Monday 5 November
In response to a government consultation paper, the free-market Adam Smith Institute has published a new report - Working Welfare – which calls for a radical shake-up of welfare policy in the UK, making work central to the benefits system.
According to the Department of Work and Pensions, over three million working-age Britons have been on benefits for over a year. As the ASI report makes clear, worklessness breeds inter-generational dependency, health problems and crime, among other social ills. By actively deterring people from entering work, welfare is hurting the very people it was designed to help.
Under the Institute's plans, all working age people not meeting national disability criteria would face "immediate work requirements". This requirement would be backed with tough sanctions – "no work, no benefits" – and any absence from mandated work without good cause would trigger a pro rata reduction in benefit payments.
For those unable to find a job, subsidized work, work experience, or community service would be available. Those with serious educational deficiencies would receive training and those suffering from drug or alcohol dependency would be required to receive treatment.
Similar reforms in the US, which were signed into law by President Clinton in 1994, reduced welfare rolls by half, from 5.5 percent in 1994 to just 2.1 percent in 2000. At the same time, the average income of the poorest 20 percent of families rose and child poverty declined significantly.
The ASI proposals 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 personalised service for jobseekers.
According to the report's author, Katharine Hirst, the government's approach to reform has been too timid:
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. If we really want to enhance self-dependence, provide a safety net for the genuinely needy and tackle child poverty, nothing less will suffice.
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.
ASI President Dr Madsen Pirie points out that, "In welfare policy, tinkering has been the order of the day. Lacking any coherent vision of what welfare should aim to achieve, governments of various complexions have merely shuffled the rules and tweaked a system that is socially toxic to many of its recipients. The ASI report shows a clear vision of what welfare should be like in future, and sets out the stages by which it can be taken there."