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Incapacity Benefit reform
By Dr Eamonn Butler

As Britain gets richer, you would expect it is getting healthier too. But remarkably, some 2,400,000 people now claim Incapacity Benefit - the state hand-out of up to £74 a week that goes to people judged too ill to work.

Indeed, it is so remarkable that nobody doubts that many people are claiming and receiving the benefit fraudulently. The numbers first escalated in the 1980s, particularly in mining and steel towns that were hit severely by the industrial restructuring of the time: there were no jobs locally, and when people's unemployment benefit ran out, doctors just signed them 'on the sick' so they qualified for permanent benefits.

Also, nearly half those claiming Incapacity Benefit claim to be suffering from 'stress', while a fifth say they have back pain. The interesting thing about both those conditions is that they are very hard to gainsay through medical tests. Which also raises suspicions that many claims are fraudulent.

But you have to be brave to give up a nice little earner of £74 a week and go out and get a job, which is why the government wants to change the system and provide higher benefits for people who are actively seeking work. Good luck to them. This government's record on welfare reform has been appalling. There is always big talk about exposing the cheats, getting people back to work and so on. But not much actually happens. The only minister to think radically on the subject, Frank Field MP, was unceremoniously dumped after just a year. And this week, we've had more big talk about reforming Incapacity Benefit - but don't expect to see the figures plummeting any time soon. So we will continue to get richer and healthier, while still more of us are drawing this discredited hand-out.

We are really only going to make an impact on the welfare rolls when we integrate the tax and benefit system so that people are always better off taking some work rather than none. And so that benefit recipients who do take work are not stung by effective tax rates of 70%+ as their benefits are withdrawn. Is that really so unthinkable?



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Adam Smith (1723-1790)
Adam Smith was the great Scottish philosopher and economist best known for "The Wealth of Nations", his pioneering book on free trade and market economics.

A wide selection of material about Adam Smith is now available on the Adam Smith website. This includes the full text of his two major works, The Theory of Moral Sentiments and The Wealth of Nations.