The IFS has reported today, according to the Guardian, that:
A couple with two children will be £1,250 a year worse off by 2015 as families "shoulder the burden of austerity", according to an Institute for Fiscal Studies report.
The figures suggest families with children under five, families with more than two children, and jobless lone parents will bear the biggest financial pain.
So although well over 99% of such couples will have had nothing to do with creating the current situation of financial austerity they are paying most for it. That's deliberate. That's Tory policy. It's a Tory policy of picking on those on benefits and those who don't fit their stereotypical, and fantastical (as in fantasy) view of the family as if all society's faults are caused by those out of work, on low pay and who are single parents.
Labour is not helping. Liam Byrne's shameful suggestions on beenfits yesterday are utterly unbecoming of any party that would like to say it is from the left - which Byrne is clearly not.
But the reality is that both these parties - and by association the Lib Dems too - have abandoned the poor. As my one time co-author Prof David Byrne (as far as I know no relation to Liam Byrne) has said in the Guardian this morning:
Liam Byrne, in his argument for increasingly punitive treatment of benefit claimants (Beveridge for this century, 3 January), draws on Beveridge's rather brief discussion of "conditionality" in relation to the receipt of unemployment benefit. He mentions Beveridge's commitment to full employment, one of the assumptions in his great report as a basis for social insurance reform, but seems surprisingly ignorant (for a holder of a first-class degree in politics and history) as to what Beveridge actually meant by this.
In Full Employment in a Free Society (1944), Beveridge defined full employment as a situation in which there were more jobs available than people seeking to be employed. In those circumstances he thought conditionality would be appropriate. He would have dismissed any assertion that conditionality was the issue when a world recession and the structural failure of the UK economy have led to there being more than 2.5 million people unemployed (not counting those on incapacity benefits who are part of Byrne's target group for conditionality) and less than half a million job vacancies.
Precisely so. Indeed, as David continues:
In Full Employment in a Free Society, Beveridge argued that Keynes' ideas meant capitalism could be managed to maintain full employment, but that if it could not then there must be a full socialisation of the economy.
David is right. So was Beveridge. And the Tories are wrong, and so, quite emphatically, is Liam Byrne.
Candidly, issues as there may be with benefit payments right now, they pale into insignificance compared with four other issues which should have vastly higher priority in the political sphere at present.
The first is why it is acceptable for so many companies to pay such low wages that people cannot live without benefit support in the UK. Our minimum wage is clearly inadequate.
The second is why do we have such high rents: this is clearly a legacy of Thatcher and failed social housing policy. We need much more social housing on fair rents.
Third, this is an issue of priorities: if tax evasion was tackled the benefits issue would be of substantially lower significance. There is £70 billion of tax evasion a year in the UK right now. This is the right target for attention, not benefits.
And lastly, no politician has a right to blame the unemployed for being out of work when politicians fail to address unemployment and opt for policies that guarantee far from full employment. But that's what all major political parties have done.
We could have full employment in this country. We may have a significantly different composition of incomes as a result. We might have to change what we do as a nation. But we will be better off. we will be more prosperous - even if not all would be richer. And we would stop the waste - the enormous human waste, the enormous waste of productivity and the even the enormous financial waste of people being told they should not work. We can do that.
But we can only do that through government intervention. As I have argued before. There are four factors that drive growth in emplyment in an economy. They are:
a) Increasing consumer spending. That's not going to happen right now. real incomes are falling.
b) Increasing business investment. That's not going to happen right now as people are spending less.
c) Increasing exports - which is highly unlikely given almost everyone is moving towards recession.
d) Increasing government spending - which is the only option left right now.
Spending works. It means people take jobs and pay taxes, and don't claim benefits. It means they spend, and so pay more VAT. And that means they also support other jobs, and so a virtuous cycle of spending occurs. Do it across the whole of Europe and it would be better. Do it here on investment style projects and it will work well anyway.
There is no other way forward now. This is the only way to create jobs. And unless a party is willing to talk about that talk about cutting benefits is simply callous and wholly politically unacceptable.
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Great article. Although full employment is possible in the U.K. is it really what we should be focusing on? More employment is always good but isn’t income security more important? For a long time now i’ve favoured the citizens income as outlined by the citizens income trust. http://www.citizensincome.org/filelibrary/Citizen%27s%20Income%20booklet.pdf It’s green party policy and was (not sure if still is) S.N.P. policy post independence.
Countries like Norway and Sweden who’s social security systems (which i like very much) rely on near full employment are straining exactly because in our modern neo-liberal economies full employment is so hard to maintain. Not to mention sustainability issues are tied up with consumption/work life balance.
Obvioualy job creation is needed and important. Just wish the time could be seized for more radical (not in the Tory way) reform.
“Although full employment is possible in the U.K. is it really what we should be focusing on?” Yes, it is. Working is good for the soul. Everyone should work who is able to. Full employment should be the main objective of any government and economists should be producing the policies to achieve this. If they can’t then they should sack themselves.
The modern economy is based on people working in order to buy the goods and services which others produce/supply. Supply and demand.
I agree working is good for the soul and essential for health but there are broader questions here. “Full employment” in economics doesn’t usually mean full employment. It usually means knocking the unemployment level down to a few percent. Real full employment isn’t possible without very heavy state intervention. I’m not advocating that people shouldn’t work at all but there’s a difference between paid labour and other work. Domestic work is unpaid but without which our economy couldn’t exist. There’s plenty of social/charity work that needs done which largely isn’t paid. I’m not suggesting that anyone should sit about. Just asking if the AMOUNT of paid work people do on average is a good idea and whether everyone should spend most of their time in paid work. Especially when many people are overworked (but see little increase in relative wage over the last30 years) and a lot of people only have part time or no work.
A citizens income would help with these problems. It would allow people to work less if they chose to which could help share out existing paid and unpaid work. It would increase employees bargaining position in relation to conditions and pay.
As for the supply and demand argument for our modern economy it doesn’t quite work that way any more. First off there’s always a surplus of what economies produce compared to what people can buy. This is fine as long as you have a Keynsian model (constant stimulus through military spending etc to help make up the shortfall) and wages track with production/growth of the economy. Unfortunately that hasn’t happened for a long time. That’s why personal debt has shot up. It’s the only way people can keep up. If it had kept up people would have been able to work less whilst having realatively steady consumption.
Also is having everyone (or nearly everyone) in full time paid employment good for society in general? For this to be at all sustainable wages would have to shoot up to match production which would increase consumption and create and ecological nightmare. Or we could reduce working hours and increase re-distribution through a citizens income giving everyone a stable base to build on letting them have a better work/life/unpaid work balance.
I would just point out that Keynes thought that we’d all be working considerably shorter hours than we are now (3 day week and less I think) while still having growth (all be it modest) in the economy.
So basically I agree work is good but I think we need to think about what constitutes “work” and if we think that’s paid work only is it a good idea to have real full employment? Especially in regards to our personal health and societies in general.
Fascinating argument
I see a lo of merit in it
Not all of it, but much to muse on
“Fascinating argument I see a lo of merit in it”
Careful Richard. The citizen’s dividend idea is at the heart of the libertarian georgist argument. Collect all the land rent and distribute on a per capita basis. No need for any other taxes or transfers. Small state and everyone looks after their own.
We can of course, achieve a better distribution of work by cutting the working week. This was always the socialist dream. I used to think that this sort of thing was part of the European project but all these ideals have now been replaced by the exigencies of the plutocracy.
I am aware of that
That’s why there was still some caution in the response, I hope
What I am saying though is that whiks I do not think rents can pay a basic citizen income reform of work and rewards has to be on our agenda
NEF has done stuff on this too. Again, I am not sayig they have it all right. But the thinking is important
One of the reasons I support a universal basic income *is* because most people inherently want to work. It’s when they consistently try and try to get a job and fail that they give up. However, many things that are worth doing and learning and passing on don’t produce financial rewards, and we spend so much time earning money that those things get sidelined. If we had the security of a universal income then even if full employment as we traditionally understand it right now wasn’t possible, people could be *doing* things that were valuable on a social and cultural level. They would have less reason to bail out on society, they would be more likely to want to contribute to our wider spread wellbeing, and they would be more willing to do things for others that didn’t necessarily have a large fiscal reward, rather than falling into anti-social behaviour.
I think we need to take a really good look at the employment-based society. With population growth and technological advances that increase efficiencies and reduce the number of workers needed, full employment for 40+ hours a week won’t be maintainable. There is no reason we need an entire society to put in those kind of hours to maintain our standards of living. Give more people jobs with fewer hours that actually do something, instead of make work, and let them spend the rest of their time with their families or learning cultural skills or new languages or improving at hobbies, and we’ll create a society that’s more relaxed, more connected to each other and far happier than the one we have now.
But that is only possible with land reform – and that will itself take considerable time
I’m no Georgist. And neither are the main organisations behind this like the Citizens Income Trust, U.S.B.I.G. or B.I.E.N. (as far as i know). A basic citizens income can be achieved through general taxation (see earlier link) and some other things like raising national insurance for higher earners. That would give everyone a very basic citizens income. For a full one much higher levels of taxation would be needed (which I’m not sure i’f i’m completely comfortable with). I’m in favour of the idea and a basic one as laid out by the C.I. trust (although there are a few things i’d maybe change in the proposal).
Think a basic C.I. makes a lot of sense and could lead to other developments later. A full C.I. would probably need large changes to taxation or monetary reform which aren’t really achievable in the short term. Canada is (or was) considering a citizens income through a Negative Income tax just now. As Richard said NEF have done some work on this and it was a crucial part of their 21 hours report (although not hugely expanded on).
Just a note.Not a fan of Georgist Land reform myself but i am interested in a Land Value Tax put forward by the Scottish Greens and Andy Wightman to replace council tax and raise more money in a progressive way. http://twodoctors.org/lvtwightman.pdf Not all land reform has to be crazy. And this isn’t even land reform only tax reform. Could be done with one or two acts in the Scottish Parliament. This wouldn’t directly help C.I./Basic Income but just think a lot of LVT people get a bad rap.
@Jamie Brown “Not a fan of Georgist Land reform myself but i am interested in a Land Value Tax…”
But that is precisely the land reform which Henry George (from whence georgism came) advocated. Andy Wightman was against LVT when I first met him! He’s now one of our finest campaigners.
@Carol Wilcox
“But that is precisely the land reform which Henry George (from whence georgism came) advocated.”
Not really. George wanted Land Taxes to be the primary source of taxation while reducing other taxes. The Scottish Greens are the only party in the Scottish Parliament who talk about (although not very loudly) increasing income taxes. So other than that it’s a tax on land (which is a much older idea than George although he was the most famous proponent) I don’t really see how this is anything like what George wanted (i.e. reducing most other taxes).
Never met Andy so can’t speak to his views but i think the LVT he outlined is a great replacement for the regressive council tax.
Richard: “But that is only possible with land reform — and that will itself take considerable time”
LVT would achieve a massive shift in land ownership from the 1% who own 70% of it now. That’s surely the land reform we need.
@Jamie Brown
Andy and the Scottish Greens started their journey on tax reform from the Edinburgh conference of the International Union for Land Value Taxation. Andy was invited because of his excellent book Who Owns Scotland?
The UK Greens, the Labour Representation Committee and the Co-operative Party all have LVT in their manifestos but support other taxes. The Labour Land Campaign have a clear policy on the tax shift, with LVT replacing all other property taxes and income tax at the basic rate (www.labourland.org).
Fair enough. I was talking about the Scottish Greens LVT proposals specifically. I didn’t realise the Labour Land campaign plans were so drastic.
Ow!
Carol?
But it also explains why I thought Jame’s suggestion interesting….
Great blog as ever Richard!
The scandal of private landlords profiting at the expense of both the taxpayer and those forced to live in sub-standard housing should be ended immediately. A programme to refurbish or replace all vacant properties – especially council-owned – would create employment and apprenticeship opportunities. Sufficient housing stock to cover general needs should be owned by local authorities, meaning that the amount of cash needed for housing benefit would reduce significantly, also creating employment in the servicing and maintenance of these too.
On other benefits, there is still a problem with people refusing to work due to a sense of entitlement etc. – I say this not to support the discriminatory views of the right, but through having known people playing this game. This could be solved in a variety of ways, but simply forcing millions into poverty when there are no jobs for them is not one of them.
Dave, I entirely agree with the comments in your last paragraph and as we all know there are always people who abuse the ‘system’ ( we all remember the scandal of MP expenses for example). We have to acknowledge that there are parts of the UK where jobs are extremely hard to find and if they do exist these jobs are poorly paid. In some former mining communities the jobs created have been ‘Macjobs’ and I would challenge anyone to attempt to live a good family life on those wages. On the other hand there are people who maybe do not want to work and perhaps for some that is their way of coping in an area where jobs are scarce. When you have a comfortable lifestyle it can be difficult to empathise.
I know a person who is recovering from breast cancer, lives in social housing and still finds the spirit to work eventhough it is obvious that she finds this difficult on some occasions. But she tells me she has to work because she needs the money.Then we have the able bodied and youngsters without jobs who lack experience and are finding it increasingly difficult to find employment.
I very much doubt that meaningful employment will be created by the present government, Osborne has staked his reputation on his policy and frankly I doubt if he cares about social unrest. The weapons of oppression rest with the state thanks in most part to New Labour and so the Coalition has taken the political gamble to ride this out and attach blame to the current crisis in Europe. Sometimes I believe that politics operated in this cynical way is very destructive economically and socially.
“On other benefits, there is still a problem with people refusing to work due to a sense of entitlement etc. — I say this not to support the discriminatory views of the right, but through having known people playing this game.”
No – you are saying this PRECISELY to support the discriminatory views of the right. Your views are based on total ignorance.
The vast majority live on benefits because they HAVE to, not because they WANT to. For instance, who in their right mind is deliberately going to voluntarily live on JSA at £67.50 a week? A paltry sum that barely stretches a couple of days, let alone a week?
Come back when you know what you’re actually talking about!
There’s a sigmificant minority on the left, wrong in my view, that suggest there is enough empty properties standing to accommodate those who need housing. The estimate of empty buildings is around 1 million, yet up to 3 million families require housing. Although it is true that exisiting properties will make a significant dent in the housing shortage, it is clear that this would be still inadequate and much more social housing will be required.
The view of adequate housing already exisiting comes from a section of the left that seem not to want any growth at any cost due to pressures on the environment. I don’t agree with this mostly because it is unrealistic. Of course, we must start to move away from the concept of endless growth in order to pay for endless debt, but we must have a certain amount of growth to maintain decent living standards.
I believe we can have sustainable growth without working people and those on benefits having to live in penury. All it requires is us using our imagination and changing our mindset.
A complete rejection of the enormously damaging neo-liberal economic philosophy and a return to manufacturing and inceased public spending on public services would be a massive step towards this.
When NAFTA was created in US the manufacturing base was shippped to Mexico and wages have stagnated in the US, the same is happening in the euro zone. I watch adverts on Bloomberg smaller eurozone countries touting “We have 300 euro a month salaries (£250)” to encourage inward investment. they are drawing jobs to those regions with lowest wages, Mundell the father of the Euro says this was the plan behind the Euro. The UK will converge to the lowest standard of living in the Eurozone,
The housing benefit system is easy to defraud in the UK, The nonsense of housing benefit means that a person on housing benefit working part time will get enough benefit to pay for a nice 2 bed house, but people who are not on benefits would have four people sharing the same house, this is nonsense and provide perverse incentives. I have seen the benefit system destroy people, their character is undermined by money for nothing.
So what would you have instead? A family of five in a one room bedsit?
The issue is not the benefits system – it is, as I said, low pay and high rents, both exploiting ordinary people
“The housing benefit system is easy to defraud in the UK,”
No it isn’t. You don’t think they do checks?
“The nonsense of housing benefit means that a person on housing benefit working part time will get enough benefit to pay for a nice 2 bed house, but people who are not on benefits would have four people sharing the same house, this is nonsense and provide perverse incentives. I have seen the benefit system destroy people, their character is undermined by money for nothing
The usual bulls**t! Dor a start, most people do not get housing benefit in their hand – it goes straght to your council or housing association. To claim full housing benefit, your income has to be at the most basic level. While peole work, they pay something called a national insurance stamp which contributes towards benefits. Therefore, many people are simply claiming what they have already contributed. Those lucky enough to obtain work will eventually help to pay some of those contributions back again.
Anyway. what would you rather people do? Live in cardboard boxes? If you are on Jobseekers Allowance, you are paid the princely sum of £67.50 or £135 a fortnight. After paying for food and heating, you aren’t going to have a great deal left for rent, are you?
Before having a go at benefit claimants, have a go at living on £67.50 a week and see how you get on.
I know people on benefits and I know people who work as fraud investigators at the social security, I am not regurgitating daily mail agenda. Its easy to scam the system and the system is being scammed every day.
I know someone who rents out a 3 bed victorian house, 5 people who are working are sharing the house/rent, I know someone on benefits working part time, they get rent to pay for a nice 2 bed house with garage.
You want to say to me that I am having a go at people getting £67/week, this is untrue, “I have seen the benefit system destroy people, their character is undermined by money for nothing.”
You may ask your self where does the £67/week come from? its taken by threat of prison from those who work, Unemployment is a deliberate tool of the capitalist to depress wages. As is mass immigration.
Respectfully – the “where does the £67/week come from? its taken by threat of prison from those who work” is profoundly libertarian tosh.
Tax is not extorted
Tax is the price we pay for democracy, society and security
More of this nonsense and you’ll join the libertarian embargoed list
“More of this nonsense and you’ll join the libertarian embargoed list”
I will keep my thoughts to myself
Milton Friedman debated many people no one ever beat his arguments, you can embargo truth?
If you can find a single flaw in the Friedman free market theory let me know, there is not one flaw.
Since Friedman himself saw the flaws, how come you can’t?
And didn’t you notice 2008? Did that pass you by?
Candidly – you just opted on to that list – saying Friedman was flawless is as barmy as saying the Pope is infallible and not worth debating
“Its easy to scam the system and the system is being scammed every day.”
Respectfully, no it isn’t! Why not try ot and see how easy ot is? If a private landlors is doing it, then the council can only take the landlords word dor it. However, if you are trying to claim full housing benefit for yourself for a council or housing assoxiation property, the council knows full well what the rents are for those properties. Therefore, please cut the crap, eh?
“I know someone who rents out a 3 bed victorian house, 5 people who are working are sharing the house/rent, I know someone on benefits working part time, they get rent to pay for a nice 2 bed house with garage”
As for as I lnow, it is perfectly legal to vlaim partial housing benefit while working under 16 hours a week. Check your facts.
Oh, we all know of someone whose brother in laws first cousin twice removed who heard from a friend of a friend that the bloke down the road is on Jobseekers and has a 30 inch Plasma TV and a BNW parked outside. We know he’s on the fiddle!! Must be, mustn’t he?? It wouldn’t occir to them this fellow might have had a big redundancy payout or insurance payout, would it?
You say you lnow about lots of benefit fiddling, What you probably mean is that you hear it from people who can’t stand to see people getting something they haven’t got.
Please stop the bulls*** now please!!
i think most honest taxpayers would far rather the fraud in the benefits system was tackled effectively (it is not currently) than cutting benefits to deserving cases.
No – you’re wrong
They’d far rather £70 billion of tax fraud was tackled
Any rational person would
why you consistently assume that any point made on here not directly in line with your own thoughts merits such a short and terse reply i will never know.
I wasnt suggesting that this was an either or proposition, in the context of benefits (which was what your original post was about, not tax evasion) i said that most people would like the fraud in the system removed above removing benefits from deserving individuals.
what that has to do with tax evasion which wasnt the subject of the original post I dont know? im wondering whether you are having an off day or merely like being contrary sometimes !?!
Have I ever had on ‘on day’ with you?
Any rational person would.
Unfortunately we are ruled by people who lack rational thought.
Since the “money for old rope” (expenses) scandal has now become a lump in the carpet people tend to forget that we have “corrupt” politics at the core of the countries government.
All three major parties are so tainted that i doubt we will ever have moral government again.
70 billion of tax fraud is unlikely to be resolved by people who are paid agents of the fraudsters.
How can we have any real employment policy, full employment or anything in that direction, while we have effectively an open door, cheap migrant labour policy?
linda – you dont seem to be a fan of the EU and freedom of movement then……
Consider – with more and more low income countries added to the amorphous ‘EU’, where does this go for UK workers if ‘free movement of workers and of services (firms bringing in own workers)’ is not renegotiated?