This article was written by Patrick Wintour, political editor, for The Guardian on Wednesday 18th June 2014 21.00 UTC
Ed Miliband will set out Labour’s first plans for cuts to the welfare system, ending out-of-work benefits for roughly 100,000 18-to-21-year-olds and replacing them with a less costly means-tested payment dependent on training.
The move is designed to symbolise Labour’s determination to reform welfare, making it more closely linked to what people pay in, as well as cutting the benefits bill.
> More closely linked to Tory policy more like. What odds on a Con-Lab coalition after the next election ? They might as well – the differences between the parties seem to have now completely vanished.
“Britain’s young people who do not have the skills they need for work should be in training, not on benefits,” the Labour leader will say. It is essential to reform welfare to bring down a “wall of scepticism” among voters who don’t believe that politicians will make the system fairer, he will argue.
> So does “reform” always have to mean “make life more difficult for those worst off” ?
Miliband’s move reflects a recognition of anger among some voters that some people are getting “something for nothing” out of the welfare system. A YouGov poll for the Institute for Public Policy Research (IPPR), the leading centre-left thinktank, published on Thursday, finds that 78% believe that the welfare system is failing to reward people who have worked and contributed to it.
> Really ? Is it supposed to be a reward ? Are these people confusing benefits with investing money in stocks and shares or something ?
The removal of jobseeker’s allowance (JSA) for those with skills below level 3 would affect seven out of 10 of the 18-to-21-year-olds currently claiming JSA, and initially save £65m.
Miliband will reveal further plans to make welfare more conditional by linking benefit payments to national insurance contributions.
Under his plans, people would only be able to claim the higher rate JSA of £71 a week after they have paid National Insurance for five years, instead of the current two. The contributory element of the welfare system has been eroded in Britain and is much smaller than in most European economies.
Labour officials said the switch in spending by abolishing JSA for young people was not designed to be punitive, but to incentivise them to train. The longer qualifying period for higher-rate JSA will mean those who qualify will be able to receive additional help worth as much as £20 to £30 a week, they added.
The Labour leader, struggling with poor personal poll ratings, will be responding to a major report by the IPPR setting out as many as 30 radical measures to rebuild public faith in politics and public institutions in an era of austerity.
Two separate polls sent further dire messages about Miliband’s personal standing, with one poll by Ipsos MORI showing a small majority of voters wanting him replaced as party leader, and another by YouGov claiming voters would be more likely to back Labour if it was led by his brother, the former foreign secretary David Miliband.
Miliband will argue that any reforming politician must deal with doubts about the ability of politics “to address the long-standing pressures on work, family and people’s sense of fair play that has been piling up for decades”.
He will admit one reason for such scepticism is that “people think the problems are huge, but they don’t believe they can be solved because of the financial problems the country faces. Many people think that in hard times, politicians’ promises are all hot air.”
But big reforms need not require big spending, he will argue. “Our country continues to confront a fiscal situation the like of which we have not seen for generations, the result of a financial crash the like of which none of us has ever seen,” he will say.
“We cannot just hope to make do and mend, and we cannot borrow and spend money to paper over the cracks.”
Writing in today’s Guardian, the IPPR’s director, Nick Pearce, goes further, saying: “Gone are the days when economic growth could generate enough resources to redistribute income without making painful choices. Even with a different economic agenda, there is little prospect of any government elected in 2015 spending its way to greater equality.”
Pearce urges Labour to reject a business as usual path in which the government “would tax a little more and cut a little less, leaving the architecture of the state untouched and the current framework of services and social security in place”.
Miliband will also back proposals for local councils to be given more control of the ballooning housing benefit budget. The report suggests the housing benefit bill will reach £25.4bn, with real terms rises expected for the next five years.
Miliband argues the IPPR report shows that even when there is no money to spend radical reform can be started in the fields of health, child care, welfare, social care and housing. But he is going to be cautious about embracing some of its specific plans drawn up over the past 18 months, including a £2bn child care package, funded through scrapping plans for a marriage tax allowance, freezing child benefit and reducing pension tax reliefs.
The report also argues that there needs to be a switch of government resources from tax transfers and credits to delivering services, something that might require abandoning the expensive target to eliminate child poverty.
It will also propose a radical devolution of power to local councils, including over housing benefit and welfare to work for the disabled. In probably the biggest proposal, the IPPR will argue that the left has to restore the contributory principle in the welfare system. Pearce argues social security for the unemployed has become a liability for social democrats. Turning the issue into a source of strategic strength will require rebuilding the reciprocity that underpins it, restoring the contributory principle and giving new life to the idea of national insurance. “Fiscal constraints should lead us away from means-tested residualisation of welfare, not further towards it”.
There is frustration among some Labour policy leaders at Miliband’s reluctance to embrace more of the report, designed to show how the left set out a redistributionist agenda in the post-crash world. It has had the support of Jon Cruddas, head of the Labour policy review.
> Well, that’s it then. Labour continue to piss all over the very people who were originally their electorate. If anyone still had any belief that they were the People’s Friend, this should finally disabuse them.
Source – Welfare News Service, 18 June 2014
This article was written by Patrick Wintour, political editor, for The Guardian on Sunday 15th June 2014
The proposal is one of a series from the Institute for Public Policy Research in its Condition of Britain report, to be published on Thursday, including a proposal for a “daddy month” – four weeks’ paternity leave on the minimum wage, a plan that would cost the taxpayer £150m. More than 400,000 working fathers a year would benefit.
The thinktank’s report, the product of two years’ research, is due to be launched by Ed Miliband. It will look at the social and economic problems facing the country and cover areas such as welfare, housing, childcare and improvements to social care, as well as handing more power to local councils.
The current legal entitlement for working fathers is paid at a flat rate of £138.18 a week – equivalent to just £3.45 an hour for a 40-hour working week, little more than half the minimum wage. The IPPR proposes that the statutory paternity leave entitlement should not only be extended but should be paid at least the national minimum wage, with employers also encouraged to bridge the gap between the statutory rate and the father’s actual pay.
Only 55% of fathers take the full two weeks off work when their child is born and a third do not take any of their statutory leave. Most say this is because they cannot afford to.
On the Work Programme, the report concludes that the scheme is especially failing mentally ill people, and the task of helping those on employment support allowance – the main disability benefit – to find work should be devolved to local authorities, with councils recouping some of the possible savings from the Department for Work and Pensions.
However, the report says private contractors should be left to find jobs for the mainstream long-term unemployed using a modified version of the current system of payments by results.
> So… get rid of the Work Programme, and replace it with something like the Work Programme ? And we all know how good private companies are at milking the system despite poor results… which brings us back to the Work Programme !
It says: “The Work Programme, while delivering acceptable results for the mainstream job seekers, is letting down those furthest from the labour market. Whilst one in five mainstream job seekers will find work through the Work Programme as few as one in 20 of those furthest from the labour market will.”
> 20% is delivering acceptable results ?
It also says those in areas of highest unemployment are receiving the least effective help.
It adds the “DWP has carved up the country between providers without any accountability to citizens or regard to local labour market conditions. Therefore for those out of work the system represents a postcode lottery in which success is determined not by individual effort but by geography.”
The report also says the government should offer a guaranteed six month minimum job paid at the minimum wage or above to anyone who has been unemployed and claiming job seekers allowance for more than 12 consecutive months.
> Or another work scheme, in other words. And after 6 months ?
The report will also set out plans to freeze child benefit to help fund a new network of children’s centres and extra free childcare, although it is understood that Miliband will reject this proposal.
Source – Welfare News Service, 15 June 2014
Regional economic policy must be revamped if the North East is to get a fair deal in the wake of the Scottish independence vote, a national research director has said.
Dr Angus Armstrong, director of macroeconomic research at the National Institute of Economic and Social Research, said the Treasury does not prioritise the North East and politicians must form a strong and unified voice to correct the imbalance.
At a debate on how September’s vote will impact on the region, regional leaders also heard of a “growing realisation” Scotland may not lower corporation tax, allaying fears the country would suck business from its neighbours.
It comes as all seven North East councils, from Durham to Northumberland, agree a Combined Authority which will allow it to bid for more Government funding.
Dr Armstrong said regional policy is not a priority for the Treasury when it calculates how to spend Government cash and the North should look to reconsider a regional assembly to be heard above its southern counterparts and in Europe.
He said: “I used to work for the Treasury during the crisis and regional policy does not register. I hate that that is the case, but I really don’t think it is part of Treasury policy. I think the whole concept of regional policy needs to be re-thought.”
He added: “People in the South East underestimate the extent to which power is centralised, so, although they have a feeling there is something of an imbalance, that imbalance is greater than that feeling would suggest.
“The reason I say that is because of the financial crisis. The only reason they could support the City of London is because of the taxpayers of the rest of England.
“When it goes wrong we pay, it is quite remarkable and I find it amazing that places outside of the South East don’t have more to say about that. I do think the degree of imbalance is extremely significant.”
Pat Ritchie, chief executive of Newcastle City Council, said the region’s airports and universities could lose out due to a possible relaxation in border controls which might see students flock to Scottish universities.
She added there were fears changes to the Air Passenger Duty tax could see carriers opt to begin routes from Scottish airports.
Ms Ritchie, however, said there was an opportunity for the region to export goods to the country and, with Edinburgh closer to the region than London, collaborate with Scottish national leaders.
She said: “We should and can be confident in our strengths. This is a region which exports more than any other region and it is already used to working with different markets.
“Whilst not wanting to marginalise what is an important debate, we should not get too hung up on what Scotland might or might not do.
“We need to really develop the strongest possible economic offer that we can for the North East and collaborate as local authorities and businesses and be confident.”
Professor David Bell, professor of economics at the University of Stirling, also spoke at the debate, organised by the Institute for Public Policy Research (IPPR), and said Scots are keenly aware of the need to collaborate with the North.
“I don’t think that the North East is particularly disadvantaged because for Scotland to get anywhere with these negotiations there would have to be a cluster of compromises, and it would make no sense to have poor relations with its near neighbours.”
He added the North East faced being drowned out by the South East but there was a “growing realisation” that Scotland could not drive down corporation tax as it risked becoming a tax haven for businesses.
He said: “I go to talk about independence on a regional basis and the elephant in the room is the lack of political impetus, particularly in the North East.
“It is just not there and it isn’t part of the issue.
“If Scotland votes yes or if it votes no and gets more powers, you will have a heavily asymmetrical system in England which cannot continue to be stable.”
Source – Newcastle Journal, 28 March 2014