By Aaron Barbour
There are so many people who are entitled to benefits but don’t claim, either because they don’t know they are entitled, or because they find the system complicated and impenetrable.”
Jo, aged 27
There isn’t one policy I’d change about the benefit system. I’d change the whole thing. The UK’s benefit system is simply not working: for claimants, administrators and the tax payer. The system has mutated into a beast which is complex, confused, contradictory (in impact and intent), frequently changing, sometimes well, but at other times, poorly delivered, bureaucratic, non-strategic, not joined-up, and sometimes welcomed but mainly mistrusted. We cannot continue with more piecemeal, ‘tinkering at the edges’ type reforms but need a fundamental re-think.
In 2005-06 we spent £79bn on non-pensionable welfare benefit payments (DWP, 2007). Welfare has become a defining part of many individual’s lives. 5.6 million working-age Britons rely on state aid (DWP, 2007/08), and so live in poverty. 71% of these remain on benefits for longer than one year (Boys Smith, 2006). This acts as a safety net (often not a very secure one), rather than a ladder; it counts as revenue expenditure not an investment in human capital, so trapping many people in a no-win situation of poverty that keeps them doing ‘nothing’ because doing ‘anything’ is too risky.
However, this money does not currently serve any purpose beyond keeping claimants ‘out of the gutter’. Current benefit levels pay below the government’s own definition of what it is to live in poverty. Meanwhile, the jobs that need doing in those areas – mostly part-time, short-term, sessional and unpredictable – simply do not get done because the people best placed to do them are excluded by the bureaucratic weight and inflexibility of the benefit system. The benefit system is very old-fashioned in its understanding and thinking, mirroring a working world focused on the 35-hour week. The world of work has moved on.
“There are thousands of people in Newham with commitments like caring for children, and other dependents, studying or medical constraints that make it impossible for them to enter the conventional labour market.”
Sir Robin Wales, Mayor of Newham
In poor neighbourhoods, the benefit spend is the single largest element of public spending. This concentration of poverty has a serious impact on local neighbourhoods. Why not spend this money better and enable people to build their own ladders out of poverty rather than keep them in a state of limbo? If those neighbourhoods improve, we will all benefit.
Since the current benefit system cannot respond to contemporary work patterns, it is not surprising that people on benefits will not take the risk of coming off benefits to take short term, part-time work because of the delays, uncertainties and disincentives which arise as a result of entering such work. In addition, complying with the complicated rules is a serious burden for individual claimants, for their advisers and for other Jobcentre Plus staff. There are currently 51 separate benefits, compared with 27 in 1979, and only 7 in 1948 (Boys Smith, 2006). Urgent and fundamental reform is need to the benefit system.
Community Links has been thinking how to get back on to the front foot with this agenda for sometime. Last summer we held a joint seminar Child Poverty Action Group with academics, practioners, politicians and policymakers to debate what the future welfare state should be aiming to achieve and how this should be delivered; and explore whether we could try to develop a programme of work to address this issue and define where policy should be headed. Plans are a foot to develop this programme over the coming year, so watch this space and help us create a benefit system fit for the 21st century.
This post is part of Community Links and Church Action on Poverty‘s project looking at working age poverty, contributing to the European Year Against Poverty
Suggestion:
Excluding payments for medical support:
Replace all cash and benefits / personal tax allowances and tax credits with an automatic weekly sum set at a level to ensure a minimum standard of living paid to all citizens. This is paid for by initial earnings taxed at higher level plus the administrative savings at national and local level.
For example if this is set at £100 / week the first £10400 could be taxed at 50%.
This is equivilent to a tax allowance of that level, with working credit for lower earnings without any poverty traps since all would be better off by doing something.
Without tax credits and tax allowances the administration of PAYE would be substantially simpler.
Such a system could also be adjusted to allow for rewarding actions that significantly benefit society and also punish behaviour that is consistantly unacceptable to society. Such adjustments need not alter the collecion (PAYE)side.
Excess family size may be considered unacceptable in a world of limited resources.
Such a system safeguards poorer members of society and negates the need for a minimim pay level, enabling the country to become competetive.
If it is only paid to citizen it enables citizens to be more competetive in the jobs market negating the need for excess restictions on immigration.
Non citizens could enjoy a limited tax allowance if they want to work here and there is demand for their services.
Will any party be willing to look at such changes?
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