Published on Liberal Democrat Voice By Mark Pack | Sat 13th April 2013 – 11:47 am
The word ‘radical’ is to welfare reform what a pot of paint is to a wall full of cracks. The less you really know what to do to fix things, the more you slap it about all over the place in the hope that it will cover up things.
When you peer carefully at the detail of what is said after the roaring demand for radical reforms, you see what usually follows is either an absence of quite what form the radical action should take (‘radical, radical, we must be radical; just please don’t ask me how’) or simply by a desire to cut and cut but dress it up in slightly nicer language.
A hunt for properly radical welfare reform which contains substance runs immediately into two problems. First, for all the overall public hostility to spending on welfare, that immediately flips round once you give nearly half of the welfare budget the other name it justly has, namely ‘pensions’. (Currently, 47% of the benefits budget goes on the state pension alone.)
Second, many of those in receipt of benefits are not the scroungers of popular imagination and tabloid headline. Instead, they are people in work. The details of these numbers are often heavily debated (such as the question of what proportion of housing benefit recipients are in work) but some clear numbers do give a sense of scale. For example, the number of families who receive tax credits and have at least one person in work has risen to 3.3 million (which is a big chunk of the 18.2 million families in total in the UK). That gives a clue to where really to look for radical welfare reform.
Skip the talk about making work pay. Instead talk about making work pay more.
Better paid jobs aren’t just good for those in them, they’re good for cutting the welfare bill. Or in other words, forget tinkering with benefit levels and instead worry about the job market, training and education.
The Living Wage should be part of that mix, though given even the IPPR and Resolution Foundation’s concerns about the limitations of the Living Wage’s impact on poverty, it’s not a simple fix for all these ills. Further cuts to income tax, especially to bring the basic allowance in line with the national minimum wage (and so provide a default Living Wage via another route) should be another part and so should even more expansion of apprenticeships. Thinking longer term, genuinely radical welfare reform is also another reason to add to the list in favour of a nursery premium.
It is these sorts of measures, which raise wages and cut poverty, that are where Liberal Democrats should look for welfare savings in future.