The welfare debate has roused emotions on both the left and right, and has led to some outlandish claims. Myth needs to be separated from reality. Geoffrey Taunton-Collins gives his take on what we should and shouldn’t believe.
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The Coalition's welfare reforms are too timid, says economist Peter Hill. Welfare-to-work schemes have failed, and adding more state intervention will only compound the problems. What is needed is a reform package that time limits out of work benefits, turns benefits into a genuine unemployment insurance scheme, and more.
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Housing benefit is a national industry, says Preston Byrne. It sustains a national minimum rent and drives up rental costs for everyone. The government's reforms are on the right track.
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The government is tilting at windmills with its plans to finance long-term care, says Terry Arthur. Normal market mechanisms could provide everything that people want, if the government would only allow the market to be free and remove the welfare state from people's lives.
Income inequality measures don't tell us much about poverty and, as this report argues, can actually mask declines in living standards of the poor. Furthermore, there is no good reason to use country-specific inequality measures as opposed to a global measure; if the latter is used, prioritites for poverty reduction shift dramatically. This report argues against the current fashion for using inequality as a measure of living standards, and argues that it may be hindering efforts to fight poverty.
The welfare state is out of date. The principle of 'Free at the point of delivery' must be replaced by 'Paid for at the point of delivery', so that those who can afford to pay for their healthcare and children's education do so in proportion to their earnings. The result, argues Ross Harvey, would be huge savings as market efficiencies are introduced to moribund sectors, without leaving the country's poorest behind.
Britain's debt is spiralling and, even after the Comprehensive Spending Review, it is set to reach critical levels by 2018 unless radical action is taken to change course. In this paper Miles Saltiel tackles the country's intergenerational obligations – that is, spending on healthcare, welfare, pensions and education – and shows that we urgently need to radically review the state's relationship with the people to avoid fiscal catastrophe along Irish lines.
Our response to the Department of Work & Pensions' '21st Century Welfare' consultation argues in favour of radical welfare reform, endorsing the 'universal credit' subsequently adopted by the government. Its authors note that piecemeal reform of the welfare system is unsuited to overcoming its two chief failings – failing to provide a safety net for the needy and creating perverse incentives against work – and instead suggest sweeping away the existing welfare system and introducing a Universal Credit that pays initial benefits at 50% of the median income, and tapers at 55%.
This think piece by ASI fellow Tim Worstall critically examines the National Equality Panel's 'Hills Report', with particular emphasis on its treatment of wealth inequality and the gender pay gap. He argues that not only have the report's authors directly ignored Office of National Statistics guidelines on how to measure the gender pay gap, but that they have also hugely overstated income and wealth inequality in the UK by failing to take account of the effects of the welfare state.
NIkhil Arora argues that we need to radically reform that state pension, moving from the current pay-as-you-go model (a Madoff-style ponzi scheme) to a funded system based on personal pension accounts. Basing his proposals on a plan developed for the American Social Security system by the Cato Institute, Arora suggests allowing people to divert their employee National Insurance Contributions into private accounts (surrending their right to a state pension in the process), while employer National Insurance Contributions continue to be paid in order to finance the state pensions of current retirees.
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