once wanted Frank Field, another keen reformer, to ‘think the unthinkable’ about welfare. But Blair never had the courage to put Frank Field in charge and after a while sacked him even from his junior position. Tony Blair funked it. David Cameron, though, has put a true radical in charge.

Yesterday Duncan Smith explained his plan which is, basically, extremely simple. He wants to make work pay. It is as obvious and commonsensical as that.

You may think, “but surely the Labour government often said it wanted to make work pay so hasn’t that been done already”. In short, no. Some improvements were made. But after 13 years of Labour reforms, plans and schemes, there are still people who, if they decided to work would face a combination of benefit withdrawals and taxation amounting to 95 per cent or more of what they would earn. As Ian Duncan Smith has said, the rich would shout the houses down if they faced a marginal tax rate like that and say it discouraged enterprise. They would be right. Exactly the same applies at the other end of the scale.

How does Duncan Smith intend to make work pay?

He wants to sweep away the complex system of different benefits and perks that have built up over the years and replace them with just two benefits. Doing this will enable him to devise a system in which everybody on benefits – absolutely everybody – would always be better off working – even part time.

When he was working on his plan at the think tank he set up, the Centre for Social Justice, he published a paper called “Dynamic Benefits” which illustrated the idea. He took, for example, the case of a couple with two children. Under the existing system, if one of them were to take a low-paid job, the combination of benefits withdrawal and taxation would amount to 96 per cent of what the worker earned. But under Duncan Smith’s plan, some of the benefits would not be removed, so the family would face a much lower rate of 69 per cent.

You will have noticed that, unfortunately, this costs money in extra benefits. But to make work pay, you need to do one of two things. There is no third way. Either you cut benefits for those who are out of work or you increase benefits for those who take up work. Lowering taxes helps but not enough. The first option of lowering benefits would be politically almost impossible and in some instances unfair. So that leaves the second option of raising benefits. Duncan Smith therefore needs to get some money off the Treasury.

His think tank estimated the cost at £3.6 billion. Obviously this is a terrible time to be going along to the Treasury and asking for money. Duncan Smith has tried to downplay the problem saying that he has found balancing savings he can make. But the savings his plan will make tend to be longer term and the costs would be immediate. John Hutton, a former secretary of State who tried to bring in reforms, said yesterday, “you always end up having a row with the Treasury”.

It is essential that Duncan Smith persuades his colleagues. Even Hutton, a Labour man, has said that Duncan Smith’s plan is “exciting”. A great deal is at stake. If the scheme is put through, suddenly it will be worthwhile for everyone to work – something that has not been true for over 40 years. It would be a revolution, possibly even bearing comparison with the successful welfare revolution in American signed off by President Clinton. His central idea is accompanied by other useful measures such as an insistence that people should be willing to accept work as a condition of getting Jobseekers’ Allowance.

Making work pay, though, is the key thing. The earlier the plan is put in place, the sooner the initial cost will be replaced by savings as more people have good reason to work. They will then come off benefits and start paying taxes. In three years or so, the plan will start saving money instead of costing it. If they get on with it, this reward will happen before the government faces the next election instead of after.

The pluses would not stop there, either. The unemployed are often demoralised and unhappy. Getting more people into work would literally make a significant number of people happier. And when more people see that work pays, then it will become more obvious that getting a good education matters. It will become clearer that having good manners and a good record are important, too – in order to get work. All these things can contribute, as time passes, to a renaissance in the decency and culture of British people. The damage that has occurred in our society could be counter-acted. The change could be the most significant that this government could possibly make. David Cameron’s promise to combat the ‘broken society’ would resonate loudly at last.

The prize in front of us is great indeed. I only pray that the current financial problems and long-standing failure of the Treasury to understand welfare will not prevent us from taking it.

The above is the unedited draft of an article I wrote for the Daily Express yesterday. The Daily Express link is here. Late last night I realised I had phrased the description of the combine benefit withdrawal and tax rates incorrectly. I apologise for this.


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Former ministers know what the problems are

One of the most interesting and knowledgeable contributions in all the coverage of Duncan Smith's welfare reform plan yesterday was that of John Hutton on The World at One on BBC Radio 4. Hutton was the secretary of state for the Department of Work and Pensions from 2005 to 2007. He tried to make reforms and to change benefits so that work would pay better.

He said that he welcomed Duncan Smith's plan as "exciting and fruitful". That is remarkable praise for a Tory plan coming from a former Labour minister.

He was asked why he had not made further improvements himself when he was in office. He warned, "you always end up having a row with the Treasury". Like Duncan Smith, he probably wanted to make it worthwhile working by increasing in-work benefits. He commented of the Duncan Smith plan, "it's going to cost money" and "there will be an argument. I wish him well".

He again brought the voice of bitter experience when he observed that there is likely to be a "winners and losers" problem (when adjusting benefits).

He said he did tighten up sanctions for those who were not willing to work and more could be done. But it was not easy when it came to 'lone parents and others'. He said the problem was especially difficult when it came to penalising those who have children.

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May 27, 2010
Thursday
Yvette Cooper inadvertently describes Labour's failure on welfare

Yvette Cooper gave the game away. She was busy defending the Labour administration's record on welfare benefits on the Today programme today. She said that Labour, before losing the election, had been intending to introduce a guarantee to those on benefits that "you would always be £50 [a week, I assume] better off in work".

She admitted, in other words, that, after 13 years of government and many plans for welfare reform including tax credits, there were still people who would gain less than £50 by working instead of sitting at home watching TV.

That is a concise description of how Labour failed to make a proper reform of welfare. Labour failed to make it clearly worthwhile to work.

Here is a link to her appearance on Radio 4's Today programme but it may only work, if at all, today or for some days after.

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The Duncan Smith welfare reform plan: the government does not appear to have accepted his plan yet. There is everything to play for and much to lose.

Here is the Guardian news story that accompanies the interview (see other posting). Below are excerpts with my comments:

Britain's welfare system is "bust", with such penal disincentives to work that many people on benefits regard those who take up job offers as "bloody morons", Iain Duncan Smith, the new work and pensions secretary, says in a Guardian interview setting out the most ambitious welfare reform plans for a decade.

Duncan Smith says he is to propose to the Treasury a radical scheme that includes simplification of the complex benefits system designed to make it financially worthwhile for unemployed people to work, including in part-time jobs.

Interesting that he says he is to "propose" his scheme to the Treasury. That makes it sound as though his scheme has not as yet been accepted. In which case, it is also interesting that he should be presenting it publicly. Is he trying to push the cabinet into accepting it?

He claims that at present it is not worth going from the dole into work if the job pays £15,000 or less. He also suggests that it is an imperative that the state retirement age rises because of growing life expectancy. The coalition agreement published last week said the state retirement age should rise to 66, although it added that this would not happen before 2016 for men and 2020 for women.

He also hints at a curtailment of welfare for the middle class, saying the government is already paring back tax credits for those earning over £50,000. "My general view is that the benefit system is a deeply ineffective and costly way of subsidising people's lives. If you want to help people above a certain income the route to do that is through tax – it is simple, straightforward and easy. The benefit system is about helping people in difficulty."

Duncan Smith says, in advance of a speech tomorrow: "What we want to do is reform the welfare system – in the way Tony Blair talked about 13 years ago, but never achieved – a system that was created for the days after the second world war."


About Tony Blair, this is right. About the system after the second world war, it is wrong. If we had kept with the post-second world war system, our current problems would not have arisen in anything like the way they have. The real problems were created by incremental changes over the years by governments which had no real understanding of the dangers of welfare benefits. The Heath and Wilson governments were probably the most to blame, not Attlee.

The former Tory party leader concedes that his proposals, initially drawn up by his Centre for Social Justice (CSJ) thinktank, will cost more in the short term, but he argues that on the basis of figures given to him since going into government he is confident that "the short-term costs are minuscule, and the potential savings are enormous". However, he acknowledges: "I have yet to arrive at the point where everyone agrees that is the way forward."

This is extraordinary. He appears to be announcing a programme for which the government has not agreed to pay.

The CSJ report proposed the merger of eight benefits into just two, the withdrawal of benefits much more slowly for low earners, and the removal of rules that stop people claiming out-of-work benefits entirely if they do only a few hours' work a week.

The scheme was thought to cost as much as £3bn, but Duncan Smith has stressed that those figures are going down since he has had access to government statistics. He says £2m-3m a year is being wasted in tax credit overpayments.

Does the Guardian mean '£2bn-3bn'?

Change would come, the CSJ report said, at the expense of some middle-income families on £30,000 a year who would lose their child tax credit.

... Duncan Smith promises to press ahead in the autumn with a review of the work capability of all 2.5 million people claiming the [incapacity] benefit.

"People basically get parked on this benefit and forgotten about. If you have been on this benefit for more than two years, you are likely to die on it."

He argues: "The present benefits system is so complex and unfair that no one understands it. It leads at the bottom end to one of the most regressive tax and benefit withdrawal rates that it is possible to imagine.

"We ask people to go to work for the first time and then tell them to pay back 70%, 80% and 90% back to the state. These are levels none of the wealthiest bankers are asked to pay – they are moaning at 50%.

This is a very good point. The upper middle class elite which runs Britain has always readily understood, when it comes to themselves, that high tax rates distort behaviour and discourage incentive when they themselves are involved. It has lacked the imagination or logic to understant that the same applies to those who are much poorer and deciding whether to work or be on benefits. It is, perhaps, the core reason why the welfare benefits system has been so badly run for the past generation.

"If you are unemployed, and you come from a family that is unemployed, all you can see when you think about work is risk. It is a real risk because for all the efforts you make the rewards are very minimal and in some cases none at all.

"Socially, everyone says: 'You are a bloody moron – why are you doing this? You don't have to do this.' So taking responsibility is a real risk for you."

Duncan Smith's ultimate aim is a single withdrawal rate for all benefits. He also discloses that he is looking at widening the definition of child poverty to include other measures besides the previous government's definition of poverty, which he says was a measure of inequality. "You get this constant juddering adjustment with poverty figures going up when, for instance, upper incomes rise."

It is good to hear Duncan Smith reject the absurd definition of poverty which was, as described in The Welfare State We're In, a deliberate plot by the Left to keep up the level of people who could be described as in 'poverty'.

He will chair a cabinet committee on social justice, saying it is ironic that it has taken the Conservative party to set up such a committee.

Duncan Smith also promises to be tougher on claimants who refuse job opportunities. "The jobseeker's allowance has a sanction at present. It just has not been used. If you simply are not going to play ball, then the taxpayer has a right to say: 'You need to know there is a limit to the amount of support we are going to give you.' The sanction comes into play."

But he stresses: "I did not come into this department to cheesepare. I came into this department to reform. My purpose in life here is to improve the quality of life of the worst off in society. If somebody tells me that I have to do something different then I won't be here any longer."

There is everything to play for and quite a lot to lose for Duncan Smith, for the coalition and for the country.

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Duncan Smith's interview in the Guardian

Here are some excerpts from the Guardian article with my comments:

As leader, the former Scots Guards officer was introduced to searing levels of poverty, and the cycle that is often impossible to escape, when he visited the Easterhouse estate on the eastern outskirts of Glasgow. His experience prompted Duncan Smith to establish the Centre for Social Justice, ...
It is always interesting to hear of the 'road to Damascus' moments that lead people to develop or change their ideas.
"The purpose of my life here is to improve the quality of life of the worst off in society." he says. "If somebody tells me I have to do something different then I won't be here any longer. Tattooed across my heart is that I didn't come here in any shape or form simply as a cheeseparer. What I have come to do is look root and branch at how we deliver welfare which is aimed at groups at the bottom end of society who need help and support, either because they can't work or because they can but they are unable to get back to work, or because they are disabled."

This sounds like a warning to Cameron that if he is not given the upfront money he needs to do the changes he wants, he will resign. He knows that it would be extremely damaging for Cameron to have a senior minister resign so early in his premiership. But he gives the warning because he passionately believes in what he is doing and does not want to spend his time at the job doing something else..'cheeseparing'.

Duncan Smith believes that two of his recent predecessors as work and pensions secretary – the Blairites James Purnell and John Hutton – embarked on the right journey, but found themselves thwarted by Gordon Brown. This was to shake up the bias in the benefits system, which "parks" people capable of work on incapacity benefit; to impose tough sanctions on claimants for other benefits, such as the jobseeker's allowance, who do not accept offers of work; and to take a hard-hearted approach to welfare by ending programmes which fail to place the unemployed back in work. This will involve a greater involvement for voluntary groups and private companies that will be paid by results.
It is interesting that he should give credit to these former Labour ministers and that he blames Gordon Brown for thwarting them. This all rings true. While not a fan of the Labour party in general, I regret that Purnell has left frontline Labour politics.
A former acolyte of Margaret Thatcher, Duncan Smith is honest about how her government attempted to massage down the unemployment numbers by placing reasonably healthy people on incapacity benefit. "Over the years IB was, to some degree, used as a way of slightly getting out of the unemployment figures and not being overly honest. Conservatives and Labour have signed up to that. Being bold about trying to change it is also about saying we may be putting more people on the unemployment list shortly because that is where they should be rather than sitting on IB. But [we then] work with them intensively to get them back into work."

I have still to see any good evidence that the Thatcher administration ever deliberately used Incapacity Benefit for this purpose. It still seems to me it was a politically useful but not a calculated result. Be that as it may, Duncan Smith is absolutely right that tightening up Incapacity Benefit could easily have the effect of increasing the numbers who are shifted onto Jobseekers' Allowance. So the numbers who appear to be unemployed could easily go up, though in fact the numbers actually unemployed do not. I once suggested to a junior minister years ago - could it have been William Hague? - that the unemployed and the Incapacity Benefit claimants should be put together in one official figure as this would give a more accurate impression of changes in unemployment. Of course many people who are on incapacity benefit are genuinely incapable of work. But that number does not change much. So the change in the figure is an indicator of changes in those who are not incapable - in other words of unemployment.

The new work and pensions secretary echoes this language as he says: "Lots of different hard-headed politicians have come into this job saying they're going to do something different and walked out with the bills of social failure still rising. I'm determined that we take this once- in-a-generation chance to tie two parties together, and possibly elements of the third, to get the job done."

This could indeed be a great opportunity. It is the first time I can remember of a man becoming the secretary of state who has spent a number of years beforehand getting to understand how welfare can cause damage and thinking how to improve matters. It is interesting that he thinks he can get the Liberal Democrats on board. If he can, that would greatly increase the chances of the reforms going through.

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May 26, 2010
Wednesday
Will Duncan Smith get the money to put his plan into action?

I appeared - briefly - on BBC Radio 5 yesterday lunchtime to talk about the new government's plans for welfare reform. Yvette Cooper, the shadow secretary of state, came on to criticise the plans.

Prior to the interview, there was precious little I could glean from the Queen's Speech so I went back to the paper, Dynamic Benefits, produced by Iain Duncan Smith's think tank, the Centre for Social Justice, last year.

It does seem that part of the plan is include housing benefit inside the framework of the two benefits which would come to exist. If that is right, the plan is more ambitious than I had first thought and has greater potential for always giving people a good incentive to get work. It is also clear that those who did the work on it did a lot of detailed calculations.

There are basically two ways to make work pay. One is to reduce benefits for those who don't work. The other is to increase benefits for those who do work. The latter is - for political if not humanitarian reasons - the one that Duncan Smith opted for. In a word, he plans to take away less of the benefits when people get jobs. This way, it will always be financially worthwhile to work.

The trouble is that, in the short term at least, this costs a lot of money. In Dynamic Benefits, Duncan Smith's think tank suggested the extra cost would be £3.6bn offset by increased tax receipts of £0.9bn. The paper argued that there would, however, be savings in government expenditure in the form of reduced need for policing, lower NHS costs and reduced costs of administration in the Department of Work and Pensions. Unfortunately the savings he looked forward to will take time to come through whereas the increased cost of the benefits will be immediate.

With our current financial problems, will Duncan Smith be able to persuade the rest of those in the government to give him the money for the initial cost? I hope so.

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Duncan Smith sounds eager to get going

He is quoted in a recent press release on poverty:

"These statistics reveal the scale of poverty in the UK today. Millions of children, adults and pensioners are daily experiencing the crushing disadvantage that poverty brings. They are living at the margins of society, unable to achieve their aspirations and trapped in dependency. Such levels of poverty are unacceptable and today’s statistics show that, despite huge expenditure, this has made little impact in helping the poorest.

"Vast sums of money have been poured into the benefits system over the last decade in an attempt to address poverty, but today’s statistics clearly show that this approach has failed. Little progress has been made in tackling child poverty, society is more unequal than 50 years ago and there are more working age people living in poverty than ever before. A new approach is needed which addresses the drivers behind poverty and actually improves the outcomes of the millions of adults and children trapped in poverty.

"It is right that we invest in addressing poverty, but we must focus our resources where they will be most effective. Work, for the vast majority of people, is the best route out of poverty.

"Yet the current welfare system is trapping in dependency the very people it is designed to help. The rise in working age poverty and continued inequality show that we must make work pay and the first choice for millions of people. It is not right that someone can actually be worse off by taking work, we should be rewarding such positive behaviour by making work pay.

"Likewise, we must demand a return on our investment in work programmes. It is crucial that we fully support people making the transition into work, but tax payers’ money should be spent on initiatives that work and make a difference to people’s lives.

"The time for piecemeal reform has ended. There has never been a more pressing need for fundamental radical reform and we will waste no time in acting."

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May 20, 2010
Thursday
Dr Wellings's plan for reforming welfare benefits

How to reform welfare benefits?

It is not often that anyone puts forward a definite programme. It is good that Dr Richard Wellings, Deputy Editorial Director at the Institute of Economic Affairs, has done so. I have numbered his proposals, underlining the key changes he proposes. I have also added some comments of my own in italics:


"The key to reducing welfare dependency is removing the “poverty trap”. For many claimants it is simply not worth doing low-paid work – at least not in the “formal sector”. Once work-related costs such as clothing, train tickets or petrol are factored in, someone working full time on the minimum wage will typically be just a few pounds a week better off. Because benefits are withdrawn as income increases, the effective pay rate can be less than £1 an hour.

Working may also mean losing the other perks given to those on welfare, including priority access to low-rent social housing. As a result of massive government subsidies, social properties are generally of superior quality to privately rented homes. Welfare dependency will only be reduced when there is a big gap in living standards between those who work and those who do not.

A series of specific policy measures would push the system in the right direction:

1)  Child tax credits, for example, should be paid at a much lower rate to workless households to better reflect the additional costs of working.

The theory may be sound but the politics would be extremely hard.

2)  More can also be done to reduce the income tax burden on low-paid employees – the new Government’s plan to increase personal allowances is a good start, though it would be far more effective if it were funded by benefit cuts rather than higher taxes on investment.

The idea would make a big difference but it would be a political Everest to climb. The closest thing that might be politically feasible would be to freeze benefits for a few years. It is much more politically attractive to increase the personal allowances to make work pay better.

3)  The poverty trap is a particular problem for those stuck on incapacity benefits. The incentives to move on to them are too strong and there are powerful reasons for claimants to hang on to these entitlements. But incapacity is a privately insurable risk. The Government should not provide special benefits for those no longer able to work as a result of chronic health problems.

To make this politically possible, it would be necessary for the government to insist that everybody takes out this kind of private insurance. Otherwise you will have cases of people who genuinely develop serious chronic disability and who do not have insurance. There will be articles about their suffering and demands that the government 'put it right'. This is the reality of modern politics.

4)  Perhaps most importantly, the perverse incentives associated with housing policy must be addressed. Social housing should be very basic – a last resort for the genuinely homeless rather than an aspiration for people trying to get accommodation on the cheap.

This is surely right. But politically it will only be done by the same methods used by the Labour government to cut back on social housing altogether: by stealth.

5)This means paring down the £7 billion-a-year public housing subsidies and also reforming the £20 billion-a-year Housing Benefit system. The latter is absolutely essential if work incentives are to be increased. Withdrawn at 65p for every pound earned, Housing Benefit is often the major reason why it is not worth working.

The problem is identified quite correctly. But the effect of cutting subsidies can actually make the perverse incentives of public housing even worse. If the rents are increased because of lower subsidies, then the value of the housing benefit actually goes up and if one gets a job, then it becomes an even bigger problem to lose that benefit. This is a very tricky policy area. But a continuation of the overall reducation in publicly owned low-cost housing would be good.

6)Part of the solution is to ensure that a significant proportion of rent is paid from basic benefits such as Jobseeker’s Allowance and Income Support. In this way, tenants are encouraged to find low-cost accommodation and the negative impact of the subsidies is reduced.

Yes, this is probably a good way to go. But, as before, Housing Benefit reform is both very important and full of pitfalls.

7)Moreover, the barmy rules that allow claimants to live in expensive areas such as Kensington and Chelsea should be phased out.

Absolutely. Getting a flat in areas like these is like winning the lottery. That is not what the benefits system is for. If the flats were let out at a market rent, many of the low-paid residents would find that they could not afford to work. So that is no good. If, on the other hand, they are let out at below a market rent, the tenants are being subsidised by others to have premium accomodation. That is not fair. They should not get this lottery win on the basis that they joined a long queue and, in some case, had children outside wedlock. It is absurd and unfair for the welfare system to house people in expensive flats and houses.


Be bold now – or miss the chance

Yet reforming the benefit system is only part of the equation. The Government must also tackle other barriers to work.

8) Key steps include reining back employment law

Yes.

9) and making it easier for the unemployed to relocate by liberalising the planning system.

This is certainly necessary.The planning system increases the cost of housing for everyone. It reduces the quality and amount of housing available for the poor. It is a system accidentally designed to hurt the poor. A house-builder, Redrow, recently stated that it has to spend more on getting planning permissions than it does on buying bricks. The demand that developers should provide 'affordable housing' in their developments is a hypocritical gesture by a planning system which has not genuinely thought through how affordable housing can be created.

10)Indeed, by lowering the cost of housing and basic goods, a programme of deregulation across the economy would enable benefit rates to be cut without increasing poverty, giving a further boost to work incentives."

Dr Wellings' full article in the Telegraph the day before yesterday is here.

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May 05, 2010
Wednesday
The election manifestos on welfare

This morning I was on BBC Radio Scotland where I was invited to talk about what each party has in its manifesto about welfare benefits. In fact we didn't discuss that at all but before the discussion, the BBC sent me excerpts from each of the manifestos.

Here are some notes on them:

Labour

Good quote:

"All those who can work will be required to do so". It sounds great but the claim lacks credibility after 13 years of initiatives that have brought about precious little change.

Unemployment benefits:

"we will guarantee that when someone who has found it difficult to get into work comes off benefits, their family will be at least £40 a week better off." The fact that this is regarded as a new achievement to be aimed at is a sign of just how absurd our benefit system remains. Of course it should pay "at least £40" to work, say, a 36 hour week. That means you earn just over £1 an hour more than you would do on benefits. That is still not enough of an advantage for working. But implicitly the Government is admitting that some people gain less than £40 a week by working. And the target of making this a minimum, one should note, only applies to "someone who has found it difficult to get into work". I suspect this means it will only apply to the long-term unemployed and not everyone else.

Incapacity benefit:

Labour claims to have made the test of incapacity tougher and it genuinely does appear to have improved things in this area although it will take some years before everyone already on the benefit has been vetted.

Lone parenting:

Labour claims that the "lone parent employment rate has increased by over 12 per cent since 1997". Yes, that is progress but how painfully slow it is! The manifesto goes on to say, "We are radically reforming how Job Centre Plus helps lone parents: providing extra help with childcare, training and support to find family-friendly work while requiring those with children aged three to take steps to prepare for work and actively to seek employment once their youngest is seven years old." The idea of requiring lone parents to "prepare" for work seems to be just a gesture unlikely to bring much result. But it is potentially a much more radical step to require lone parents on benefits to seek employment once their youngest is seven. In previous times, lone parents have been allowed to receive benefits until their oldest is 16. In parts of America, at least, the lone parent is required to seek work once the youngest is three months old. This change - at least I think it is a change - could be quite positive and important if it is carried out rigorously. Unfortunately it could have one unintended consequence. It could encourage some lone parents who have got used to not working to have another baby when otherwise they would not and perhaps without having a father in the household, ideally a husband.

Minimum wage:

Labour says it wants to keep the minimum wage rising in line with earnings, although it leaves it up to the Low Pay Commission. I wonder whether the government has calculated how many people are out of work because they are not able to get a job at the minimum wage though they would be able to if the minimum wage were, say, a pound lower? But actually this may be a red herring since the benefits system provides, effectively, a minimum level below which people will not seek work.

Overall: Labour knows the problems and takes them seriously. It has been moving in the right direction but far too slowly.

Conservatives

Good: the party accepts that the benefits system has been extremely damaging. It says, "One in six children in the UK now lives in a workless household - the highest proportion of any country in Europe". This tells us not only that our welfare state has bungled but that it has bungled even worse than that of other European countries.

Getting people off benefits into work: The Tories have a single, overarching plan, a "Work Programme". The unemployed would be offered help to get work earlier than now. This help would be delivered "through private and voluntary providers, which will be rewarded on a payment by results basis". This is a good idea, used in the USA, which cannot help but be more effective than the Job Centres (see previous entry for the experience of Harriet Sergeant at a Job Centre). Long term claimants will be required to "work for the dole" on community work programmes. This plan could be called "Wisconsin lite" or "New York lite". It is a cautious version of what has been carried in America with considerable success. It is the best programme produced by any of the British parties but its fault, still, is that it does not move fast enough towards the target which should be that people who want benefits for being unemployed should be required to attend several times a week a centre where they are assisted in applying for jobs. After a specified period, say, three months, if they fail to get a job in the private sector, they are required to work, say, three days a week in a community job while continuing to attend the centre to find a job in the private sector for the other two days.


Liberal Democrats

Good: Radically increased personal tax allowance of £10,000. This would make it much clearer to low-paid people that they could well be better off working. It cuts out the need for many people to obtain tax credits. It is simpler and fairer. After all, who that is earning or receiving less than £10,000 should be taxed? But where the party then goes wrong is not adjusting upwards the tax rate so that after, say, £18,000, people will start to pay more than previously. The Liberal Democrats offer the illusion that everything can be paid for by taxing the rich more. It is simply not true. You could even call it a lie since the information on this from the Institute for Fiscal Studies is well known. The extra taxes on the very rich will drive them away which will also have damaging effects on the growth of the private sector.

Tax credit:

The party scores by hinting, at least, at the mess that tax credits are. They say they will be "ending the rollercoaster of tax credit overpayments by fixing payments for six months at a time". It is good that at least one party is admitting that tax credits are far from perfect. Tax credits for pensioners, incidentally, are a farce and a cynical outrage of the Labour Party since such a large proportion of the poor and old do not claim them.

Getting people off benefits into work: very little on this apart from the £10,000 allowance. This manifesto is thin stuff. Unlike Labour and the Tories, the Libdems seem lightweight on this crucial issue.

Scottish National Party

Good: "the benefits system should be designed to provide incentives for work". I am glad that so many of the parties acknowledge this principle. It is progress of a sort. Unfortunately they offer little to bring it about.

Everything else: the SNP seems to have little to say judging by what the BBC sent me. It is even more lightweight on the subject than the Libdems.


Overall

Most of the parties recognise that it is a good idea for work to pay better than benefits. The Libdems seem pretty lightweight on the subject of benefits and the SNP even more so. But both Labour and the Tories are moving towards stricter conditionality of benefits and the Conservatives are willing to use private and charitable organisations to help people get jobs (with payments for the organisations being based on results). The Tories are also moving hesitantly towards the idea of workfare.

Labour is gradually getting better at welfare but it is a slow, tortuous process and most of their many initiatives in the past have turned into damp squibs. The Tories have the plan most likely to bring down the awful number of people of working age who are not working.

Note: 28 per cent of working age people do not work. Most of them are on benefits.

The manifesto excerpts in full:


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May 04, 2010
Tuesday
The Labour government has kept telling us how hard it tries to help young people into work

Every now and then over the past years, one has seen a Labour government spokesman proclaim how effective the government's initiatives have been in getting people off the dole and into work. A list of initiatives are mentioned leaving the impression that everything possible is being earnestly done to find work.

So how does it look on the ground? And would private companies which only got paid if they found work for people, do better?

Here is an account from the front line of how the current system tries to find work for the unemployed:

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April 26, 2010
Monday
The idea that we just have to tax bankers' bonuses to solve unemployment

I have just returned after appearing on Radio 5 Live where I took part in a discussion about Lord Digby's remarks (see previous posting) about the young unemployed.

It was a rather unsatisfactory debate, not least because I was alone in the studio in Television Centre in London whereas the presente was, I think, in Manchester.

I was 'up against' a gentleman called Charlie Kimber - speaking from I don't know where - who was from a group called "Fight for the right to work". His position was interesting. He said there a million NEETs (people not in employment education or training) and there were only half a million vacancies.
Therefore they could not get work.

I asked who did he think would give them work?

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Even the staff of the benefits office tell young people they are better off on benefits

Digby Jones has stirred up interest in welfare benefits by comments made in a Panorama programme being screened tonight at 8.30pm. (Looks worth watching.)

Digby Jones, who was trade minister in 2007-08, made his comments after being introduced to two men in Swindon for a television programme about the young unemployed.

One of the pair, who were from middle-class families, told Jones that he and his girlfriend were paid about £12,000 a year in jobseeker’s allowance and housing benefit, and there was no reason for them to look for work. This is equivalent to a gross income of £15,000-£16,000.

Filmed for the BBC’s Panorama programme to be shown tomorrow, Jones said to the two, called Ben and Tim: “If I was watching this I’d throw something at the TV and say ‘Get off your backsides and work’ and we should cut all your benefits and starve you into going back to work.”

(This was from The Times online)

He apparently has said that in fact his idea is not to starve them but, on the contrary to give them food stamps but nothing else if they refuse three job offers.

This led to a phone-in on Radio 5 Live where a TUC representative said there were no jobs. However later in the day I was asked to comment on BBC Radio Wales and was fascinated by the comments of another contributor called James Hall. He works with the unemployed in Wales.

James Hall reported that there was a pyschology among the young employed of 'why bother to work?' This was compounded when, as he knew from experience, they were sometimes told by staff in the benefits office that they would be better off on benefits.

He found it shocking that the benefits office should tell them this. He had been to the office and complained saying that it was not just a matter of finance. The young people would have more satisfaction from working. He mentioned some of the familiar damaging effects of remaining unemployed. He felt these should influence what the staff said.

Far more shocking however, is the fact that the staff might have been telling the simple truth as far as money alone is concerned.

The most basic principle of well-designed benefits was set out clearly back in 1834. The Royal Commission on the operation of the Poor Laws declared that the income that could be obtained by a low paid worker should always be more than amount that person could obtain on benefits. Otherwise he would have limited incentive to find work. That principle holds good today.

Although the level of Jobseekers' Allowance has fallen compared to average earnings over the years since 1979, it seems that it is still the case that some people can get more on benefits than they can by working. More important, a vastly greater number of people would gain only modestly by working instead of living on benefits.

In all cases, there should be major advantage in working as opposed to not working. That should be the first basic premise of the design of Jobseekers' Allowance.

Incidentally, it was said on the BBC Radio 5 Live that the Jobseekers' Allowance is very small. Yes, it is small by the standards of those on median and high incomes. But it should never been forgotten that Jobseekers' Allowance and other benefits often carry with them 'passport benefits' - other benefits that you automatically or easily get when you are on them. Among them are free school meals, housing benefit, council tax benefit and even, in some cases, payment of mortgage bills. These things can add up to a great deal more

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April 22, 2010
Thursday
BBC propaganda about inequality

The BBC left-wing propaganda never rests. It does not matter whether it is the Today programme, comedy programmes or social science. It is relentless.

Yesterday Laurie Taylor, a left-wing academic, was interviewing another left-wing academic about inequality. This was all under the guise of a non-partisan programme about social science called "Thinking allowed". Now Laurie Taylor is a very clever man with a lively mind. But he also has his left-wing prejudices. His interviewee yesterday was arguing - we were told this was on the basis of objective data - that Britain was a particularly unequal society and that inequality is highly damaging.

I was not able to listen all the way to the end however, at the time when it was being established that Britain was particularly unequal, Laurie Taylor did not think to query whether the evidence was reliable. My view is that he wanted to accept the 'evidence' and therefore did not want any doubt to be cast on it. However if he had thought to get in someone who took a different view of these matters, he would have readily had reason to doubt the figures.

For example, in the 1990s, the Department of Social Security, as it then was, studied the lowest income decile in Britain to find out what they did in life. You would think they were low-paid unskilled workers, wouldn't you? But the remarkable discovery was that a surprisingly high proportion of them fell into two categories: builders and accountants. In other words, these were people who were either fixing their tax affairs so that they appeared to earn little or nothing but who, in fact, were making plenty, or else they were plain crooked. The figures did not truly represent the condition of poor people. The figures were not reliable.

A second discovery was that people who were supposedly extremely poor had a remarkable amount of consumer durables.

A third factor, which would be obvious to anyone who knows anything about welfare benefits, is that those on income support (as it was) were not allowed to have more than a very small amount of capital, otherwise they would lose some of their benefits. So what do people on such means-tested benefits do? They have every reason to arrange their affairs as carefully as any tax avoiding "greedy banker". They buy consumer durables. They buy objects like gold which will not appear on bank statements or savings accounts. They simply spend the money by taking holidays. They "give" money to close relatives who will then "give" it back at a later stage. In other words, those on means-tested benefits have reason to reduce their capital if they have more than a small amount. This is one of the damaging unintended consequences on people's lives. It is also a reason wholly to distrust statistics on the assets of the poor.

But none of this was mentioned. The propaganda rolls on.

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April 09, 2010
Friday
In the jargon, "working and claiming"

Another paper I have come across in my sorting was commissioned by the new administration of Tony Blair when it was willing to contemplate almost any fact (since none of them could be its fault). The report was on "The Informal Economic" and was published in 2000.

This revealed,

The Department of Social Security estimates that more than 40 per cent of all fraud against the main means-tested benefits for people of working age, Income Support and Jobseeker's Allowance, involved failure to declare earnings.

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"What Beveridge denounced as the 'giant evil' of idleness is now being incubated on a mass scale by the very welfare state designed to eradicate it."
If an unemployed Pole gets a job as a barista in Starbucks, even for 15 hours a week, his situation improves dramatically. A young man in Britain would be just £10 a week better off than if he stayed at home on benefits. Why break your back for an extra tenner?

The situation is even more pernicious for young women who leave school with low qualifications, because the alternative to low-paid work is pregnancy. A woman with one child and on benefits has, on average, more disposable income than a hairdresser or teaching assistant. With two children, it's more than a receptionist or library assistant. With three, it's a lab technician, typist or bookkeeper. So there should be no mystery about why Britain came to have so many children in workless households (one in five, the highest in Europe). The young mothers, and the young men on benefits, are walking down a road to dependency paved for them by the state.

This is a peculiar definition of compassion. What Beveridge denounced as the "giant evil" of idleness is now being incubated on a mass scale by the very welfare state designed to eradicate it.

This is from an excellent piece by Fraser Nelson in today's Telegraph. It repeats something that people like me have been saying for a long time but it is good to see it said anew and so well. The trouble is, as he says, that neither of the main parties seems likely to be willing to take the problem on. In fact, the one party which openly has a policy which would genuinely help is, to my surprise, the Liberal Democrat party which proposes that the personal tax allowance should be raised to £10,000.

Incidentally, it would be good to know what were the sources for his detailed assertions about how work does not pay.

The Institute for Fiscal Studies produced a report earlier this week about benefits and taxes under Labour. One of the authors commented,

Compared with 1997 those who had a weak incentive to work – especially lone parents – have seen an improvement in their incentive.

"But in order to pay for that Labour have had to raise taxes which has weakened the incentive to work of other groups.

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April 08, 2010
Thursday
How many were in the workhouses?

I have finally got a proper bookcase for all the books and pamphlets I have accumulated on the welfare state. As I was sorting them out, I came across an article by David Beito in the National Review, published back on May 6th, 1996. This is the quote which I see I underlined when I read it:

According to a study by the U.S. Census in 1905, only 1 out of every 150 Americans (excluding prisoners) resided in a public or private institution of any kind, including almshouses, asylums, orphanages, and hospitals.

Of course people will interpret this figure according to their political beliefs. Beito argues that it shows how people made every effort to be independent and not rely on handouts.

It made we wonder, though, what proportion of the population was resident in the workhouses in Victorian Britain. These workhouses are regarded by the modern British media and educational establishment as a kind of shame on Victorian society. How could these brutish Victorians treat the poor so horribly?

But I am pretty sure that the proportion of the population who lived in the workhouses was extremely small. It was not the poor who lived in them, it was the absolutely destitute. I would expect, if the US figures and other information I have seen along the way are a guide, that the proportion was certainly far less than, for example, the increase in the proportion of the population that is now kept in prisons. Which is worse: being in prison or a workhouse? The two figures are not unrelated since it is a major part of my argument that state benefits have undermined employment, the family and civility. These things have, I suggest, led to a vast increase in crime and hence the increased prison population.

In the latter two thirds of the 19th century, according to the intentions at least of the Poor Law commission of 1834, there was meant to be no 'relief' (welfare benefit) for anyone who was not in a workhouse. Therefor people made every conceivable effort to make sure they could manage without any welfare benefit. They pursued any work opportunity with determination. They made every effort not to get pregnant without having a husband and - if pregnancy did occur - the man was under enormous pressure to marry the woman. Otherwise, he would be condemning her to a terrible situation which would be morally wrong.

It so happens that one of my great grand-mothers became pregnant without being married. The family of my great grand-father insisted that he should marry her using the imoortal words: "If she is good enough for that, she is good enough to marry!"

People made sure they did not become welfare-dependent. Only a tiny proportion, I believe, ever entered the dreaded workhouse. Any information on the actual figures would be welcomed.

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March 26, 2010
Friday
Welfare benefits are complicated

Welfare benefits are complicated. For a graphic description from a claimant, try this.

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February 10, 2010
Wednesday
Two out of three disabled are fit for work

It is extraordinary how trivial news can dominate the headlines while genuinely significant news barely gets mentioned, even in so-called quality newspapers.

One story that came out about nine or ten days ago was mentioned in only a minority of newspapers (including the People, the Daily Telegraph and, from memory, the Daily Express). It was the news that two out of three people claiming Incapacity Benefit (now renamed Employment and Support Allowance) have been deemed fit for work under new, tougher tests.

This is extremely significant news. For the first time since Labour came to power here is concrete evidence that, finally, it is tackling the vast army of people who are wrongly being given Employment and Support Allowance. I have not seen the latest figures but the numbers who were on the old Incapacity Benefit were over two million. That is a vast number. This news suggests that over a million people will be taken off this benefit and required to seek work. Those deemed incapable of work, of course, are not required to seek work.

The consequences could be:

- a dramatic rise in the numbers 'unemployed' as defined by those getting Jobseekers Allowance. This rise may be considered by casual observers to be a rise in unemployment. In fact, to the extent it is due to people being moved off Employment and Support Allowance, it will be a revealing of unemployment that was previously hidden because so many were wrongly on incapacity benefit.

- a great increase in the numbers genuinely seeking work, since the money given to those on Jobseekers Allowance is significantly less than the money people used to get on Incapacity Benefit. Also they have a legal requirement to seek work.

- most important of all - a long term increase in the proportion of people genuinely seeking and doing work. This could make a great - though hard to measure - difference in the morale and culture of Britain.

- a reduction in the cost of the welfare state, as people are moved to a less expensive benefit and more of them seek work.

We are talking about over a million people whose lives are being changed. This is truly important. Yet it is barely written about at all.

Some of the best coverage was by the Taxpayers' Alliance, using the story in the People. Here is the Telegraph coverage. The Guardian, I find, has mentioned it. Naturally it is worried that the test is unfair and appears uninterested in the idea that people have been claiming billions of pounds for being incapable of work when, in fact, they are not. It is, of course, important that a test is fair. But why cannot the Guardian have any sense of injustice to those who pay tax or the importance of work to the creation of decent lives?

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Benefits undermining energy - what would Beveridge say

One of the five giants which Beveridge wanted to slay was idleness. What would he say about this particular outcome of benefit dependancy? He would be appalled.

http://winstonsmith33.blogspot.com/2010/01/failing-to-scrounge-from-state.html

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January 28, 2010
Thursday
Video: welfare benefits are like stale cheese

Here is part of talk I gave at the Cato Institute in Washington last year.


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January 05, 2010
Tuesday
Housing benefit provides the biggest discouragement to work


In the great roll call of this government’s failures and blunders, its record on housing benefit deserves to have a prominent place. This was the government that was going to “think the unthinkable” on welfare benefits. Instead it “did the predictable”. Instead of embarking on radical reform like the administration of President Clinton in America, it opted to muddle along. It talked big and acted small.

Housing benefit is arguably the worst of all the benefit failures. Why? For two important reasons. One, it costs an amazing amount of money after nearly doubling since Labour came to power to £20 billion. That – for those who can bear the idea – amounts to £692 for every working person in Britain. Most people imagine that Jobseekers’ Allowance is the big, key welfare benefit. Not at all. Housing benefit costs more than three times as much.

The second and even more important reason why this failure matters is that housing benefit is probably the biggest single discouragement to the low-skilled unemployed to getting a job. Get a job and you lose housing benefit at a rapid rate. So housing benefit is one of the most important reason why more one in four people of working age are not working.

The official cost of £20 billion is just the beginning. Nearly all the people who are discouraged from working are also getting other benefits including Jobseekers’ Allowance and – in many cases - Incapacity Benefit or Income Support. But worse even than that is the effect on the morale and culture of those at the lower end of society who get accustomed to welfare dependency. It causes depression and alienation and contributes to uncivil and even criminal behaviour.

There is a simple rule for creating sound welfare benefits. It was described 175 years ago in the report of a Royal Commission into the operation of the poor laws. The commissioners decided that benefits should not be more advantageous than the income that would be obtained by the individual taking on low-paid work. It is as simple as that. Work must always pay. .

On radio phone-ins I have often heard people exclaim: “Do you realise how little you get on Jobseekers’ Allowance? You can’t live on that!” Unfortunately interviewers – being part of the upper middle class - rarely understand that the Jobseekers’ Allowance and other benefits are normally accompanied by other benefits such as a free school meals and, very likely, the big one: housing benefit. Only when they are all added together do they amount to a meaty discouragement to work for the low-paid.

It will come as a surprise to many people to know that not all countries pay housing benefit – or at least not to as many classes of people as Britain does. In Italy, for example, an unmarried teenage mother does not climb up the council housing queue, get income support and housing benefit. She is expected to live with her parents or other relatives or perhaps the father of the child. The result is that there is far less unmarried parenting in Italy than here. They make their decisions and live with them. That means they make better decisions.

If there were prizes for tinkering with the welfare benefit system, this government would certainly win the gold trophy. I used to get press releases from the old Department of Social Security as it was called. If I had had a strange notion of interior decoration, I could have wall-papered my bedroom with them within a few weeks.

To be fair, some reforms have gone in the right direction. James Purnell, when he was in charge, decided that people should only get benefit to pay for a maximum of five bedrooms. Yet you can see from this example just how cautious the reform has been. For people who struggling to afford accommodation with two bedrooms, it will seem outrageous that others can going on having babies and getting more and more bedrooms at the expense of taxpayers. And people sometimes get benefit at a level based on expensive housing. Hence the scandalous case recently of one family getting £2,875 a week.

America was far more radical in its reforms. President Clinton agreed to a limit to the total number of years in a lifetime during which people could claim unemployment benefit. America was determined to do something about the benefits culture. Britain under Labour has merely strutted on the stage – posing, pontificating and making precious little difference.

What could be done? One idea – from the Centre for Social Justice - is to subsume housing benefit with many benefits into just a couple of major benefits. The benefits could be withdrawn at a slower rate than now when someone gets work, thus reducing the discouragement to getting a job. The trouble is that, other things being equal, this would cost a lot more.

The truly radical idea would be do something like that but significantly reduce the amount paid and leave it to the recipient entirely what accommodation is rented – if any. That would provide a powerful incentive to lodge with relatives or to go to a different area with lower rents.

But has Britain got the guts to do this sort of thing? I would like to think so but there is every reason to doubt it. The upper middle class elite does not get the seriousness of the problem. The BBC, the readers of Guardian and the Independent believe that their support for generous benefits makes them into generous, good people. Unfortunately it does not. It results instead in the continuance of a welfare dependant lower class with tremendously damaging social effects both to the poor themselves and everyone else.

(This is the unedited version of an article that appeared in the Daily Express today.)

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October 27, 2009
Tuesday
How many are really not working?

A few statistics from Dynamic Benefits published by the Centre for Social Justice:

- Today there are 10.4 million working-age people not working in the UK. Of these, 5.9 million are claiming out-of-work benefits.

- Throughout the last ten years, prior to the recession, the number claiming out-of-work benefits has been at around 5.4 million.

- Benefits are the main source of income for three in ten households in the UK

- In 2008/09, £74.4 billion was paid directly to working age adults and children, about 40% of the total social security budget.

- The total cost of and number of people claiming Disability Living Allowance are up 50% since 1997.

- 23 European countries have a lower proportion of children living in workless households than the UK. In countries such as Spain, Italy and the Netherlands, the percentage of children living in workless households hovers at around 6%. In the UK, by contrast, it is over 16%.

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October 21, 2009
Wednesday
Reform's idea of only giving money to those in need

I have just returned from the launch of proposals by the think-tank Reform for changing welfare benefits. The report is called the The End of Entitlement and is surprisingly disappointing. Its main thrust is that lots of money is 'wasted' because it goes to middle-class people. Instead, the money should be concentrated on those who need it.

This is an idea which has been knocking around for centuries. Among the various times, I remember it being proposed by Conservatives in the 1970s. On the face of it, the idea is attractive. Let's save money by only giving money to those who really need it.

Quite absurdly, the name of Beveridge was mentioned in this context and anyone who has a cursory knowledge of the system Beveridge proposed would know that he was against such a thing. His proposal was for a flat rate contribution rate for everyone and a flat rate benefit for everyone, too. Means-testing was intended to play a tiny part.

It is disappointing, to put it kindly, that the people who wrote this report seemed to have little awareness of why the idea has been discredited and why, indeed, Beveridge would have none of it.

What is wrong with 'concentrating benefits on those who really need it'?

Let us say that you decide to remove Child Benefit in order not to 'waste' it on the middle classes and, indeed, the rich. In doing so, you will be under great pressure to make up the loss of this benefit to the poor.

So the pay-out that goes specifically to the poor - who will probably also be unemployed - will go up. But if that poor person thinks of taking a job, that child benefit element of his or her benefits will be lost. Whereas if you keep the child benefit, he or she will not lose it on taking a job. Therefore the incentive to take a job will be reduced. The poor person's reasons to stay on benefits will increase. This will, other things being equal, lead to even more unemployment with all the damage it creates in terms of the poor person's well-being and self-respect and the tax burden on those who work.

This failure to think through the effect of welfare legislation on the incentives affecting the poor has caused the unemployment and unmarried parenting explosions that have afflicted this country over the past half century. It is dismaying to hear them touted as a new proposal.

The trouble always comes from those who think it would be a good idea to save money but have no background in how welfare can go wrong. The Treasury has often been at fault in this way, I suspect. It comes as no suprise that the Reform presentation started with the size of the government deficit as a reason to reform welfare.

If benefits, such as Child Benefit, that often go to the middle classes were removed as part of a thoroughgoing reform of benefits in which the incentives facing the poor were centre stage, there need be no harm. But removing such benefits and replacing them with even more means-testing would be a terrible mistake.

I should say that I have previously and otherwise had great respect for Reform which has done some terrific work. However in this area, I fear they are aiming at the wrong target and could end up doing more harm than good.

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September 30, 2009
Wednesday
Hostels, lone parents and some grim statistics

There has been an interestingly muted response to Gordon Brown's proposal of hostels for teenage mothers aged 16 and 17. Simon Hoggart in the Guardian referred to

a weird Victorian notion of an institution for fallen women – a barracks for single teenage mothers

and his colleague Polly Toybee said,

Sheltered housing with support is a good idea for the youngest teenage mums without families. But why make good schemes sound like sending them to a Victorian nunnery for punishment?

If a Tory government had suggested such a thing it is sure that there would have been shriek of outrage that unfortunate women were being 'victimised'.

If the Tories run with the idea or anything like it when/if they form the next government, the Left and people on Question Time and the BBC will be sure to turn on it with fury.

Here, then, is a reminder of why action of some sort has become desirable. It comes from Dynamic Benefit: towards welfare that works recently published by the Centre for Social Justice. It includes a graph showing that Britain is the unmarried parenting capital of Europe. The only country that is anywhere close to us is Ireland. The rest have a far lower incidence of unmarried mothers.

These are the proportions of households headed by an unmarried mother (figures from Eurostat, read off as best I can from the graph on page 117 of the report):

UK 11%
Ireland 9.7%
France 5.6%
Netherlands 5%
Germany 4.9%
Slovenia 4.7%
Norway 4.3%
Poland 3.3%
Portugal 2.8%
Bulgaria 1.8%
Italy 1.3%
Spain 1.2%

The reason we are the European capital for unmarried parenting is that we give higher benefits - in cash and housing - compared to money available from low-paid jobs than the other countries. Italy gives virtually nothing and unmarried parenting there is rare. It is not that the cash encourages young women to have children out of wedlock. It is rather that government, by giving - relatively speaking - so much money has ended the situation that has previously existed in Britain and still exists elsewhere: that it is a disaster for a young woman to have a child outside wedlock so she does all she can to avoid it.

To those who say that giving less money is harsh and that this is a humanitarian issue I will agree on this: it is indeed a humanitarian issue. A government which changes the natural order of things so that more children are produced by unmarried mothers without any means of support other than the state is creating a deluge of misery for the children that are created.

There are many kinds of evidence that the children are likely to do less well at school and turn to delinquency causing unhappiness to themselves and others, too. Here are just two figures from the same report (p120):

- 70% of young offenders are from lone parent families

- children from lone parent families are than 70% more likely to fail at school.

It is indeed a humanitarian issue and we should think of and speak for the children who are created by the policies that remove the natural disincentive to have children out of wedlock.

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July 14, 2009
Tuesday
Ten welfare failures of the Labour administration

Here are ten pretty dramatic assertions about how Labour has affected the welfare of the poor during its twelve years in power. They are extracted from an article by Fraser Nelson in the The Spectator:

1. "Even by Labour’s favourite measure, the Gini index, which measures income gaps across various countries, inequality is at a record high — towering above the levels seen in the Thatcher years."

2. "Scandalously, the poorest 10 per cent now have a disposable income of £87 a week, down from £96 a week eight years ago."

3. "Foreign-born workers account for all net job creation in the private sector since 1997. That is to say, strip out the public sector and there are fewer British-born people in work now than in 1997."

4. "As for youth unemployment, that is now a third higher than when Labour took office."

5. "At no point since Labour came to power has the number on out- of-work benefits fallen below five million."

6. "Of these working-age people, 1.1 million — equivalent to the population of a city the size of Birmingham — have never worked a day in the Labour years."

7. "International surveys show school standards are declining, with the poorest hit worst."

8. "Studies set up in the early Labour years to track progress have in fact tracked decline."

9. "Infant mortality gaps between the rich and poor have — quite extraordinarily — widened under Labour."

10. "Ditto the gulf in life expectancy."

These points are mentioned almost casually in his article. But each is powerful. Assuming they are true, should be far better known. Television and radio interviewers should all be sent a copy to put the points to Labour ministers when they are crowing about their supposed successes. Tory shadows should repeat them frequently.

I would be glad if it were possible to have links to the sources of the data supporting these assertions. Fraser Nelson says in his article: "none of the above figures have [sic] been published by the government - this magazine lodged a request for their release".
It would be good if he would put the sources up online so the assertions could be repeated with confidence.

But the big point, which he makes well, is this: "The Prime Minister's greatest contribution to convervatism... has been to test to destruction the idea that money solves social problems."

And again, "Mr Brown's government spent like no other, and was socially regressive."

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July 11, 2009
Saturday
How the welfare state taxes the poor

Here is a clear account of how our 'welfare state' treats those on low incomes:

Anyone entitled to claim tax credits – and that includes about half of all pensioners – whose annual income exceeds about £7,000 (believe it or not, neither HM Revenue & Customs nor the Department of Work and Pensions could tell me the precise figure when I called to check) has some of their state benefits withdrawn through a means test.

To be precise, claimants lose 39p of tax credit for every £1 of income above that limit. Then, like anyone earning more than £6,475 a year – the current personal allowance – they must pay National Insurance Contributions (NICs) at 11pc.

Plus, to put the tin lid on it, like everybody whose income exceeds their personal allowance, they must now pay 20pc income tax instead of the 10pc they paid on the first £2,230 earned in the last fiscal year before Mr Brown cut off the bottom rung of the tax ladder. So, total deductions from their marginal earnings are 39pc, plus 11pc, plus 20pc – or a total of 70pc.

What it all boils down to is that people earning about £7,000 a year are allowed to keep just 30p in every £1 they earn above that level. The scope of this poverty trap was set out in the Treasury's Red Book last year – funnily enough, the chapter headed 'Fairness and Opportunity For All' – to see the figures, but there they are.

More than 1.87m people paid "high marginal deduction rates" of between 60pc and 90pc last year.

This description is by Ian Cowie, the personal finance editor of the Daily Telegraph. The full article is here.

Two points:

1. Things used to be even worse in discouraging work and employment.

2. What a pity it is that newspapers do not, on the whole, have 'welfare state' correspondents who would point out this kind of thing more frequently and on pages that politicians read more frequently. Of course, as newspapers lose circulation, they have actually been cutting back on specialist correspondents including those who deal with health policy and education.

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June 17, 2009
Wednesday
This is not what Attlee expected

Youtube now has an excerpt from the talk I gave at the Cato Institute in Washington.

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April 01, 2009
Wednesday
Welfare reform in Wisconsin

How do you go about reforming welfare benefits?

It is not often that the story is told but the process which took place in Wisconsin was carefully examined in Government Matters by Lawrence Mead (Princeton University Press, 2004).

Here are few observations extracted from the first two chapters:

“The states with good-government traditions like Wisconsin were the most able to fuse generous benefits with strong work requirement. That is the combination that seems to work best and that the public supports.” (p12)

“Administrative work tests – where work effort is demanded as an eligibility condition for aid – avoided the fairness problem of incentives. They turned out to be more effective as well.” (p20)

“Work enforcement emerged as a middle ground between the old policy of entitlement and the more extreme conservative proposal of simply eliminating welfare.” (p20)

“While fraud and abuse were indeed rampant when welfare expanded in the 1960s and 1970s, states moved speedily under federal pressure to clean up, and the rolls remained largely unchanged.” (p20)

“However, deciding and enforcing the required work standards makes serious demands on government. The potential for political conflict or administrative breakdown is great. The dilemmas of traditional welfare are traded for institutional challenges that may prove just as difficult.” (p20)

Between 1994 and 2000, the real value of welfare benefits in Wisconsin rose a little. So the dramatic fall in caseload between those two dates clearly had nothing to do with the level of benefits. It appears to have been entirely due to the amount of conditionality. (Statistics on p22)

Prior to 1994, “Normally when applicants approached local welfare agencies, they were immediately processed to determine their eligibility. Under Work First, they were first counselled against unnecessary dependency and invited to pursue other options, including immediate participation in JOBS.” [JOBS = Job Opportunities and Basic Skills Training Programme.]….Self Sufficiency First (SSF) was a tougher version of the same thing…they had to attend work orientation sessions and put in 60 hours looking for work for 30 days prior to going on aid – or their applications would be denied.”(p30)

“SSF’s companion was Pay for Performance. PFP toughened the sanction for noncooperation with work requirements….hours of assigned activities that a client missed without good cause were docked from the grant at a rate of $4.25 an hour…” (p31)

“SSF and PFP were implemented in March 1996 for the entire state. They were thus the first reform programs to impact Milwaukee seriously. They produced little short of a revolution….huge numbers simply left the rolls, with the majority apparently taking jobs…”(p31)

“There is no point in considering options to solve a problem that will be rejected by the legislature or the voters.” (p35)

“Tommy Thompson [the Governor of Wisconsin] realized it was more important to begin a process of change than to know precisely where it was headed. By proposing one initiative after another, he got people thinking about change, and he kept his opponents off balance. He legitimised the idea that welfare, which had been sacrosanct, could be changed without the roof falling in.” (p35)

Early ‘inconsequential’ legislation “…changed the discourse surrounding welfare and thus prepared the way for the later and more radical programs…Policymaking is a process as much as a decision.” (p36)

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December 23, 2008
Tuesday
How much and how quickly do benefits change behaviour?

The study described below suggests a quick and powerful effect of welfare benefits on behaviour. It is all the more remarkable since the report is connected to the Institute for Fiscal Studies which, in the past, I would have associated with the view that giving money to the poor was an obviously good idea. I would not previously have expected this institute to worry about the perverse incentives this might create. But now this study makes a very dramatic claim: that the effect of benefit changes takes place almost straight away.

Of course I wholly agree that welfare benefits change behaviour. I would argue further than they change people's morality. But I have always taken the cautious view that it takes a long time for benefit changes to do all this. I have found it hard to imagine a woman thinking to herself as she is deciding whether or not to have sex (or whether to have it with contraception) "Yes, I think I will go ahead, unprotected. After all, I calculate that benefits for lone parents have gone up ten per cent."

But who knows? Perhaps I have been overcautious. I hope that I might find the time in the future to read the report in detail.

Here is part of the the Daily Telegraph report:

The study, Does Welfare Reform Affect Fertility?, looks at the impact on the birth rate in the UK caused by reform of child benefits launched by Labour.

It says that the introduction of Working Families Tax Credit and an increase in Income Support between 1999 and 2003 triggered a rise in taxpayer spending on children "unprecedented" in the previous 30 years.

Because the reforms were targeted at the poorest families with children, the value of their state handouts increased by 10 per cent of their total household income.

For couples who both left school at 16, the reforms meant an increase in benefits of 45 per cent, from £39 a week to £56.76. This is a rise almost twice as much as the handouts for which a couple who went on to sixth form college would be eligible, which increased by 25 per cent to £37.27 a week.

The researchers then looked at fertility rates both before the reforms were announced and after, for a sample of 101,330 women aged between 20 and 45.

They found a large increase in the first year after the benefits were made more generous, particularly among women who had left school as soon as possible.

The results show a 15 per cent increase in the probability of having a baby in the "low education group", equivalent to an extra 45,000 births compared with 670,000 across Britain as a whole.

Overall there has been a steady rise in the birth rate since 2001, and although some of this is down to higher fertility among immigrants, even among women born in the UK it has risen from 1.68 births per woman in 2004 to 1.79 last year.

In addition, analysis of household surveys found large numbers of poorly-educated women who said they were not using contraception because they wanted to have children.

The study, led by Sarah Smith of the Centre for Market and Public Organisation at Bristol University, is published in the autumn issue of the journal Research in Public Policy.

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December 10, 2008
Wednesday
Notes ahead of the welfare reform white paper

NOTES AHEAD OF THE WHITE PAPER ON WELFARE REFORM

Britain has more than four million people who are of working age but who are claiming benefit on the basis that they are not working. This is the case after more than a decade of economic growth. The figure is likely to rise substantially now that we have entered a recession.

The numbers who are claiming benefits in this way are about four times the equivalent figure in the 1960s. This has been a massive increase and it shows particularly in the number claiming benefit on the basis that they are sick or incapable and then number claiming benefit as lone parents.

This enormous change in our society has been and remains extremely damaging.

1. Living on benefits and not on earned income is demoralising and disaffecting for many people. It has a tendency (though of course this does not always happen) to change the values of those affected. People are sorely tempted to go on claiming benefits when they know, in fact, they are no longer genuinely entitled to them. Karen Matthews, allegedly, was tempted to have more children for the bad reason that she would get more benefits and perhaps larger accomodation. Women are tempted not to care so much whether a man who fathers a child with her actually stays around. Men consequently feel they no longer have a duty to take responsibility for children they father. Unintended consequences such as these reverberate through a benefits culture.

2. The unemployed are depressed as is evidenced by the increased likelihood of them becoming ill, committing suicide, drinking and smoking more than others and dying.

3. Children brought up in families in which no one has worked are twice as likely to have psychiatric disorders (this telling statistic comes from the government-commissioned report by Professor Gregg published a week or so ago).

4. The benefits system has led to enormous growth in lone parenting and absent fathers. It is well established that children of lone parents and absent fathers tend to less well in life, tend to be less happy and have a greater likelihood of becoming delinquent. (Of course this is a tendency, not true in every or indeed many cases. I should also add that the evidence for this holds true even after allowance is made for class, wealth and other factors which might be thought to be a cause of children's good or bad outcomes.)

5. The welfare benefits have to be paid for out of taxing those who are working. This is, in many cases, simply unfair. It is also distressing to think of able-bodied people claiming benefits and the cost being paid for in part by taxing, for example, elderly people with very low incomes.

6. The fact that millions of able-bodied people are not working means that Britain's economic output and growth is lower than it would otherwise be.

What the present administration has done:

Unemployment benefits

- it has reduced the value of benefits in comparison to earnings (continuing the policy instituted by Lady Thatcher)
- It has created various schemes of encouragement and training to try to get people to work.
- Incapacity benefit has continued to be paid on more attractive terms than unemployment benefit

RESULT There has been a big reduction in the number claiming unemployment benefit/jobseekers' allowance since 1997. (Personally I suspect the reduction in the value of the benefits is the more important cause of this change.)

Sickness and incapacity benefits

- There has been some mild tightening up on the checks on people and some encouragement to take up work.

RESULT The numbers of such benefits are a little higher now than in 1997. These benefits are now the benefit of choice for those who are unemployed. (As well, of course, as being the benefit which is paid to those who have genuine incapacity to work.)

Benefits to lone parents

- Little change except the general reduction of benefits in comparison with earnings.
- Some extra pressure on mothers with older children to take up work. This pressure is now due to increase especially on those with an oldest child of 12 or more.

RESULT A small reduction in the numbers of lone parents claiming benefits.


OVERALL VIEW OF THIS ADMINISTRATION'S PERFORMANCE

The Labour government basically funked it. President Clinton had signed into law a radical change in the USA which resulted a 60 per cent reduction in the numbers claiming welfare benefits. Other countries, according to Professor Gregg, also sharply increased the conditionality of their welfare benefits. Britain has made only marginal progress. The welfare culture with the damaging effects it has on national culture has been allowed to continue.

THE CURRENT PROPOSALS IN THE WHITE PAPER

At the time of writing, these have not been published. If the leaks are accurate, the proposals will tighten up the conditions more and offer more assistance to people in getting work. This is welcome. But it will still be modest compared to what has happened in America. It sounds as though there will be little in the way of workfare or in requiring people to turn up every week either to work or to try to get work (important elements of the reform in New York State, for example).

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December 08, 2008
Monday
The coming white paper of welfare benefits

It will be interesting to see just how radical Purnell is with his white paper later this week. Will he, for example, really take on the problem of housing benefit? Here is an article with him from the Sunday Times.

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December 07, 2008
Sunday
Welfare reform is a mainstream but certainly not a universal view

A Daily Telegraph leader on Saturday puts the case for tough welfare reform. Of course it is a case with which I agree and it is satisfying, well over 15 years since I conceived the idea of writing The Welfare State We're In to see one of the main contentions of the book supported in a major national newspaper. But, as I have said before, our best chance of a major advance will be when the Guardian and even presenters of the Today progamme or Newsnight take the same view.

The conclusion of the Telegraph leader:

Ten years ago, Labour identified a moral case for welfare reform, but, like so much with this Government, it was mere rhetoric.

Another attempt is to be made in the current parliament, but it offers no greater prospect of success than the last.

Unless a far tougher approach is adopted, another generation of children will be born into this cycle of state-sponsored hopelessness.

Sadly, Polly Toynbee in the Guardian appears unwilling to accept that things are getting worse or that welfare and housing benefits are the root cause. She wrote on Saturday:

But this is not a story of broken Britain going to hell in a hand cart; it is a picture of small but deep and persistent dysfunction passed from generation to generation. Social historians looking at Charles Booth's maps of poverty in Victorian Britain find the same areas still in deep poverty, often the descendants of those he studied. The seven Matthews children or Baby P's siblings have a slender chance of growing up to be good parents, as abuse, neglect and lack of love are passed on indelibly.

I would urge her to read the Duncan Smith article below which offers at least some evidence that this constant level of people in great difficulties that she suggests does not actually exist. The levels of dependency, worklessness and crime have all risen dramatically. Moreover the evidence from Charles Booth is not all as most people suppose as this earlier post reveals.

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"Barely a third of working-age [council] tenants have full-time work"

If you read little else on this website, I hope you will at least read this extract from an article by Iain Duncan Smith in the Saturday Daily Telegraph. It describes the problem well and with some data which I had not seen before.

Britain is witnessing a growth in an underclass whose lifestyles affect everyone. Perhaps the reason why most people haven't been aware of the extent of this is because housing policy has, over 20 to 30 years, ghettoised many of these dysfunctional families.

In the Seventies, only 11 per cent of households on the estates weren't working; today barely a third of working-age tenants have full-time work. Less than 15 per cent are headed by a couple with children. Two-thirds are occupied by lone parents, lone men or lone women.

On such estates, few children see a positive father figure, with young men having children by different mothers, with the state covering the cost.

Small wonder that alcoholism rates are high and drug dealers ply their trade in full view of young families. This social breakdown leads far too many young boys into street gangs.

Although gangs are criminal and bound together by harsh discipline, the leader acts as an authority figure and the gang's strong ties and loyalties perversely replicate the family they never had. As gangs clash, residents suffer from the violence and high levels of crime.

These young boys are on their way to a life of crime. You don't have to take my word for it - look at the background of those who as young offenders end up in custody.

Over three-quarters of them are from broken homes, just under half of them experienced violence in the home and half of them have educational levels below an 11-year-old.

Girls suffer too. Many have grown up in dysfunctional families where their mothers had children as teenagers and they have shared the house with a string of "guesting fathers". Too many will repeat the lives of their mothers.

Families like this are much more at risk of abuse than any other. Recent NSPCC research has shown that a child growing in such a family structure is up to six times more likely to suffer abuse, which is why the social services are under growing pressure.

The cases of Baby P and Shannon Matthews have led to demands that more children be taken into care, yet in the past ten years 20 per cent more children have been taken into care. Furthermore, the outcomes for those youngsters are appalling.

Nearly half of all the under-21s in the criminal justice system have been in care, only 12 per cent gain five A-C GCSEs and a third of all homeless people have been in care.

When social services do take the child, too often the young mother goes off and has another child, which will more than likely end up in care as well.

The full article is here.

Here is a link to the Centre for Social Justice report on "housing poverty".

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December 05, 2008
Friday
Karen Matthews 'a one-woman advertisement for urgent welfare reform. '

It is astonishing the way that news and opinion work in Britain. Today, suddenly there is a focus on the idea that the welfare state created Karen Matthews, the woman who arranged for the kidnap of her own daughter.

The key to this seems to be that one of her lovers asserted that she had given birth to more babies to increase her welfare benefits.

In my book, I put the argument that the welfare state had undermined the morality of those most affected by it, namely those at the poorer end of society. I suggested it had damaged our culture and caused misery on a massive scale.

It is fascinating to see the arguments I put very carefully and with as much relevant evidence that I could muster put now in a really pugnacious and blunt way.

I don't want to associate myself with all the views expressed in the Sun today but they certainly overlap with mine. I agree that Karen Matthews is a creation of the welfare state. I certainly agree with the Sun that the need for reform is urgent. Sadly, the beneficial effects of reform would take a generation to come through. When views such as these are expressed in the Guardian and by presenters of the Today programme on Radio 4 or on Newsnight, then there will be a chance of reform actually happening.

From the Sun editorial:

If ever there was a story to make you hold your head in disbelief, this is it.

How could a MOTHER have her own little girl drugged, kidnapped, tethered like an animal and stuffed in a drawer under a bed?

Vile Karen Matthews is a product of the sink-estate underclass of chaotic families that loaf away their days on easy welfare benefits.

She is a one-woman advertisement for urgent welfare reform.

Slumped in front of her big TV, chain-smoking 60 a day and stuffing herself with pizza, Matthews didn’t give a damn for her kids.

By 30 she’d had seven children by five fathers and was raking in £360 a week in handouts.

One of her grubby lovers said: “She used us just to get pregnant so she could grab more child benefit.”

From John Gaunt's column:

The tragedy is that — just as there will be another Baby P case — there are plenty more Shannons being dragged up in a life of grime that leads to a life of crime.

To blame are the feral parents who couldn’t spell the word parenthood, let alone know the meaning of it.

Whole estates are infested by this underclass. They are not working class — the clue is in the title — they don’t and won’t work.

They have no pride in their homes or areas. They have no respect for themselves, let alone their neighbours or children. They have a moral code that would make an alley cat blush.

They have a lawyer’s expert knowledge of their rights but, sadly, no idea of their responsibilities to their kids or society in general. This is an underclass that New Labour have allowed to fester with their lax “non-judgmental, all kinds of family are equal” social engineering attitude.

But these people aren’t equal to you and me, and they need to be told so before they are allowed to breed another generation that will only be more irresponsible and useless.

Welfare

We have a sickening situation where those of us who actually work spend more than £170billion of our taxes on social security. That is in addition to the £16billion spent on incapacity benefit.

It’s ironic that Matthews was convicted one day after Labour promised ANOTHER crackdown on welfare dependency.

Scrape beneath the surface of this new “get tough on benefit fraud” policy and you see it is the same old Labour spin. The depressing reality is that, even if the Government were serious, they have left it too late to crack down on the feral, feckless and long-term useless.

In large parts of the country people like Karen Matthews have won, and TV programmes like Shameless aren’t fiction but documentaries of their lives.

The welfare state was set up to be a safety net, not a lifestyle choice, and it is time to return to those principles.

Only those who have paid into the system through NI or tax contributions should be allowed to claim anything out of the pot. If this were applied, it would soon rule out junkies, new arrivals or people like Karen Matthews.

We should also time-limit benefits, as they have done in the US, to force the shirkers back to work.

We need to break the cycle.

These people have chosen a life of benefit dependency because they have been allowed to do so.

Never before, with the world in economic crisis, has there been such a need for urgent reform.

With hard-working people facing the prospect of losing their homes and their savings, I don’t see why the decent majority of Brits should shoulder the responsibility of the bone idle any longer.

Just as the death of Baby P must signal a complete change in social services, so must the conviction of Karen Matthews lead to a change in our Benefits R Us society.

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December 02, 2008
Tuesday
Working lone parents would lift 300,000 children out of officially defined poverty

A notable extract from today's report by Professor Gregg on welfare reform. The report was commissioned by the government.

...if lone parents had the same employment rate as the overall population some 300,000 children would be lifted out of poverty. Furthermore, the prevalence of psychiatric disorders among children aged 5-15 in families whose parents have never worked is almost double that of children whose parents are in low-skilled jobs.

Here is a link to the report.

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November 25, 2008
Tuesday
The sincerest form of flattery

Mr Durkin appears to have read The Welfare State We're In.

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November 18, 2008
Tuesday
Blaming the Guardian

There is nothing new in this letter to the Guardian, quoted in the Samizdata blog. The arguments and the data are treated very fully in The Welfare State We're In. But it is good to hear the argument so pithily put and from someone who has known what it is to be financially poor, rather than culturally impoverished.

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February 18, 2008
Monday
"fewer than a third of those on incapacity benefit are really too ill to get a job. "When the whole rot started in the 1980s we had 700,000. I suspect that's much closer to the real figure than the one we've got now"

Long after it appeared, here are a few links to coverage of the interview which David Freud gave earlier this year in which he suggested that most people on incapacity benefit should not be there.

Here is a link to the original interview.

Here is the BBC coverage of the story.

Here is the Times coverage.

I would like to add a link to coverage of the story by the Guardian but unfortunately I cannot find any. The BBC and the Times thought it was a big enough story to cover. David Freud is, after all, a government adviser and he was saying something pretty radical (though of course it was in The Welfare State We're In). Did the

Guardian
really avoid covering it because the view was unpalatable to itself and perhaps some of its readers? Or was it because it was a Telegraph exclusive?

Here is a part of the interview:

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February 13, 2008
Wednesday
the benefits system is the most influential kind of sex education around

I wonder if this is true? A person who commented on the Daily Mail website on the story below, wrote:

In The Netherlands a single mother with a child is not entitled to claim benefits or social housing until aged 22. This makes young women more likely to be careful about teenage pregnancy and get on with their education and lives instead of stuck in a hole of state dependency.

- Adam, UK

If this is indeed true, it casts a different light on the debate on teenage pregnancy in the UK. Usually the argument is all about sex education and I think, if memory serves, it is suggested that the Netherlands has a particularly open form of sex education which, it is suggested, does no harm because the teenage pregnancy rate is lower that Britain's. But if this commenter on the Daily Mail website is correct, it would seem quite possible that in fact any lower teenage pregnancy rate could be due to the benefits system rather than the nature of sex education. It might be that the benefits system is the most influential kind of sex education around.

Posted by James Bartholomew • Indexed in Behaviour & Crime • Parenting • Welfare benefits

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" [in] Manchester Central... an astonishing 49.2 per cent of children have parents claiming handouts"

For reference, here is part of a story on welfare dependency in the Daily Mail today. The figures are dramatic but they are based on government answers to parliamentary questions put by the Conservative Party, so presumably they are reliable:

One in five British children is growing up in a family dependent on state handouts, shocking figures show.

In some regions almost half of all youngsters are in households claiming out-of-work benefits.

Britain has a higher proportion of children in such households than anywhere in Europe.

The vast majority are living in homes in which nobody is even looking for a job.

Experts say these children risk drifting into a life of joblessness, poverty, ill-health and crime.

Those with parents who do not work are less likely to go on to get a job themselves or take part in education or training.

The Conservatives, who uncovered the figures using Parliamentary questions, said the level of joblessness was unacceptable when an expanding economy has produced record levels of employment.

Four out of five jobs created under Labour have gone to foreigners.

In all, more than 2.2million children are growing up in households dependent on out-of-work benefits - one in five of all youngsters.

The worst area is Manchester Central where an astonishing 49.2 per cent of children have parents claiming handouts.

This is followed by Liverpool Riverside with 47.6 per cent and Poplar and Canning Town in East London with 46.8 per cent.

The full story is here.

Posted by James Bartholomew • Indexed in Welfare benefits

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January 06, 2008
Sunday
The Tories get radical on welfare reform. Good.
120,000 more people claim incapacity benefit than 10 years ago and 52 per cent more under-24s are claiming than in 1997. Half a million people under 35 are now claiming the benefit. More than half of the people now claiming incapacity benefit have been receiving it for more than five years.

This is from Chris Grayling's article in the Sunday Telegraph. He offers a bold reform. It is more radical that what is proposed by the government. But if the government complains, it will be easy for the Tories to say that the government itself has embarked on the same road. It looks daring and right - politically astute and good policy. Here are his proposals:

The majority of people signed on to this benefit by filling in a form and sending in a note from their doctor. Most claimants are then simply left to their own devices. We will change that. We will contact every single one of those 2.6 million people as quickly as possible. We will carry out face-to-face interviews with all of them, to assess what they can do, and how we can help them back into work. It's a big task, and it won't be done overnight, but it has to be done, and as rapidly as possible.

Our initial aim will be to offer most people a place on a structured programme of support to find them a job. We know that as many as a million people claiming incapacity benefit say that they hope to get back into the workplace. We will offer them the help they need to achieve that.

Those who don't want to accept that offer will be expected to undergo a full medical check to confirm what they can and can't do now, and what they might, with the right support, be able to do in the future. It will be done by someone independent, so the relationship with a family doctor doesn't affect the outcome.

Those found to be perfectly capable of working will lose their entitlement to incapacity benefit immediately. Many have been abusing the system. They will be transferred into the normal process for Jobseekers and will be expected to start looking for work straight away. Based on the experience of other countries, we expect at least 200,000 people to be affected.

Those who have the potential to get back into work - even if it's a different kind of job - but still have mental or physical hurdles to overcome will be required to join a return-to-work programme. Only those whose incapacity makes it impossible or unrealistic for them to work will be able to continue to claim the benefit without conditions.

For Britain such an approach marks a revolution in our welfare state. It marks an end to a situation where the receipt of incapacity benefit is an unconditional entitlement. In the future it will carry with it the responsibility to do everything that you can to get back into work and help lift yourself out of the poverty trap that incapacity benefit represents for so many people. It's already happening in places like New York. It's something we should aspire to in Britain.

A country where a young man and his family regard it as an achievement to get onto the "sick" is one that desperately needs reform. A country that brings in millions of workers but can't help people out of the trap that incapacity benefit has become, is one that desperately needs change.


Posted by James Bartholomew • Indexed in Welfare benefits

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November 19, 2007
Monday
"greater emphasis on what sick and disabled people can do, rather than what they cannot"

The government's announcement on new tests for eligibility for incapacity benefits appear to be be going in the right direction. Unfortunately this government has a long record of talking the talk on benefits but not walking the walk (search 'incapacity benefit' on this website for more details). The first thing one notices about this announcement is that the new tests will initially only apply to new applicants. That leaves in the region of two million people who will not face these tests. Still, I should not complain. I have been arguing for years now that Britain should move towards the system adopted in New York quite a few years ago now: the system whereby a claimant is assessed for what he or she can do rather than what he or she cannot do. It is better to make slow progress towards this than none at all.

This is from the BBC Online coverage of the news:

The new work capability assessment is being introduced alongside the employment support allowance - which will replace incapacity benefits for new claimants from next autumn.

Mr Hain said the true cost of people claiming incapacity benefit in 2006-07 is £12.5 billion.

At the moment more than 60% of the people who apply for incapacity benefits are successful, but only 50% of people who take the new test are likely to pass it.

Those who fail will be expected to seek work.

Mr Hain says the new system will place greater emphasis on what sick and disabled people can do, rather than what they cannot.

Tests such as being able to walk more than 400 metres (437 yards) would be abolished.

"There are lots of jobs that people can do now which don't involve that kind of physical test, so we will be looking at what people could do," Mr Hain said.

"Could they operate a computer properly, use a mouse, operate a keyboard rather than have they got the physical stamina to do the old type of jobs that involve a great deal of physical hard work?"

Mr Hain told BBC News: "We want to help people, not punish people. This is about giving people opportunities because you are better off in work - the evidence shows that."

He said people who remained on benefits for long periods of time were more likely to become ill, as were their children.

"If we can provide the support, the training, the skills, the professional help, we can transform people's lives," he said.

Of course the last part is political spin. What he means is that the welfare state can reduce the extent to which it seduces people into welfare dependency and thus damages their lives.

Posted by James Bartholomew • Indexed in Welfare benefits

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September 09, 2007
Sunday
"the Social Assistance State leads to a loss of human energies"

I was surprised this weekend to find resistance against the extent of modern welfare states from the late Pope John Paul II of all people.

He apparently wrote in his encyclical Centesimus annus:

By intervening directly and depriving society of its responsibility the Social Assistance State leads to a loss of human energies and an inordinate increase of public agencies, which are dominated more by bureaucratic ways of thinking than by concern for serving their clients, and which are accompanies by an enormous increase in spending. (CA48)

He was also concerned for the wellbeing of those who work in the bureaucracy:

[Dignity is] extinguished within him in a system of excessive bureaucratic centralisation, which makes the workier feel that he is just a cog in a huge machine moved from above, that he is for more reasons that one a mere productive instrument rather than a true subject of work with an initiative of his own. (LE71)

That was from his first social encyclical, Laborem exercens.

I say Pope John Paul II "of all people" simply because, in England, one is so used to Christian leaders being cheerleaders for big government. It is a surprise to find the most senior Christian leader of all taking a very different view.

The quotations I cite come from a book I was dipping into: "Catholic Social Teaching and the Market Economy" edited by Philip Booth and published by the Institute of Economic Affairs. The quotations were in an essay by Robert A. Sirico called, "Re-thinking welfare, reviving charity: a Catholic alternative."

Posted by James Bartholomew • Indexed in Welfare benefits

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May 25, 2007
Friday
The soaring numbers on the current benefit of choice

The crucial line in an article in the Sunday Telegraph last weekend was this:

"When Labour came to power in May 1997, 1.9 million people received DLA. By last November, the number of claimants had risen to 2.85 million."

Thus does the Disability Living Allowance, a benefit of which many people in the richer half of society have never even heard, become the latest benefit to attract more than an army of new claimants. In the 1970s it was unemployment benefit. In the 1980s it was invalidity benefit and income support for lone parents. Now the DLA is the latest.

As usual, excuses are found. It is said that the population is ageing or that more people are aware of the benefit. This a paper thin covering for the reality that many people who are not well off will, sooner or later, gravitate towards the benefits which are easiest to get and keep.

It does not matter how much of it you call fraud, how much borderline fraud and how much of it welfare dependency or even laziness (not getting off a benefit to which one has ceased to be entitled).
The gatekeeping of this benefit, among others, by the government is weak. The result is that many poor people are taxed today to pay for other poor people who take advantage of them. It is bad for both parties. It corrupts those who take and it makes decent people poorer.

The full story is here.

Posted by James Bartholomew • Indexed in Welfare benefits

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March 06, 2007
Tuesday
Misleading employment claims by government and the idea of locally administered social security
The Freud Report, published yesterday, claimed that Labour's welfare-to-work measures have already reduced the inactive total by 900,000. It is a figure ministers keep repeating. It is deeply misleading. This fall is recorded only by using two very separate sets of data that the minister's own statisticians tell them should not be mixed. The true figure may be as low as 160,000.

The above is one of several interesting nuggets in the article by Frank Field in the Daily Telegraph today.

Here is another:

The first move a radical government would make would be to devolve power to local offices. As a minister, I argued for giving the local office their own budget, with the proviso that each office had to administer the law. Local offices would be totally autonomous and have the power and resources to devise local programmes that would be the most effective in helping claimants move from benefit to work.

The idea of localising social security strikes a chord. Beveridge was confident in his views about most things. But one thing he openly hesitated about was having a single benefit rate across the country. Pay rates are different in different places. A benefit rate that would seem modest in London might be enough to discourage someone from working in rural Wales.

The arguments from history in favour of local social security are described in The Welfare State We're In. Look especially at the references to a most remarkable man, Bishop Chalmers.

This is a point by Frank Field that he would totally have agreed with:

the local staff will know many of the claimants personally. They would know which ones have real difficulties, and also which ones were just trying to swing the lead.

Posted by James Bartholomew • Indexed in Welfare benefits

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March 05, 2007
Monday
Report on lone parents and work

Here is a link to the David Freud report published today that was commissioned by the government.

I was on Radio 5 Live last night debating some of the ideas. One of the other speakers was a woman whose youngest son was 16 and who had been on benefits for the past 16 years.

She objected to the 'demonisation' of lone parents. She said she could not work for various reasons, including ill health. But the crux of the matter seemed to be that, to her, it appeared financially impossible or, at least, disadvantageous for her to work.

She said she could not afford the childcare costs. She had no family to help look after her children. And it later emerged that she feared she would lose her benefits, her house and her housing benefits if she took a low-paid job.

Then on to the radio came several lone parents who said that they had managed to combine lone-parenting with work. One of them revealingly said that her friends did not think of her as a lone parent because she had worked more or less ever since she had children.

Some people get exaggerated ideas of what they would lose in benefits if they took up work. But it is also true that the level of benefits, especially housing benefits, are so high relative to low wages, that they can make it difficult for someone to justify going out to work.

For myself, I do not wish to 'demonise' lone parents. I wish to point out that, over several decades, governments have wrongly reduced the natural incentives to marriage. Men and women both have responded to the change of incentives with the result that we have had a lone parent epidemic with consequent damage to children. The lives of the women and men concerned have also been damaged. To make it worse, we have also brought about one of the lowest rates of work among lone parents. This leads to demoralisation and a culture of complaint rather than one of achievement.

Posted by James Bartholomew • Indexed in Parenting • Welfare benefits

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February 22, 2007
Thursday
It is a pity that influential people don't read mid-market newspapers and down-market rags

It is a pity that the people who run this country only read newspapers such as the Times, the Guardian and the Telegraph. They miss seeing stories about what, to them, is the irrelevant underworld of welfare benefits.

Today in the Daily Express is the sort of story which only appears in mid and down-market newspapers. It is about Anna Taylor who has produced five children and lives with her husband. Both are living on welfare benefits.

Anna Taylor has apparently written a letter of complaint to Tony Blair. She is "disgusted" that she has been told by her benefits office to look for work.

Her remarks on the subject reveal harsh truths. They illustrate how the welfare state has made it financially unattractive for some to work and how it has created a culture of complaint.

"I'm better off doing nothing," says Mrs Taylor. "I would be worse off working than at home. I've been told I need to actively seek work, but to be honest, what's the point?"

Her husband Alan is quoted as saying: "How can you expect people to work, when they can get the same money by claiming benefits? It's an infringement of human rights. We're a decent family and should not treated like this."

There is, I suspect, more to the story than was in the article. I find it a bit strange that the mother is on Jobseeker's Allowance rather than Income Support. There may be something slightly unusual about their circumstances. But the fact that we have come to the stage where hale and hearty people of working age think it is outrageous that they are asked to seek work is appalling. The fact that it is financially unattractive for them to work shows how incompetent Britain has been in managing welfare benefits. The creators of the welfare state, such as Beveridge, would be amazed and disgusted.

Posted by James Bartholomew • Indexed in Welfare benefits

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December 22, 2006
Friday
Welfare reform in Britain compared to the USA

Here is a knock-about article by Jeff Randall about Britain's welfare benefits reforms compared to those in the USA.

Posted by James Bartholomew • Indexed in Welfare benefits

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Youth unemployment not solved by Labour after all

I am reluctant to make too much of the story in the Mail and The Telegraph today about youth unemployment being as high today as when Labour came to power. But it is potentially very powerful.

Labour has made a big thing about 'eradicating' youth unemployment. The printed Daily Mail has a series of Tony Blair quotations on this. If today's story is true, it tells us a) that there is still a major problem and b) that Labour boasts on this are absurd.

This is the Telegraph news story:

Posted by James Bartholomew • Indexed in Welfare benefits

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November 14, 2006
Tuesday
The human face of complexity

I have suggested in the past that Gordon Brown's tax credit system is an unnecessarily complicated way to allow poorer people to keep more of their income. A far simpler way would be to have raised the personal allowance. Gordon Brown opts for the complex way partly, I suspect, because in this way he can make a fuss about himself being 'generous'. He could have been just as generous, but without deceiving the public, by raising the personal allowance - and simultaneously raising the standard rate of income tax, if he wanted to aim all the benefit to poorer people, without passing on any to richer people. (The political advantage of being complex now becomes obvious.)

But when people like me criticise a benefit for being complex, it may seem a pretty weak insult. Who minds a bit of complexity? It does not really matter, if it achieves something worthwhile, does it?

Here is part of a remarkable letter sent to the Your Money section of last Saturday's Daily Telegraph:

Three years ago I began dealing with the tax credit office on behalf of an employee, Matthew, who is dyslexic.

As his appointee, I filled in the forms, and kept the Helpline informed of every change of circumstance. The subsequent deluge of computer print-outs, the unresolved muddles, uncorrected mistakes, payment stoppages, demands for repayment and telephone calls have left Matthew and me in a state of stupefied dejection, as hard to weather as a chronic illness.

He is struggling to live on an income which the Government acknowledges is inadequate, and trying to keep on top of things in the only way he knows, by working long hours. I am angry and exasperated because I have been unable to secure for him the payments to which he is entitled. For me, acting for him on his authority, it has been hours of unproductive work trying to understand a system which is inherently opaque.

Complexity matters. It can make it a miserable experience to try to claim something to which one is entitled. In this case it is partly becuase the bureaucrats attempting to administer such a complex system, just can't maintain a decent service. Here is another extract from the letter:


Posted by James Bartholomew • Indexed in Welfare benefits

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November 08, 2006
Wednesday
Unemployment hidden in sickness and invalidity benefits in Poland, Norway and Switzerland

It is not only Britain which has many people on sickness and invalidity benefits who should not be there. Here is a press release for a recent OECD report on Norway, Poland and Switzerland:

Posted by James Bartholomew • Indexed in Welfare benefits

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September 04, 2006
Monday
Britain has the highest proportion of single mothers in the European Union and, surprise, surpise, one of the highest rates of benefits for single mothers

Many thanks to Phil Taylor for directing me to this article in the Sunday Times eight days ago.

Here is an extract:

The analysis of figures in 14 European countries found that Britain has by far the highest proportion of single mothers in the European Union.

The report says that in 2001, more than 8% of British households were headed by a single mother aged 18-35, while the UK also has one of the highest rates of benefits for single mothers.

In 1994 a single mother with two children who worked for about 18 hours a week could expect more than £2,000 a year in benefits. By 2001 the figure had increased to more than £3,500.

The researchers do not say outright that high benefits accelerate family break-up. Others, however, believe the study shows that generous benefits for single motherhood provide an incentive for women to have children alone.

Frank Field,

Posted by James Bartholomew • Indexed in Housing • Parenting • Welfare benefits

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Blunkett wants hostels for single mothers

David Blunkett wrote in the Sun last week (august 30,

All too often girls come to my constituency surgery demanding a house for themselves and their baby.

This just isn't on. If the family - and often their mothers are single parents too - can't or won't look after the offspring then we will simply have to go back to the idea of hostel accomodation.

The "give us a house" mentality has to become a thing of the past and be replaced by "give us respect".

It may sound harsh, but blaming the changes in society won't wash.

So there is a former senior minister calling for hostels for unmarried mothers instead of council flats. It is a sign of the changing times. I remember once suggesting to a Daily Telegraph features editor that offering free flats to unmarried mothers had substantially increased the numbers of children born out of wedlock. Out of concern for children, we should cease to do it. Possibly we should offer hostels instead but it was essential that single parenting was an unattractive route for a girl to take (as it naturally would be if the government did not get involved). Only that way would we reduce the number of children brought up in a way that makes them more likely to be unhappy, more likely to be abused, more likely to under-achieve academically and - indeed - more likely to go wrong and suffer in every possible way.

The features editor of that Conservative Party supporting newspaper was shocked. Now a senior Labour Party figure suggests it. It is progress of a sort - but it is painfully slow.

Further on, David Blunkett refers to a survey of 13 European Union countries "this week" which "tried to link the increase in lone parents with the rise in their benefits." He adds "it is true that lone mothers here are given more financial help than all but one of the other countries surveyed".

It is no surprise if the survey suggests a link between subsidies for lone parenting and increases in the incidence of it. But it would be interesting if it was actually commissioned by the European Union. And, in any case, I would be glad if anyone knows of this survey and could direct me to it.

Posted by James Bartholomew • Indexed in Housing • Parenting • Welfare benefits

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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

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August 22, 2006
Tuesday
The success of welfare reform in America

Here is an article on the success of America's welfare reform in the Daily Mail today.

Posted by James Bartholomew • Indexed in Reform • Welfare benefits

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August 11, 2006
Friday
The welfare state makes us less happy

I have recently been interviewed on behalf of a magazine called Human Givens. Ivan Tyrrell,who has also co-written a book by the same name, was very interested in The Welfare State We're In from a completely unexpected point of view.

The basis of the Human Givens approach is that all human beings have certain well-recognised needs. These include the need to socialise, to have some status and to be stretched. People cannot readily be content without these needs being met.

Ivan was interested in The Welfare State We're In because in it I argue that the welfare state has made people less happy. He fully agrees and sees this as being because it takes away from people - in many ways - the need to stretch themselves, the context in which to socialise and a sense of status.

It is easy to think of examples of this. People who are discouraged by benefits from seeking work get demoralised staying at home. They would be happier being stretched in a job. They would be happier having the sense of achievement in putting food on the table for their families. They would be happier having the status of a job and soicalising at work. Doctors and teachers would be more satisfied if they were more in control of their work instead of being dictated to so much by commandments from government or managers.

We live now in a society where the government controls more and more of our lives. It robs us of a sense that we are the ones who run our own lives. It takes away a certain dignity and, through that, it takes away some of our contentment.

The psychological impact (not to mention the cultural impact) of the welfare state has been enormous. It deserves far more study than the academic world has yet given it.

Posted by James Bartholomew • Indexed in General • Welfare benefits

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June 19, 2006
Monday
Britain: The Depressed Man of Europe

Professor Layard wants pschological therapy for all those people on incapacity benefit who are suffering from depression and other mental conditions. This would help them back to work, he suggests and save a lot of money in benefits.

Of course those familiar with The Welfare State We're In will know that I see this issue from a different angle. To me (and indeed to the government) at least a million people on incapacity benefit are in fact capable of work. Additionally they would be mentally in better shape if they worked. It is no co-incidence, in my view, that depression and back-ache are conditions that cannot be disproved and that these are the most common conditions enabling people to claim incapacity benefit.

Of course there are certainly people who are genuinely chronically depressed or who genuinely have terrible back-ache. But there are many others to whom this does not apply.

Indeed consider if there were genuinely so many deeply depressed people in existence. Britain would be a place suffused with depression. It could be called The Depressed Man of Europe, the Country That Couldn't Cheer Up or Glumovia.

If indeed this is a particularly depressed country by historical and international standards, why should this be? If it is true - and I agree that depression is more common than it used to be, though not as common as the incapacity benefits make it appear - I suggest it is because of the mentally depressing effect of unemployment and other aspects of the welfare state. It is a 'chicken and egg' debate. I suggest that the lack of insistence that people should get a job is one of the major causes of depression. (Another is the subsidy for unmarried, fatherless parenting.) Layard thinks that the depression leads to the unemployment.

The link to Layard and his works is here.

Posted by James Bartholomew • Indexed in Welfare benefits

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June 14, 2006
Wednesday
That old chestnut that the Tories shunted people onto Invalidity Benefit in the 1980s in order to keep down the unemployment figures

I gave a talk last night at the Institute of Chartered Surveyors in which I was 'heckled' by Peter Lilley, the former Social Security Secretary, Professor Pat Thane and Paul Holmes, the Liberal Democrat chairman.

Paul Holmes repeated the well-worn assertion that the Tories shunted people into Invalidity Benefit during the 1980s in order to keep down the official unemployment figures. I said that, in fact, the cause of the huge rise in the numbers claimeing invalidity benefit was the creation of a special premium for the benefit compared to unemployment benefit. This had been created first by the Heath government and then greatly increased by the Wilson government in the 1970s. I had done the numbers (and they are in the book).

I then said I did not believe that there was any cunning plan by the Tories to put people onto Invalidity Benefit but that perhaps Peter Lilley, having been a long-serving Social Security Secretary, would put me right.

Peter Lilley stood up and said that if there had been any intention to do so, it would have been communicated to the civil servants in writing. That is how government departments work. He had seen no evidence of any such instruction or suggestion ever having been made. (Indeed, I will add that if there ever had been such an instruction, it would very probably have been leaked.)

It was possible, however, said Peter Lilley, that individual benefit officers would guide claimants to invalidity benefit since it paid better (and has other advantages, incidentally).

Later he told me that a doctor in the audience had come up to him afterwards and told him that doctors at that time would also guide claimants towards invalidity benefit as the benefit of choice.

This exchange confirms me in my view that there was no cunning plan but the rise in the numbers on Invalidity Benefit was a result of a premium created in the 1970s combined with higher unemployment. Invalidity Benefit became the 'benefit of choice'.

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June 05, 2006
Monday
Gladstone was a member of a friendly society

Friendly Societies were probably the most important kind of welfare in Britain before they were 'crowded out' by the welfare state. I contend that they provided substantial social security for the vast majority of people prior to the Unemployment Insurance and Health Insurance Acts of 1911.

In bringing to life the importance of friendly societies, I have been hampered by being unable to remember or find any reference to them in well-known 19th century novels. If anyone can recall such a reference, I would be delighted to hear of it. In the meantime, I have come across a paper on the internet which claims that Gladstone, one of the most important political figures of the century, was a member of one: The Loyal Order of Ancient Shepherds (Ashton Unity).

Posted by James Bartholomew • Indexed in Welfare benefits

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May 23, 2006
Tuesday
A new motto for the Department of Work and Pensions?

In the modern culture it tends to be thought that to be socialist is to be all kind and nice. It therefore amused me to come across a Russian communist plate that is soon to be sold at Sotheby's. These were modernist designs with pro-communist mottoes - terrific art, incidentally. The communists used blanks made in the Imperial Porcelain Factory and celebrated meetings of the Communist Party and suchlike. In this one, dated 1921, a man appears to be eating bread and the motto boldly declares: "He who doesn't work, doesn't eat".

You tell'em comrade.

The link is here but I fear you may need to register with Sotheby's to access it.


Posted by James Bartholomew • Indexed in Welfare benefits

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April 27, 2006
Thursday
From someone who gives benefits to lone parents

I am pasting here a comment which has just been contributed to a previous entry about Lone Parents 'On the fiddle'. I should concede that I cannot vouch for whether or not the contributor genuinely does work for the Department of Work and Pensions. But I have no reason to think otherwise.

I think it is an important view 'from the front' and is an antidote to the assumption of many middle class folk that benefits just go to the needy and do not influence behaviour in a damaging way.

I work for the DWP on the Lone Parent section and am confronted with lone parents quite blatently fiddling the system all the time, unfortunately because the government has cut so many jobs within the sector our fraud section only deals with a minute selection of cases. I have come across people who have had sanctions imposed on their benefits for not attending appts and then a further sanction imposed for not responding to the sanction. This in my eyes would say to me that they are either working or got someone helping them out with money as surely they would've noticed 40% of money gone if on such a tight budget? Another common thing we see quite often is that as soon as the child of a lone parent is about to turn 16 the parent gets pregnant again just so as to stay on benefit. I believe that the government should bring in something so that if a lone parent has another child while on benefit they get little or no benefits with it. I'm not trying to to sound harsh but this would save the government millions and also force parents back into work when their child reaches 16 rather than just sitting back and doing nothing while us tax payers pay them for it!

Posted by James Bartholomew • Indexed in Parenting • Welfare benefits

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March 30, 2006
Thursday
Wanless against means-testing

How interesting and encouraging that the Derek Wanless report on care for the elderly has - on the whole - come out against the current high level of means-testing.

It is good to see resistance to the idea that there can be two people - one of whom spends everything through life while the other saves prudently for old age - who then find themselves in next door rooms in the same care home. The first gets care in old age at the expense of other taxpayers while the second pays for the same care out of savings. It is not fair and the fact of it discourages people from saving - which generally is a sensible and empowering thing to do.

No wonder that this is a King's Fund report and not a government one.

Posted by James Bartholomew • Indexed in Care for the elderly • Welfare benefits

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March 29, 2006
Wednesday
21 per cent of eligible families do not claim the children's tax credit
21% of families who were eligible to claim the children's tax credit did not do so

That is from the Guardian's coverage of speeches by Alan Milburn and Stephen Byers. The statistic is cited by Mr Milburn. Their speeches are interpreted as attacks on the Gordon Brown approach to welfare benefits and his increase in means-testing. The fact that many people do not actually get the tax credits they are entitled to is one of many objections to Gordon Brown's tax credits scheme.

The full Guardian report is here.

Posted by James Bartholomew • Indexed in Welfare benefits

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March 28, 2006
Tuesday
'Lone parents' and benefits fraud

From the Institute for Fiscal Studies:

The Government thinks it is paying out tax credits or out-of-work benefits to around 200,000 more lone parents than the Office for National Statistics estimate live in the UK, according to an analysis of official statistics by researchers at the IFS.

HM Revenue & Customs and the Department of Work and Pensions together estimate that they are paying income-related support for children to 2.1 million lone parents, even though the best estimate from other evidence is that there are only 1.9 million lone parents living in the UK.

Although there are other possibilities, it is highly likely that fraud or error explain much of this disparity. After analysing
data from the latest Family Resources Survey (FRS), IFS researchers have concluded that a portion of the tax credits or out-of-work benefits which HMRC or DWP think they are paying to lone parents are probably being received by cohabiting couples with children, whether through deliberate fraud or errors made by claimants or the government. If one disregards the threat of fines or penalties, it is often financially worthwhile to pretend to be a lone parent, rather than a couple, when claiming tax credits or out-of-work benefits.
“We already know that the tax credit system is subject to fraud from people using stolen identities. The latest figures provide powerful – albeit circumstantial – evidence that the system is also subject to fraud from families not being honest about their circumstances.

The full press release (released on 12th March) is here.

An insight into the nature of the possible fraud comes from the television programme on benefit fraud commented on here.

Posted by James Bartholomew • Indexed in Parenting • Welfare benefits

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March 14, 2006
Tuesday
Why has the proportion of relatively poor increased?

A few other piece of little-known information about modern 'poverty':

"...according to the government's Households Below Average Incomes survey, more than half the people defined as in poverty are homeowners but many of these are pensioners who are asset rich but income poor.

"Can an elderly person living on 60% of average income but with a very valuable property and no mortgage be considered poor?"

(From BBC Online 'The changing face of poverty')


"Between 1996/97 and 2000/01, income inequality rose to its highest level since comparable records begain in 1961 as measured by the Gini coefficient. Since then, income inequality has fallen back to roughly the level Labour inherited."

(From the Institute for Fiscal Studies - IFS - press release 8/3/06. My italics.)


"With the government focusing resources on families with children and pensioners, poverty amongst the working-aged non-parent population has received less attention. Poverty in this group is now about one percentage point higher than it was in 1998/99, on both BHC and AHC measures".

(IFS press release as above. BHC means "Before housing costs" and AHC "After housing costs".)

Perhaps most important of all:

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March 13, 2006
Monday
Low conditionality welfare leading to high dependancy

An email from 'pommygranate':

You may be interested by recent developments Down Under with regards Aboriginal welfare. After 30 years of unconditional and increased welfare for anyone who could prove they were 1/8th Aboriginal, the Labour Party has declared the experiment an abject failure. Dependancy is now endemic and even the architects of this welfare program have accepted its defeat.

http://www.theaustralian.news.com.au/common/story_page/0,5744,18409415%255E601,00.html


In its place, a new system is soon to be trialed whereby communities will only receive welfare under certain conditions (e.g. ensuring their children attend school).

Interesting that even those on the Left in Australia have now admitted what a catastrophe is unconditional welfare.

Posted by James Bartholomew • Indexed in Welfare benefits

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March 03, 2006
Friday
If unemployment is so low, how come the benefits bill is so high?

Some things just don't add up. The government propaganda machine tells us one thing but our own experience tells us another. And it seems to be getting worse.

Living in Britain is becoming rather like living in the old Soviet Union. People there were regularly told how agricultural production was increasing wonderfully but, on the other hand, they noticed there was no fresh fruit in the shops. It did not make sense.

In the same way we have been repeatedly told how unemployment is in Britain is low. Gordon Brown boasts about it at every opportunity. In one of his recent bouts of this, he announced, "while unemployment in America is higher than ours — and in France and Germany, it is much higher, at nearly 10 per cent —in Britain, unemployment is lower than 5 per cent."

That sounds marvellous.

But hang on a minute. Though our unemployment is apparently so low, the bill we pay for the Department of Work and Pensions - which dishes out welfare benefits - does not seem low at all. It is expected to amount to £136 billion this financial year, accounting for over a quarter of all government spending. It costs far more than health or education. And that is without even including the cost of tax credits - which are benefits by another name - and various other benefits paid for by other departments.

So how come the cost of benefits is astronomical if we have low unemployment?

Half of the cost consists of payments to those past retirement age. But after taking them out of the equation, we are still left with a bill of some £65 billion. Why do people of working age cost so much if virtually all of them are working?

The answer is, they aren't.

A total of nearly 5.2 million people of working age are not working and are in receipt of state hand-outs. That is 14 per cent of those of working age. It is equivalent to 52 British armies.

Of course some of these people cannot work because they are genuinely incapacitated. But many of those who claim incapacity benefit are capable of work. That is the view of the Government itself which has said it wants to get a million people off this benefit and into work. The government is probably being modest in its estimate of the proportion of those on incapacity benefit who are, in reality, unemployed.

The numbers claiming the benefit tripled between 1979 and the late 1990s. This was without any medically recognised increase in real levels of disease or incapacity. If we add, say, one and a quarter million of those claiming incapacity or other sickness benefits on to the 870,000 claiming Jobseeker's Allowance (what used to be called 'unemployment benefit'), we leap in one bound to a figure of 2.1 million unemployed.

But there are many others in our non-working army who could arguably be included, too. There are those on New Deal training schemes, for example. They have not got jobs but they are not counted as unemployed. There are those who are unemployed but do not claim Jobseeker's Allowance.

Then there is the vexed question of lone parents.

Posted by James Bartholomew • Indexed in Welfare benefits

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February 01, 2006
Wednesday
Lone parents 'On the fiddle'

I got round to seeing one of a series of programmes currently running on TV on benefit fraud. It is called 'On the fiddle'. This focussed on lone parents who are actually living with a man but continuing to claim benefits as though they are alone.

Of course every TV programme is not as natural, unrehearsed or objective as it appears. Having made that proviso, I found it fascinating how the lone parents were upset and felt it unfair that they should cease to have their benefits when a man moved in. It was easy to see the logic of their position:

Posted by James Bartholomew • Indexed in Welfare benefits

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January 24, 2006
Tuesday
Welfare reform green paper

BBC Online coverage of the welfare reform Green Paper.

The Department of Work and Pensions press release.

The Green Paper itself.

Posted by James Bartholomew • Indexed in Welfare benefits

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Frank Field assert chronic maladministration of Incapacity Benefits

A fascinating assertion by Frank Field MP is reported in the Guardian. It is that many thousands of claimants are not medically examined as they should be. They are therefore given incapacity benefit when doctors think most of them should not receive the benefit.

Why are they not examined? It seems, if I understand correctly, that it is because there is a budget for the examinations and once that budget is used up, the administrators discourage General Practitioners from referring any more claimants for further medical examination. This sounds like monstrous incompetence and maladministration.

This is from the Guardian article:

Posted by James Bartholomew • Indexed in Waste in public services • Welfare benefits

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Welfare reform Green Paper comes out today

I have just returned from a brief appearance on the Today programme where I was up against Polly Toynbee, discussing the welfare reform green paper which is coming out today. During today, you should be able to hear it on the Today website. The time of the discussion was 8.55am.

I argued that one could have little confidence that much would happen. In America, the welfare reform programme had resulted in a 60 per cent reduction in the benefits caseload. In Britain, nothing approaching that result has been achieved or even attempted.

Now, after eight and a half years in power, the Government is producing a mere Green Paper - a discussion document. The performance has been lamentably slow and inadequate.

Polly Toynbee said she understood that the Government intended to take 100,000 people a year off incapacity benefit (from a current figure of 2.5 million). She was utterly confident this would be achieved. She thought that the figures were already going that way.

Her faith in the effectiveness of government action on this is illogical given the government's dithering and lack of effectiveness thus far.

As to the actual proposals in the Green Paper,they are not fully out as I write, but I notice one in particular that seems worrying.

Posted by James Bartholomew • Indexed in NHS • Welfare benefits

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January 23, 2006
Monday
Not working is bad for you

Ahead of the Green Paper on welfare reform, I have been taking a look at a few ministerial speeches on the subject over the past year.

In the process, I was reminded that we had three Secretaries of State for Work and Pensions last year: Alan Johnson, David Blunkett and John Hutton. No wonder this Green Paper has been somewhat delayed. But they have all said rather similar things - much of which I have agreed with. The trouble, I fear, is that they will not be very radical in trying to get people back to work. This is only a Green Paper anyway and it seems unlikely that anything radical would be accepted by Labour backbenchers these days.

But here is a particularly interesting part of the attempt to persuade backbenchers that reform is in the interests of many benefit claimants, as well as of taxpayers (which is quite right). It comes from a speech early last year by Alan Johnson:

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January 18, 2006
Wednesday
Thanks to Gordon Brown, 'perhaps Britain's biggest welfare benefit scam'

Many people like to believe that welfare benefit fraud is small scale and not a factor even to consider when designing benefits. This is incorrect in both respects. Perhaps The Times's front page story today will begin to change people's minds:

THE identities of thousands of rail workers have been stolen by criminal gangs and used to steal millions of pounds from the Treasury, The Times has learnt. One in seven staff at Network Rail has been caught up in the tax credit fraud that has plunged the tax system into chaos and could turn out to be Britain’s biggest benefit scam.

Last month it emerged that 13,000 Jobcentre workers had had their identities stolen and there are fears that other leading companies have also been targeted by the gangs. Suspicions are mounting that HM Revenue and Customs insiders are involved in the fraud.

Posted by James Bartholomew • Indexed in Welfare benefits

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January 17, 2006
Tuesday
Reform of incapacity benefit - again

The government is going to reform incapacity benefit and demand that more of those people on it who are capable of work make real efforts to be get a job. That line could have been written almost any time since Labour has been in power. The fact that the government is announcing this intention yet again should not make us believe it is actually going to happen.

Here is the Guardian coverage of the speech on the subject by John Hutton yesterday. It is the usual thing and perfectly fine so far as it goes. But it does not go very far. And once Labour backbenchers have demanded that it be made less 'tough', it will travel an even shorter distance. The failure to reform incapacity benefit in Britain stands in marked contrast to the vigorous reforms in some states in the USA.

Update:

On dipping into the speech itself, I find a passage in which it almost seems that Mr Hutton might have read The Welfare State We're In:

Our predecessors – Hardie, Atlee, Wilson, Callaghan – would have been horrified to see how the notion of personal responsibility gradually became obscured over the decades as parts of our welfare system trapped people between the twin vices of benefit dependency and poverty. Once inside the benefits system, it was often difficult to get out. People were frequently better off on benefit than in work.

I am not sure he is right about Wilson and Callaghan, who bear much of the responsibility for the way it all went wrong. But he is surely correct about Hardie and Attlee. (He won't have got the mispelling 'Atlee' from my book.)

Mr Hutton can, up to a point, talk the talk. But I doubt he can walk the walk. The full speech is here.

Further update:

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January 16, 2006
Monday
The BBC makes progress and looks at benefit fraud

Another step forward: a six-part BBC series on benefits and how they got wrong. The first one, tonight, appears to be about benefit fraud. According the Telegraph,

David Street, the series' producer, said: "These are just a few of the cases that are prosecuted every year. The scale of fraud in disability living allowance claims is just staggering.

"I have made a lot of programmes about fraud and I have to say I was stunned by the size of this problem."

The full article is here.

The programme is on BBC1 at 8.30pm tonight and is called 'On the fiddle'.

Posted by James Bartholomew • Indexed in Behaviour & Crime • Media, including BBC bias • Parenting • Waste in public services • Welfare benefits

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December 17, 2005
Saturday
Parents live apart 'to cash in on benefits system'

Newspaper articles don't get much more important than the Daily Telegraph one below. It goes to the heart of how and why the character of British people has changed. You see in it incentives not to be married. Through that, you see a major cause of the increasing number of children not brought up within a family with married, committed parents. That, in turn, tends on average - though not always, of course - to lead to alienation and delinquency among more children. That is a pathway to uncivil behaviour and crime. And then there is also the incentive to fraud - making lying and cheating a normal part of the way people lead their lives.


By Sarah Womack, Social Affairs Correspondent
(Filed: 16/12/2005)

Thousands of couples with children may be choosing to live apart because they can cash in on benefits.

An official report by one of the Government's former leading experts on the family shows that as many as one million couples in a committed sexual relationship live most of their time at separate addresses.

Family campaigners seized on the findings, saying women who lived apart from their child's father or a new partner were rewarded with higher levels of state benefits.

The research, contained in a politically sensitive report published yesterday by the Office for National Statistics, has prompted politicians and family campaigners to question Government policy. They say changes to the tax and benefits system could encourage women to wait until they are married before having children.

The ONS report, Living arrangements in contemporary Britain, has been surrounded by controversy for some time.

Last year there were claims - strongly denied by the ONS - that the Government was suppressing a draft version because the findings could be seen as embarrassing.

Posted by James Bartholomew • Indexed in Behaviour & Crime • Parenting • Welfare benefits

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November 26, 2005
Saturday
Yes, you are entitled to benefits but no, you can't have them

The inefficiency of state welfare is shocking and mostly unreported. As newspapers cut their staff ever more, they are all the more dependent on Government announcements. But now and again, in place of the propaganda, we get insights into what is really going on. This story tells directly of large-scale incompetence of the state in administering welfare. Such a thing would result in legal action and possibly bankruptcy for a commercial company or a mutual society such as the Equitable. What the story does not describe is the human distress caused to those at the receiving end. One can imagine people in genuine need and already in a bad way being thoroughly depressed by this maladministration:

Posted by James Bartholomew • Indexed in Waste in public services • Welfare benefits

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November 09, 2005
Wednesday
Throwing bricks at British firemen - an echo of the French riots

The audience of parents of children at Tonbridge School last night was one of the most positive and supportive I have come across.

I talked mainly about how the welfare state has damaged the culture and morality of Britain and how it has led to higher levels of crime. One member of the audience responded by saying he had been a fireman who had worked in council estates. There had been youths there who he described as 'untouchables' - that is they were not touched or cowed by anything. They did not care if they were arrested, or got hurt or went to prison. These youths would throw bricks at himself and other firemen as they tried to put out fires.

Posted by James Bartholomew • Indexed in Behaviour & Crime • NHS • Waste in public services • Welfare benefits

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October 26, 2005
Wednesday
The war orphan's pension in ancient Athens

Welfare issues have been around far longer than most people realise. There is a comfortable assumption in Britain that welfare was invented by the Labour government between 1945 and 1950. This is so wrong as to verge on the absurd. It is wrong not just in terms of Britain but internationally.

Welfare provision - by mutual help, by insurance, by charity, by insurance, by investment, by individual arrangement and by government - has been around since before the birth of Christ. The question is not 'should we have welfare provision' but 'what sort of welfare provision is best?' The argument is not between those who want people to suffer and die and those who want people to be assisted. It is between those who think the government is the best provider of assistance and those who do not.

At least it should be. But the less knowledgeable of those who favour government as the provider of first and last resort often imagine that those who are against this are against welfare provision of any sort at all. It suits their purpose. It makes them think they are being kind, good people while those who oppose government welfare are bad, cruel people.

I recently came across an example of welfare provision before Christ. I have been to a few lessons on ancient Greece and was given some sheets about the historian, Thucydides. One of his more celebrated accounts was of that of the funeral oration of Pericles.

In the same winter the Athenians, following their annual custom, gave a public funeral for those who had been the first to die in the war.

In the latter part of the speech Pericles made at this public funeral - in a section most people would not notice - Thucydides quotes Pericles saying,

For the time being our offerings to the dead have been made, and for the future their children will be supported at the public expense by the city, until they come of age.

So in ancient Greece, there was clearly some kind of city government provision for those children whose fathers had been killed fighting for the city. It was the ancient equivalent of the modern 'war widow's pension'.

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October 12, 2005
Wednesday
Benefit fraud - they are going to sack some of the staff who fight it but it won't affect performance

Before appearing on Sky News last night to talk about the government statistics on benefit fraud, I took a look at the full press release from the Commons Public Accounts Committee. It included the astonishing fact that while the government claims - as it would - that it is making great progress in tackling fraud and is going to do even better in future, it is simultaneously reducing the number of staff employed fighting fraud.

Confused? There is no need to be. This sort of government line is routine. It goes, as with this issue, "We acknowledge there is a serious problem, although we should not get it out of proportion. We are not complacent. We are tackling it. We have had successes and we are going to make further substantial improvements." This line is trotted out regardless of the actual facts.

The actual facts in this case is that fraud is far more widespread than the government admits (see the section in The Welfare State We're In for more on this) and the government is now cutting the staff involved in combatting it.

The government claims, of course, that this will have no effect whatever on the fight against fraud because of better methods.

Posted by James Bartholomew • Indexed in Welfare benefits

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October 11, 2005
Tuesday
He said it.
The system for awarding benefits to the disabled is "crackers", because it is too complicated and wide open to error and fraud, according to David Blunkett, the Works and Pensions Secretary.

The article in the Independent is here.

Posted by James Bartholomew • Indexed in Welfare benefits

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October 08, 2005
Saturday
Charity did not always help even the 'deserving' poor.

The following was submitted as a comment on 'about James Bartholomew'. It was not really suitable for that spot but I think it is interesting and raises a point that is always likely to put up in objection to the arguments in the book, so here it is. The comment was submitted by J. Wallis Martin:

I agree with many of the points you raised in 'The Welfare State We're In', but cannot see an alternative to the Welfare State.

My great-grandmother appealed for help from a church based charity in Warrington. She had been widowed, and had two children, a disabled aunt, and her own mother to care for. They were starving. When she explained her circumstances to Mrs. Broadbent (whose family were prominent in Warrington at that time), she was provided with a recipe for making soup from potato peelings.

My great grandmother was regarded one of the 'deserving' poor. I cannot imagine how she would have been treated had she been regarded one of the 'criminally' poor.

It is a point with power than deserves an answer. I could write at length in reply but I will only mention one point:

Posted by James Bartholomew • Indexed in General • Welfare benefits

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July 07, 2005
Thursday
Swedish people are supposedly four times more likely to be incapacitated than the Japanese

There are some who doubt that the value and conditions of various welfare benefits affect the way people behave. However there is overwhelming evidence that people respond to strongly to these terms, not least from the enormous variation in the proportion of people of working age in different countries who, supposedly, are incapacity by illness.

Note the way that, in the following figures, the rate of incapacity in Sweden is, ostensibly, four times that in Japan. It is surely very unlikely that Swedish people are genuinely four times more incapacitated than the Japanese.

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June 29, 2005
Wednesday
Welfare reform reduced poverty in America. When will the Tories endorse it?

I attended a talk by Professor Larry Mead at the Institute of Economic Affairs the night before last. He gave his talk in a scholarly, methodical way - quite different from the more openly partisan talk given by Ron Haskins last week. But the message was mostly the same. The big fact is that welfare rolls fell by 60 per cent in America following the 1996 reform package. It was an awesome result. Of course, people like Professor Mead knew very well that such a thing would be attacked as cruel and bad. But one of the impressive things about the American Right is that it arms itself with plenty of facts to counter such assertions:

He gave Federal Poverty Rates for whites, blacks and Hispanics in 1994, 2000 and 2003 respectively:

Posted by James Bartholomew • Indexed in Parenting • Recommended reading • Reform • Welfare benefits

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June 25, 2005
Saturday
One part of Gordon Brown's incompetence

Gordon Brown's poor record as chancellor is gradually becoming more obvious.

This week, more light fell on his bad policy of tax credits. But first a quick summary of the bad policies he has pursued:

1. He has raised tax heavily to pay for investment in a monopolistic healthcare system (adding to the problem by fighting any attempt to make it less monopolistic). The result: the country will be poorer than it would have been and people less well cared for when ill.

2. He took a pension system which was amongst the most successful and well provided for in Europe and has put it in crisis. Result: more people will be poor in old age.

3. He has increased the prevalence of means testing - with all its disadvantages (see The Welfare State We're In and previous postings. One of the results: reduced savings (which will, again, cause more people to be poor in old age).

4. He has dramatically increased red tape, waste and errors through complicated systems - such as tax credits - instead of using much simpler methods (such as higher thresholds for tax-free income). By wasting public money, he has made us poorer. Through red tape he has cost us money again and wasted our time.

Here is some of the coverage of the problems Mr Brown created through tax credits:


Hundreds of thousands of families have suffered because of flaws in Gordon Brown's £13 billion system of tax credits, a watchdog says today.

Ann Abraham, the Parliamentary and Health Service Ombudsman, says poor families are particularly vulnerable because of the way they have been forced to pay back money given to them in error.


Posted by James Bartholomew • Indexed in Reform • Tax and growth • Waste in public services • Welfare benefits

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June 23, 2005
Thursday
American welfare reform was bitterly opposed and not bi-partisan

Ron Haskins, a senior adviser to President Bush on welfare reform, addressed the Centre for Policy Studies yesterday. It was an exceptionally good presentation - powerful about the way in which the 1996 welfare reform programme has succeeded and honest about admitting ways in which it has disappointed.

He brought home that the welfare reform was not, as it is usually described in Britain, a genuinely bi-partisan affair. It was, above all, a Republican reform that was fought bitterly by most Democrats (with one particularly notable exception). Based on the American experience, we should not get hung up on the idea that only the Left can reform welfare on the same basis that 'only Nixon could make peace with Commmunist China'. In America, passionate Republicans aimed to save their country though welfare reform and they have, to a remarkable degree, succeeded.

The notable exception on the Democrat side was,

Posted by James Bartholomew • Indexed in Behaviour & Crime • Parenting • Politics • Reform • Welfare benefits

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June 21, 2005
Tuesday
If we had had welfare reform like America, we could have had this:

Below is what has been achieved in America. It could have been done here. But instead of radical reform in welfare, Gordon Brown increased means-testing. There has been some reduction in the value of welfare benefits and some increased incentives to work and even some increased conditionality of benefits. But it has been minor and at the edges.

If Blair had done what Clinton (pushed on by the Republicans) had done in the USA, then we might have had this:

What was the result of the 1996 reforms? By 2003, American welfare case loads had declined by about 60 per cent nationally. The number of families receiving cash welfare is now the lowest it has been since 1971. Between 1993 and 2000, the percentage of single mothers in employment grew from 58 per cent to nearly 75 per cent. The sub-group of never-married mothers working grew from 44 per cent to 66 per cent.

Posted by James Bartholomew • Indexed in Behaviour & Crime • Parenting • Politics • Welfare benefits

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June 16, 2005
Thursday
How to do welfare reform.

The blog Once More Unto the Breach has an interesting posting and comments on the options and difficulties in welfare reform.

Posted by James Bartholomew • Indexed in NHS • Politics • Reform • Welfare benefits

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May 19, 2005
Thursday
The state finally realises that charities can do better but then spoils this breakthrough by forcing its own inefficiencies onto them

An email received today:

I've recently read your book and you raise a lot of good points. I teach in a college that retrains unemployed disabled adults and it is only too apparent that the welfare system has hindered as well as helped a large number of our students in the ways in which you describe. For many the financial incentive to work just isn't there, especially those with families, although often we are sucessful in changing peoples outlook and raising their aspirations.

Posted by James Bartholomew • Indexed in Education • NHS • Waste in public services • Welfare benefits

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May 18, 2005
Wednesday
Blunkett is back and talking big. But will it amount to anything?

David Blunkett is back and talking big. The self-styled bruiser and radical says he intends to take a million people off incapacity benefit.

Is this a sensible thing to try to achieve?

Let's consider a few salient facts: there are currently 2.6 million people on the benefit - 7.2 per cent of the working age population. In Germany, only four per cent are on a similar benefits, only three per cent of the Spanish claim to be incapable of work and a mere two per cent of the French. Is it credible that we in Britain suffer from some ailment - currently not identified by medical science - that makes us more than three times more likely to be incapacitated than the French?

The numbers who claim to be incapable of work have jumped most extraordinarily. They have quadrupled since the mid 1970s. Again, medical science has failed to identify a new disease sweeping the nation and causing four times as many people to be physically or mentally incapable of work.

Here are two clues to what has really been happening. The different afflictions from which this new army of the incapable are suffering have one characteristic in common: they are ones which cannot easily be proved or disproved. The big boom has been in 'mental and behavioural disorders' - which often means 'stress' or 'depression' - and 'muskulo-skeletal' problems which typically means backache. Undoubtedly there are people with serious mental problems and terrible backache. What is beyond belief is that there should have been such a gigantic increase in these conditions and, moreover, that it should disproportionately have affected areas of high unemployment.

In reality, it has been known since the 1980s that a large proportion of those on incapacity benefit could work. Labour used to complain the Conservative Government was using the benefit to hide the true level of unemployment. Now, by saying that a million could be removed from the benefit, Labour is accepting that a million extra people should be classified as unemployed. This is worth remembering next time you hear the Government boast that unemployment in Britain is low. It isn't when you include these hidden unemployed on incapacity benefit.

But how did we get into this mess anyway?

Posted by James Bartholomew • Indexed in Welfare benefits

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May 16, 2005
Monday
It's the family, stupid

Messrs Blair and Brown just don't get it. They think good social policy revolves around a bad definition of 'poverty'. They are puzzled by the 'hoodies'.

This from a good article by Fraser Nelson in the Scotsman:

For all the hype about the New Deal, Brown’s economy has specialised in finding alternatives to work for young people. When Labour came to power, 23% of 18-24 years olds were not working: this has risen to now 25%.

And benefit dependency has risen from 6.01m when Labour came to power to 6.58m now. Family disintegration has continued apace: the proportion of births to lone parents is up from 21% in 1996 to 26% today.

Posted by James Bartholomew • Indexed in Behaviour & Crime • Parenting • Welfare benefits

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May 11, 2005
Wednesday
NHS beds halve and crimes against the person up 281 per cent
The NHS is the world's third-largest employer with a million people on its books, second only to the Chinese Army and Indian railways. We spend some £80 billion a year on the NHS, equating to £1,400 annually for every man, woman and child. Despite this the number of NHS beds in England has halved in the past 25 years.
The average British woman will have 2.2 healthy pregnancies in her lifetime - almost enough to keep the UK population stable - but will give birth to only 1.7 children. The difference is accounted for by the number of abortions.
The number of people working in the public sector has increased by 10 per cent since 1998, accounting for some half a million of the new jobs created since Labour came to power.
Total public sector employment in 5.29 million, up from 4.71 million in 1997.
In 1981, 600,000 people claimed incapacity benefit. Now it is 2.2 million.
The greatest increases in recorded crime since 1997 have been in drug offences (509 per cent) and violence against the person (281 per cent) and there has been a drop in burglaries by nearly a fifth.
More than half the households in Britain have less than £1,500 in savings, and a quarter have no savings at all.
Teenage birth rates in Britain are twice as high as in Germany, and five times as high as in Holland.
150,000 children are educated at home, and the figure is rising. Bullying, harrassment and religion are the reasons most cited by parents for taking their children out of school.

From Britain in Numbers published by Politico's and serialised in today's Daily Mail.

Posted by James Bartholomew • Indexed in Behaviour & Crime • Education • General • NHS • Parenting • Waste in public services • Welfare benefits

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May 10, 2005
Tuesday
The evolution of a friendly society

Email from a friend:

While on holiday I read Irving Stone's biography of Charles Darwin, 'The Origin'. For much of his life he lived in the small Kent village of Down. The local villagers approached him in 1850 and asked him to be the treasurer of the 'Down Friendly Club'. This he duly agreed to, and for at least the following twenty seven years kept the books for this small Friendly society. Then, in 1877 the villagers sent him notice that they wanted to wind up the society and distribute the funds among the members because they feared "that the government intended to unite all the clubs throughout England into a single one, and then divide the funds.'

Posted by James Bartholomew • Indexed in Welfare benefits

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April 30, 2005
Saturday
The dilemma of charities
...belief in restoring people to 'self-respect and self-support' has led compassionate conservatives to reject the de-humanising 'feed-and-forget' philosophy that has come to characterises the welfare state's attitude to its dependent clients. Compassionate conservatives want to see 'help-to-change' charities becoming an increasing feature of society's response to poverty.

Compassionate conservatives are then faced with something of a dilemma.

Posted by James Bartholomew • Indexed in General • NHS • Welfare benefits

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April 25, 2005
Monday
Tax the workers!

The 'quality' papers failed to mention the following in their coverage of the Institute for Fiscal Studies report last week. However the Daily Mail and the Daily Express did. This is the relevant passage from the Express's coverage:


LABOUR has penalised parents who work hard to give their children a good start in life while handing huge subsidies to families where nobody bothers to get a job.

The findings shatter Tony Blair's claims that he is on the side of "hard-working families" and blew a hole in his re-election strategy.

Research by the independent Institute for Fiscal Studies found Labour's tax and benefit changes have boosted the income of a typical unemployed couple with children by around £2,500 a year.

But a working couple with children are around £750 a year worse off because soaring national insurance and other stealth taxes have wiped out the benefit they get from the child tax credit.

If this is true, it is important. I can well believe that the working couple with children has been hurt by Labour policies. But I am more surprised by the idea that benefits for the non-working couple have significantly increased. This needs further examination.

(I am grateful to Corin Taylor of the think tank, Reform, for supplying this cutting.)

Posted by James Bartholomew • Indexed in Welfare benefits

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April 08, 2005
Friday
Depressing depression figures

The most common medical reason given for people being incapable of work and therefore entitled to incapacity benefit is now depression. It has overtaken musculo-skeletal problems. This is a competition between two conditions that have one thing in common: in neither case is it easy to prove that someone does not have it.

Posted by James Bartholomew • Indexed in NHS • Welfare benefits

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April 04, 2005
Monday
Are people able to look after themselves?

A key issue for those of us who believe the state is bad at looking after people, is whether or not individuals are any good at it either.

This is Tim Congdon in the Telegraph today on the competence or otherwise of people in saving:

Much of economic theory is concerned to establish that people are rational. But theoreticians and practitioners do not always see eye to eye. When confronted with real-world problems, economists are inclined to forget that they live in a world of rational agents.

Indeed, they are quite unembarrassed about offering recommendations to politicians which make sense only if people are rather silly. A good example is the recent report from the Pensions Commission, under the chairmanship of Adair Turner.

It says flatly: "Most people do not make rational decisions about long-term savings without encouragement and advice.'' The report proceeds from this patronising remark to recommend increased state involvement in pension provision, with a consequent enlargement of the government's role in the economy and a rise in taxation.

Professor Congdon goes on to look at the overall savings people make including saving that is not labelled "pension saving" but which nonetheless can be used for that purpose. He concludes that people are perfectly rational. His analysis may be open to challenge. But I want to mention another area in which the rationality of people in looking after themselves may be in doubt.

In America, people have to pay for their own healthcare. But in the same country, the incidence of obesity is very high. Why, when they must know that being fat increases their chances of premature death and early use of expensive healthcare, do so many Americans allow themselves to become fat? It does not seem sensible or rational.

Posted by James Bartholomew • Indexed in General • NHS • Pensions • Welfare benefits

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March 29, 2005
Tuesday
Telling grandma how to suck eggs

The Conservatives have 'matched' the Labour promises on financial support and leave for new parents. They have added some elements of choice but essentially the Conservatives are accepting the Labour idea that the government should dish out other people's cash and impose extra obligations on employers when a couple have a baby. In their desperate attempts to morph a Labour plan which would subsidise care by people outside a family but not care from inside the family, the Conservatives have come up with the idea that grandparents should be able to take a course in caring for children so that they could then qualify for subsidy too. The idea of the government - which has shown itself incapable even of teaching children in its care how to read - telling grandparents how to look after children is grotesque.

The Conservatives have also implicitly accepted tax credits. But tax credits are an appallingly bad way of delivering benefits. A large minority - often those most in most need - do not go through the difficulties of applying and so do not get them.

The Conservatives should not have accepted these flawed, complex, anti-employment, high-tax, bureaucracy-heavy ideas.

The BBC coverage of the Tory proposals is here.

Posted by James Bartholomew • Indexed in Parenting • Politics • Welfare benefits

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March 25, 2005
Friday
The effect of the minimum wage on young blacks

Walter Williams on proposals to raise the minimum wage in the USA:

The crucial question for any policy is not what are its intentions but what are its effects? One of its effects is readily seen by putting yourself in the place of an employer and asking: If I must pay $6.25 or $7.25 an hour to whomever I hire, does it make sense for me to hire a worker whose skills enable him to produce only $4.00 worth of value per hour? Most employers would view doing so as a losing economic proposition. Thus, one effect of minimum wages is that of discriminating against the employment of low-skilled workers.

For the most part, teenagers dominate the low-skilled worker category. They lack the maturity, skills and experience of adults. Black teenagers not only share those characteristics, but they are additionally burdened by grossly fraudulent education, making them even lower skilled.

Bureau of Labor Statistics unemployment data confirms the economic prediction about minimum wage effects. Currently, the teen unemployment rate is 16 percent for whites and 32 percent for blacks. In 1948, the unemployment rate for black teens (16-17) was lower (9.4 percent) than white teens (10.2 percent). Plus, black teens were more active in the labor force.


Posted by James Bartholomew • Indexed in Welfare benefits

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March 24, 2005
Thursday
The fantastic reduction in crime during Victoria's reign

Why did crime rates fall so dramatically during Victoria's reign? Why is the fact that crime fell so little known? And why do some very clever and well-educated people decline to believe it?

The fall in crime in the second half of the 19th century is an astonishing, little-known story throws light on how government welfare policy may influence crime levels ('the causes of crime'). Crime levels, in turn, probably reflect more general standards of behaviour.

Here is an excerpt from Dr Jose Harris's excellent Public Lives, Public Spirit: Britain 1870-1914 which gives us some of the facts from which to start:

One of the most striking features of British society betweeen the 1860s and the First World War was its continually diminishing rate of recorded crime - a phenomenon that was historically quite unusual by comparison with both earlier and later periods in British society and with the experience of other industrialising societies in the latter half of the nineteenth century. In spite of increasing concentration on imprisonment as the sole form of punishment for serious crime, the prison population in all parts of the United Kingdom was proportionally much smaller in 1914 than it had been in the 1860s, while sentences for penal servitude were one-fifth of the level of fifty years before. Recorded crime and conviction rates are clearly a somewhat elastic measure of actual criminal behaviour, and public definitions of what constituted 'crime' were no less fluid in this epoch than in any other. But as legislators thoughout the period were constantly extending the boundaries of crime and as police were increasingly active in its apprehension, it seems scarcely credible that falling crime rates can be ascribed to mere transient social perceptions.

This point could be demonstrated much more forcefully than I have space for here; but the point should be made that a very high proportion of Edwardian convicts were in prison for offences that would have been much more lightly treated or wholly disregarded by law enforcers in the late twentieth century. In 1912-13, for example, one quarter of males aged 16 to 21 who were imprisoned in the metropolitan area of London were serving seven-day sentences for offences which included drunkenness, 'playing games in the street; riding a bicycle without lights, gaming, obscene language, and sleeping rough. If late twentieth century standards of policing and sentencing had been applied in Edwardian Britain, then prisons would have been virtually empty; conversely, if Edwardian standards were applied in the 1990s then most of the youth of Britain would be in gaol.

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March 22, 2005
Tuesday
What Patten did to Hong Kong

Lunch with a senior official of the Hong Kong government. Hong Kong still has a relatively low burden of government, but the weight has got a lot heavier since John Cowperthwaite's day. (Cowperthwaite is the hero of the chapter on tax and growth in The Welfare State We're In). Whereas government activity used to account for 14 per cent of gross national product. It is now up to 22 per cent. Of course, that is still miles better than our 40 per cent and rising.

The official admitted that the big rises in spending happened in 1993-1996, when Chris Patten, the Conservative politician, was there. Mr Patten played a strong political game in Hong Kong. But he was, of course, a British centrist. Under him, Hong Kong welfare state spending rose. It comes as no surprise that unemployment after Patten has been higher than it was before he arrived.

Posted by James Bartholomew • Indexed in NHS • Tax and growth • Welfare benefits • Welfare benefits

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What Patten did to Hong Kong

Lunch with a senior official of the Hong Kong government. Hong Kong still has a relatively low burden of government, but the weight has got a lot heavier since John Cowperthwaite's day. (Cowperthwaite is the hero of the chapter on tax and growth in The Welfare State We're In). Whereas government activity used to account for 14 per cent of gross national product. It is now up to 22 per cent. Of course, that is still miles better than our 40 per cent and rising.

The official admitted that the big rises in spending happened in 1993-1996, when Chris Patten, the Conservative politician, was there. Mr Patten played a strong political game in Hong Kong. But he was, of course, a British centrist. Under him, Hong Kong welfare state spending rose. It comes as no surprise that unemployment after Patten has been higher than it was before he arrived.

Posted by James Bartholomew • Indexed in NHS • Tax and growth • Welfare benefits • Welfare benefits

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