We were right: welfare bill to rocket as unemployment keeps growing

This post was written by Reuben Bard-Rosenberg on January 4, 2011
Posted Under: Tories

Back in November I took issue with the idea, espoused by Jackie Ashley and others, that “welfare reform” could cut either the welfare bill or the deficit. Policies that simply made life on benefits more intolerable, I said, were worse than useless considering that there were 5 unemployed workers for every vacancy. People cannot be cajoled into non-existent jobs.

Well now it appears that the official government watchdog, and indeed the respected Chartered Institute of Personnel and Development agree with me. The CIPD project that unemployment will reach 2.7million as the cuts begin to bite. Meanwhile the government’s Office for Budget Responsibility has forecast a £1.4 billion increase in welfare payments. Not long ago Clegg told us that cuts to the welfare budget were “unavoidable”. Well, if so, he has achieved the impossible.

The bitter irony about the Conservatives is that despite their Victorian rhetoric about “cracking down on scroungers” they always seem to preside over huge increases in welfare payments. While Norway was able to put its proceeds from North Sea gas into a “rainy day fund”, which it is now using to great effect, Thatcher spent much of the money keeping three million unemployed people alive.

This gap between rhetoric and reality arises for the simple reason that managing unemployment is not the same thing as running a nursery. Putting the unemployed on the naughty step until the private sector comes to collect them will not conquer mass joblessness. Keeping unemployment, and the welfare bill, down depends upon a actively managing the economy to ensure that sufficient demand exists, that fluctuations can be mitigated and that people have the skills they need.

One remark that offers a clue as to the mentality of this government is Clegg’s statement, some months back, that benefits should not be there to “compensate the poor for their predicament”.  By “predicament” he meant the fact that people would by otherwise unable to eat. By “compensate” he meant the relatively meagre payments that just about enable people to just about do so.  In Clegg’s Orange Book world men make their own luck. Back in reality, however, Clegg and Cameron preside over an economic system in which periodic bouts of unemployment – of disequiblium between the number of people and the number of jobs – have been a recurring feature. Ensuring that those who take the hit can survive, is the least the government can do. A serious plan to get Britain working again – one more plausible than Osbourne’s private sector prayers, or Duncan Smith’s naughty step – is the least we ought to demand.

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Reader Comments

JWA

Reueben is quite right in eviscerating Clegg’s loathsome outlook – ‘benefits should not be there to “compensate the poor for their predicament”. By “predicament” he meant the fact that people would by otherwise unable to eat. By “compensate” he meant the relatively meagre payments that just about enable people to just about do so.’

That is, I think. spot on.

I’ve been reading Tony Judt last book ‘Ill Fares the Land’ – he writes incredibly well about welfare (p24-27) and here’s a taste of a couple of paragraphs…

‘The New Poor Law [1838] was an outrage. It obliged the indigent and the unemployed to choose between work at any wage, however low, and the humiliation of the workhouse… the Law drew on contemporary economic theories that denied the very possibility of unemployment in an efficient market: if wages fell low enough and there were no attractive alternative to work, everyone would eventually find a job.

For the next 150 years, reformers strove to abolish such demeaning practices… more than anything else, the welfare states of the mid 20th century established the profound indecency of defining civic status as a function of economic good fortune… instead the inability to find work, far from being stigmatized, was now treated as a condition of of occasional but by no means dishonourable dependence upon one’s fellow citizens… the idea that unemployment was the product of bad character or insufficient effort was put to rest.

Today we have reverted to the attitudes of our earlier Victorian forebears. Once again, we believe exclusively in incentives, “effort” and reward-together with penalties for inadequacy

Contrary to a widespread assumption that has crept back into Anglo-american political jargon, few derive pleasure from handouts… [they are] quite simply humiliating. Restoring pride and self-respect to society’s losers was a central platform in the social reforms that marked 20th century progress. Today we have once again turned our back on them.’

And as Reuben also points out they don’t even save money.

Possibly the most egregiously unpleasant aspect of coalition is its constant efforts to redefine fairness: not as an equal starting point in life but as some kind of nebulous drivel about equal opportunities which will ‘enable just desserts’ – as if where you start from is unconnected to your ability to take those opportunities.

Judt was writing before the election of course. The attitude he decided was prevalent across the political spectrum. If E.M wants to reform the Labour party – he could do a lot worse than looking at how it approaches welfare, and to show some moral guts by setting out a new principled position – and to win some votes by actually winning the moral argument and not just the scrap in the tabloids.

#1 
Written By JWA on January 4th, 2011 @ 3:21 am
JWA

for decided* in my last para – I meant to write described* – its 3.20am. These are the muttering of insomnia, still fairly cogent.

#2 
Written By JWA on January 4th, 2011 @ 3:24 am

Are you taking issue with the right person? Who cares what Jackie Ashley thought?

IDS, the author of the reforms, has been pretty straight-forward and honest that welfare reform would require upfront payments.

It may not impact the currect deficit but when the recovery commences hopefully it will suck in more of the unemployed into work rather than allowing vacancies to be filled by immigrants with workless families left behind.

If you are expecting a quicker, easy result – you are being naive. Successive governments have made no impact on this issue – the current reforms are worth trying.

#3 
Written By James on January 4th, 2011 @ 12:33 pm

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