Tuesday, 8 January 2008

"Tories target long-term jobless"

The Tories are stumbling blindly in vaguely the right direction.

As regular readers may know, I am all in favour of chucking all non-housing related benefits into a pot and dishing it out as flat-rate, non-means tested, non-contributory universal benefits. Children would get £34 a week and pensioners a flat £138 a week (or £117 plus State Second Pension). Legally resident working age adults (regardless of income or marital status) would be able to choose between a "Citizen's Income" of about £60 (but no tax-free personal allowance) or a higher tax-free personal allowance of £9,000-plus.

This would all be broadly fiscally neutral and would remove the poverty trap as recently highlighted by Migrationwatch, thus getting rid of all the discentives to work, marriage, studying or saving.

This leaves us with Housing & Council Tax Benefit, of course, which average around £90 per claimant household. This could easily be replaced by Workfare schemes, run by local councils paying £90 per week tax-free. Which puts paid to Peter Hain MP's rather pathetic objection that "...the Tory plans were hugely costly and would not work".

Orange Face goes on to say "If you divert people into mandatory community activities they don't get a job at the end of it ... the way to get people back into work was through new skills and training".

This is complete crap: for many low level jobs, about the only skills required are turning up on time and being there. Which would be new skills for a lot of people currently languishing on benefits.


Newmania said...

Where do you get these ideas from ,I am intruiged but what about a sort of negative income tax setting the bar at about £10,000 pa . That was Friedman`s idea

I doubt any of these things would work in practice, those pesky "people " would spoil your pristine plan somehow . I think you have fundementally confused rights and academic suppsings with poltical reality which is based largely on power.The narrative supporting the truce is only a part of it.

Bottom line ,you aint removing benefits like that and actually this was a bold move by our boys which deserves somewhat less cumudgeonly support

Mark Wadsworth said...

Mathematically, a Citizen's Income and no personal allowance is exactly the same as negative income tax, it's just much simpler and more straightforward.

If you want to argue for a Citizen's Income of £nil per week, then that has some intellectual merit at least. But the Tory stuff has too many rules and where there are rules there are civil servants and massive cheating and unintended consequences. For example, people would take the job offered and then make sure that they were made redundant again ASAP.

And of course it would work in practice - what about Child Benefit (a low level citizen's income) or the right to 'free at point of use' NHS or State education? If people can somehow live off £60 a week without working at all, then good luck to them. However little you can earn, you'd always be better off working and there'd be no administrative hurdles to worry about if you take a short term job.

Could we agree on the flat rate higher child benefit and Citizen's Pension at least? And maybe the Workfare idea?

flashgordonnz said...

I think the idea has merit. But with administrative ease comes union opposition, me thinks...

Snafu said...

You still need to be able to read just to get a job stacking shelves!

Mark Wadsworth said...

FG, the fact that under CI/flat tax you could sack a couple of hundred thousand civil servants is icing on the cake, of course.

Also, the UK would probably have to leave the EU first (else we'd be forced to pay it to all comers), which is a reason for leaving the EU and NOT a reason for not implementing it.

S, true. So people will voluntarily attend reading classes. That's a bonus, not a drawback.

The Remittance Man said...

The problem I have with the CBI is that money still passes from the public to the state and then back again. Even if the state could administer a simple CBI scheme properly (itself a dubious assumption) this costs money.

I don't know what the fiscal inefficiency of the system would be but whether it was 10% or 100% it's still an inefficiency and thus philosophically a bad thing.

Mark Wadsworth said...

RM, if you are undamentally against any sort of redistribution, then fine (obviously, you've just lost the pensioners and families vote). I am just saying, if we are to have redistribution/welfare AT ALL, then a CBI is the least-worst option.

BTW, the running costs of universal flat-rate benefits like Child Benefit (in the UK) is tiny, it's less than half a per cent. Fraud is tiny and masked by small underclaims.

Sure, taxes have deadweight costs, but some far more than others (and Land Value Tax has practically no deadweight costs at all and also has POSITIVE effects, different topic).

Neil Harding said...

Mark: Totally with you on a CBI and LVT. I'm not against workfare in principle, just do wonder whether forcing people to work for benefits will save us any money in the long run.

People can be pretty obstropulous bastards when they want to be. As some Sun reader put it (have corrected the grammar and spelling) - "burglaries and muggings will go through the roof because of this Tory scheme". Whether we like it or not, he has a point.