March 02, 2007

Addressing the benefits burden

FT journalists have been fed the line that Gordon Brown is to "press on with" welfare reforms.

The budget for benefits to people of working age is £50bn, almost a tenth of public spending. Only £1bn of this is spent on encouraging people back into work.

Leaving aside the politics, the article talks up a review commissioned by John Hutton which is said to concentrate on four areas.
  1. Extending "conditionality", or requirements on claimants to attend interviews, take up training or look for work

  2. Do benefits contain the right incentives and penalties to encourage people to get back into the labour market?

  3. A "vastly expanded" role for the private and voluntary sectors in running employment schemes and administering benefits - the idea is for charities and private employment agencies to compete on a level playing field with the government's Jobcentre Plus "after they showed they were more successful at getting people into stable jobs"

  4. The use of capital markets to fund welfare-to-work programmes when public resources are tight. Contractors would be able to borrow on the markets against future revenues from the government. They would be paid according to their success in getting people back to work and keeping them there for up to three years.
If this is going to be effective, how will it play with the unions and the labour party members whose votes Brown will want in the leadership election, and whose money he will need when the general election comes?

Some employers of immigrant labour are quoted anecdotally as saying immigrants are better workers than local people. Any change that is worth while will have to address this.

And Poles will travel to SE England to work, while many in the UK are content to stick in their local areas relying on handouts paid for by London and Eastern and South East England, as discussed in an earlier post today.

Don't expect any effective action. These are Labour strongholds.

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