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Written by Tom Clougherty
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Sunday, 04 November 2007 |
The ASI's latest report, Working Welfare, is released today. It has already been sent to the government in reponse to their consultation paper 'In work, better off: next steps to full employment', which was published in July.
The problem with welfare policy in this country is governments of
various complexions, lacking any coherent vision of what welfare should
aim to achieve, have merely shuffled the rules and tweaked a system
that is socially toxic to many of its recipients. Tinkering has been
the order of the day.
However, as our report's author, Katharine Hirst, points out:
"Gradual change may appear to be a step in the right direction, but can
also create confusion and contradictory pressures rather than improving
things. The time has come for a radical overhaul of the benefits
system." The purpose of Working Welfare is to show a clear vision of
what welfare should be like in future, and to set out the stages by
which it can be taken there.
Inspired by the successful American reforms of the 1990s, our
latest proposals make work central to welfare: all working age people
not meeting national disability criteria would face immediate work
requirements, backed up by tough sanctions. No work would mean no
benefits, and any absence from mandated work without good cause would
trigger a pro rata reduction in payments.
The proposals in Working Welfare would also revolutionize
the delivery of welfare. Responsibility for its provision and
administration would be devolved to local agencies, which would be paid
according to results. Agencies would be rewarded for getting people
into work for a set period of time, ensuring an ongoing and
personalized service for jobseekers.
The report also advocates raising the personal income tax
allowance to £12,000, to tackle high effective marginal tax rates for
those trying to enter the workforce, and to make life easier for those
with low incomes.
Read the whole report here.
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Written by Tom Clougherty
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Saturday, 01 September 2007 |
Here is
a story I missed earlier in the week. On Wednesday the Office for
National Statistics released figures showing that one in five
households (23.9 percent in London) rely entirely on benefits. Terrible
enough on its own, but when you take account of the fact that this
figure excludes pensioners and students, it becomes clear just how
enormous the problem is.
He most obvious consequences are economic ones. Having that many
people out of work (and therefore unproductive) is a complete waste of
the country's human resources. The high taxes required to support a
welfare state that large are a significant drain on our economy too.
Both these things hurt our competitiveness, reducing economic growth
and encouraging investors to look elsewhere.
It is also pretty clear – with more than 3 million households
relying on handouts when labour is still in demand – that government
benefits have had a serious negative impact on the incentives to work
and make money. Indeed, only one in five of the homes listed as
workless contain anyone who is even looking for a job.
Ultimately though, it is the social effects of welfare that are
the most damaging and corrosive to society. As the National Audit
Office warned, those living in workless households are at risk of
falling into a spiral of ill-health and crime. And with a system that
positively encourages family breakdown, it is all too likely that this
vicious circle will continue from one generation to the next.
Far from creating a more equal Britain, the welfare state has
fostered the growth of a vast underclass. Without serious reform, this
problem is only going to get worse.
To buy James Bartholomew's excellent book on the subject, click here.
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Written by David Cuthbertson
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Saturday, 21 July 2007 |
Troubling news from a Scottish Widows report
which says that almost half of all people over 30 and earning more than
£10,000 per year were not saving enough for their pensions. Moreover, a
quarter of people in that group were saving nothing at all.
State pensions are shrinking compared to earnings and will continue to
do so. Simply, there isn't enough money in the country to continue our
current unfunded state pension. The problem is that people are living
longer. When the state pension was established it was expected that
people would live only a few years beyond the retirement age, today
people may expect to live decades more. Also, people are retiring
earlier and so the number of people working and paying into the pot is
shrinking compared to the number of people drawing out of it.
This is the major social crisis facing the country and it will reveal
itself in the next 20-30 years. So one might expect that the government
is carefully making provision for it. Not a bit of it.
Instead, the government has actually made it harder to save for your
own retirement. Gordon Brown's stealth taxes have raided private
pension funds to the point that people are now actively discouraged
from saving for their old age. To compound this, people expect that if
they do save, they will lose any benefits that they might get from the
state. And as if this wasn't enough, a tortuously complicated system of
tax relief makes it difficult for people to understand the few ways
that savings may benefit them.
The new trend for people to change jobs several time in their career is
making it difficult for company pension funds. Their costs are
spiralling as they are forced to keep track of ever larger numbers of
people, even if only to pay them a small amount.
Ultimatly, changing demograpics mean the country will be forced to move
from our current unfunded to a funded system and private savings and
investements will be a big part of that. The government should be
making it easier and simpler to save with straighforward top-ups
instead of complex tax-relief. That way we will be able to reverse the
decline in savings and save ourselves from much bigger problems later.
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