An influential group of Tory MPs have called for young person’s unemployment benefits to be turned into repayable loans, it has been reported.
It’s claimed that the move would provide young people with “an additional incentive to find work rather than allow the debt to build up”.
The suggestion is included in a book by the right-wing Conservative MP, Kwasi Kwarteng.
Mr Kwarteng and junior Tory MPs call for the shrinking of the welfare state and a return to a contributory benefits system – the more you pay in the more you get out.
The book – ‘A Time For Choosing: Free Enterprise in Twenty-First Century Britain’ – says:
“Young individuals who have not yet paid national insurance contributions for a certain period, five years say, could receive their unemployment benefit in the form of a repayable loan.
“Turning an entitlement into a loan would mean that people would still be supported while out of work, but would have an additional incentive to find work rather than allow the debt to build up.”
Coalition claims that it has presided over a jobs revival have come under fresh scrutiny with research showing that as few as a fifth of the 2 million jobless people whose benefit has been taken away are known to have found work.
The research, due to be presented at a Commons select committee inquiry into welfare sanctions on Wednesday, suggests that hundreds of thousands are leaving Jobseeker’s Allowance because of benefit sanctions without finding employment, though the report’s authors decline to provide an exact figure.
Written by academics at the University of Oxford and the London School of Hygiene & Tropical Medicine, the report raises questions about why so many of those losing their benefit then disappear from the welfare system – possibly to rely on food banks.
Prof David Stuckler, of Oxford University, said that benefit sanctions “do not appear to help people return to work. There is a real concern that sanctioned persons are disappearing from view. What we need next is a full cost-benefit analysis that looks not just narrowly at employment but possibly at hidden social costs of sanctions.
> No, what we need next is a stop to sanctions. Then you can do all the cost-benefit analysis stuff, in the knowledge that your research is not being made obsolute by people continuing to be sanctioned every day.
“If, as we’re finding, people are out of work but without support – disappeared from view – there’s a real danger that other services will absorb the costs, like the NHS, possibly jails and food support systems, to name a few. Sanctions could be costing taxpayers more.”
However, the Department for Work and Pensions, which is expected to hail a further rise in UK employment on Wednesday, countered that it was proud that 1 million jobless people were now subject to the “claimant commitment”, which sets out tougher requirements on the jobless to find work or risk losing their benefit payments.
Iain Duncan Smith, the work and pensions secretary, said:
“It is only right that in return for government support – and in return for their benefits – jobseekers are expected to do all they can to find work. Although on benefits, they still have a job: the job is to get back into work.
> This would be the government support we paid into, via National Insurance, when we were working, right ? So its our money, IDS, not yours.
“The claimant commitment, which is deliberately set to mimic a contract of employment, makes this expectation explicit. It has created a real change in attitudes. Already more than a million people have signed up to – and are benefiting from – this new jobseeking regime.”
> What real-life employment contract does it mimic !? The sort used for slaves on the old southern US plantations perhaps ?
The Oxford-based research showed that between June 2011 and March 2014, more than 1.9m sanctions were imposed on people receiving jobseeker’s allowance (JSA), with 43% of those sanctioned subsequently ceasing to try to claim the benefit. Only 20% of those who left gave as their stated reason that they had found work.
The Department for Work and Pensions conducts no systematic research into what happens to those sanctioned, so the new findings start to fill an evidential gap in what has been one of the biggest but least publicised changes to the welfare system since the government came to power.
The 1.9m benefit removals between June 2011 and March 2014 represent a 40% increase compared with the previous seven years. The figures are based on official monthly and quarterly data from databases covering UK local authorities between 2005 and 2014.
The highly emotive dispute about a central aspect of government welfare reform centres on whether jobcentre staff, driven by senior management, are following arbitrary and poorly communicated rules that punish not just the feckless but some of the most vulnerable in society, including mentally ill and disabled people. Many independent witnesses have urged the DWP inquiry at least to suspend the sanctions regime for those claiming employment support allowance, the main disability benefit .
Study author Dr Rachel Loopstra, from Oxford University, said:
“The data did not give us the full picture of why sanctioned people have stopped claiming unemployment benefit. We can say, however, that there was a large rise in the number of people leaving JSA for reasons that were not linked to employment in association with sanctioning. On this basis, it appears that the punitive use of sanctions is driving people away from social support.”
The study also shows widespread variation in how local authorities used sanctions. In Derby, Preston, Chorley and Southampton, researchers found particularly high rates of people being referred for sanctions. In some months, more than 10% of claimants in these areas were sanctioned – the highest rates nationwide.
Co-author Prof Martin McKee, from the London School of Hygiene & Tropical Medicine, said:
“There is a need for a cost-benefit analysis of sanctioning, looking at it not just in narrow terms of unemployment benefit, but also the bigger picture, focusing on employment, health, and other social costs.”
“The coalition government has embarked upon an unprecedented experiment to reform social security. I hope policymakers will be informed by these findings and see the value of investigating the consequences.”
Separate evidence in front of the DWP select committee inquiry includes witness statements from former jobcentre staff suggesting senior management threaten staff if they do not take a harsh approach to claimants. There is also cumulative evidence that many of those sanctioned have little or no knowledge of why they are being punished.
The main union representing jobcentre staff, PCS – also due to give evidence on Wednesday to the select committee inquiry – suggests:
“While there is considerable anecdotal evidence about the inappropriate use of sanctions, there is a lack of empirical evidence. We believe that DWP should publish a more detailed breakdown of sanctions, and specifically more detailed explanations as to why they were imposed. PCS’s survey of our adviser members showed that 61% had experienced pressure to refer claimants to sanctions where they believed it may be inappropriate to do so.”
DWP select committee inquiry member Debbie Abrahams said:
“This government has developed a culture in which Jobcentre Plus advisers are expected to sanction claimants using unjust, and potentially fraudulent, reasons in order get people “off-flow”. This creates the illusion the government is bringing down unemployment.”
The government counters that its policies are turning the UK into the jobs factory of Europe, and dismisses the idea that the unemployment figures are being subverted by sanctions.
This article was written by Frances Perraudin and Patrick Wintour, for The Guardian on Tuesday 20th January 2015
With Labour voting for the government’s bill to cap welfare spending, the debate on the welfare state has taken a decisively wrong turn. The issue is not the cap itself, its level, or even its design. The problem lies in the very way in which the welfare state is understood.
Even if one accepts the need for the cap, there are many problems with the way in which it is designed. Many people have rightly pointed out that the capping scheme is not as “recession proof” as it is portrayed. One defence of the bill offered by the government – and accepted by Labour as the key justification for its support – is that it exempts “cyclical” spending, such as unemployment benefit (now given the Orwellian name jobseekers’ allowance). But there are other elements of welfare spending that increase in economic downturns that won’t be exempt. For example, recessions may increase the need for disability benefit because more people are incapacitated due to the psychological and physical impact of unemployment, poor diet, and lack of heating.
Important though these criticisms are, the biggest issue is the very way in which the “problem” of the British welfare state has been defined and understood. The cap is based on the view that the UK needs “to prevent welfare costs spiralling out of control”, given the wasteful nature of such spending. This is not backed up by the evidence.
The British, having supposedly invented the modern welfare state (a debatable proposition), have the mistaken notion that they have an exceptionally generous welfare state, as evidenced by the widespread worries about “welfare scrounging” and “welfare tourism”.
However, measured by public social spending (eg income support, pensions, health) as a proportion of GDP, Britain’s is not much bigger than the OECD average; 24.1% against 22.1% as of 2009. And the OECD includes among its 34 members a dozen or so relatively poor economies – Mexico, Chile, Turkey, Estonia and Slovakia, for example – where the welfare state is much smaller for various reasons (eg younger population, weaker parties of the left).
Even when it comes to income support for the working-age population – the element targeted by the new bill – the UK is not a particularly generous place. In 2007 it spent 4.5% of GDP for the purpose. This was only slightly above the OECD average (3.9%) and way below other rich European economies: the figures were 7.2% for Belgium, 7% for Denmark, 6% for Finland and 5.6% for Sweden.
And it is not even as if the need for social spending goes away if you reduce the welfare state. For many British supporters of a smaller welfare state the role model is the US, which has a very small welfare state (considering its level of income), accounting for only 19.2% of GDP as of 2009. However, it has a huge level of private spending on social expenditure, especially medical insurance and private pensions, which is equivalent to 10.2% of GDP. This means that, at 29.4%, the US has total social spending that is almost as high as that of Finland, which spends 30.7% of GDP on it (29.4% public and 1.3% private). Moreover, if the cost is “spiralling out of control” anywhere, it is in the largely private US healthcare system, thanks to over-treatment of patients, rising insurance premiums and soaring legal costs.
Most importantly, the view that social spending is wasteful needs to be seriously challenged. The frequently used argument against the welfare state is that it reduces economic growth by making the poor workshy and the rich reduce their wealth creation, given the tax burden involved.
However, there is no general correlation between the size of the welfare state and the growth performance of an economy. To cite a rather striking example, despite having a welfare state that is 50% bigger than that of the US (29.4% of GDP as against 19.2% of GDP in the US, in 2009), Finland has grown much faster. Between 1960 and 2010 Finland’s average annual per capita income growth rate was 2.7%, against 2% for the US. This means that during this period US income rose 2.7 times while Finland’s rose by 3.8 times.
The point is that the welfare state – if well designed and coordinated with labour market policies to re-train people and get them back into work – can encourage people to be more accepting of change, thereby promoting growth. Firms in countries such as Finland and Sweden can introduce new technologies faster than their US competitors because, knowing that unemployment need not mean penury and long-term joblessness, their workers do not resist these changes strongly.
Most American workforces are not organised and thus incapable of resisting technological changes that create unemployment – but the minority that are organised, such as the automobile workers, resist them tooth and nail because they know that if they lose their jobs, they will not even be able to afford to go to hospital, and will find it extremely difficult to get back into the labour market at the same level.
The British debate on the welfare state needs to be recast. The false premise that the country has a particularly generous welfare state whose cost is spiralling out of control needs to be abandoned. The structural factors driving up welfare costs, such as ageing, should be accepted – rather than denied and so putting undue pressure on other elements of social services.
Above all, the debate should be redirected into reforming the welfare state in a way that promotes structural change and economic growth.
Source – Welfare News Service 28 March 2014
North East unemployment has dropped slightly but still remains the UK’s highest.
The latest unemployment count shows 130,000 on unemployment benefit in the region, down 3,000 over the last three month period. But at 10% the rate was nearly 2% higher than elsewhere in the UK.
> It says something about the true state of affairs when, even after all the sanctioning and manipulation of figures, they still can’t get the NE figures down.
This morning employment minister Esther McVey said: “With the number of people claiming Jobseeker’s Allowance in the North East falling in every month of the last year, it’s clear that the Government’s long-term plan to build a stronger, more secure economy is helping businesses create jobs and get people into work.
“Nationally, employment continues to increase and youth unemployment continues to fall, which means more people have the security of a regular wage and can plan for their future.”
Across the UK unemployment continued to fall and a record number of women are in work, new figures have revealed.
The jobless total was 2.34 million in the final quarter of last year, down by 125,000, giving a rate of 7.2%.
The number of people claiming jobseeker’s allowance dipped to 1.22 million in January, down by 27,000 – the 15th consecutive monthly fall.
More women are in work than at any time since records began in 1971, at just over 14 million, today’s data from the Office for National Statistics showed.
Prime Minister David Cameron tweeted: “It’s good to see another fall in unemployment. Our Long Term Economic Plan means more people with the security of a wage and a chance in life.”
But Dave Prentis, general secretary of Unison, said: “Sadly, today’s fall in the total number of unemployed masks the scourge of under-employment, which is growing at an alarming rate across the country.
“Under-employment is now a bitter reality for millions of struggling families across the UK.
“Too many people are stuck in minimum-wage jobs, on zero-hours contracts and part-time work when they are desperate to go full-time.”
Source – Newcastle Journal 19 Feb 2014
100 ? Tip of the iceberg !
Reposted from The Green Benches
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