Wednesday, January 09, 2013

The nonsense of Labour's welfare policy

I am with the Liberal Democrat MPs who rebelled over the one per cent cap of benefit increases after yesterday's debate.

As Caroline Lucas said:
The Secretary of State brandishes the figure of a 20 per cent increase in benefits in the past five years. In cash terms, jobseeker’s allowance has gone up from just £59.15 in 2007 to £71 in 2012. In other words, in each of those past years JSA has gone up by just £2.50.
And as David Miliband said of the politics behind this move:
The truth is that this rancid Bill is not about affordability; it reeks of the politics of dividing lines that the current Government spent so much time denouncing when they were in opposition in the dog days of the Brown Administration. It says a lot that within two years they have had to resort to that dividing-line politics. We know the style: you invent your own enemy, you spin your campaign to a friendly newspaper editor, you “frame” the debate. But the enemy within in is not the unemployed; the enemy within is unemployment.
But what really struck me about the debate was this complaint from Liam Byrne:
Some 40,000 soldiers, 300,000 nurses and 150,000 primary and nursery school teachers will be hit by this Bill.
But why are such people receiving money from the government at all? A common complaint about welfare systems is that they use public money to subsidise bad employers, but here the government is using it to subsidise a perfectly reasonable employer - itself.

Worse than that, the last Labour government had no great appetite for making the rich pay tax. And even if a government does have that ambition, it turns out to be rather hard to do.

The result is that the tax credits for soldiers, nurses and teachers have to be financed by people in reasonably but not highly paid jobs. People like soldiers, nurses and teachers, in fact.

In other words, the whole system is a complicated way of leaving people pretty much where you found them.

The Coalition has the right idea in cutting tax rates for lower paid workers and reducing the reach of the tax credit system. They should use some of the money they have saved to protect the poorest of all from inflation.


Anonymous said...

100% agree with this. Its all recycling the same cash. Take with one hand give back with the other, and a big chunk is lost in pointless administration and jobs to pay for the farce.

Much better to eliminate nearl ALL supplementary benefits and credits, have a good unemployment benefit rate which supports basic needs and then reduce taxes both direct and indirect on employment.

IE income tax and national insurance could both be slashed if we drastically reduced all working credits etc.

Make job creation attractive by reducing the states cut.

Start with Employees National Insurance, this should be the VERY FIRST tax we cut
Second should be the Employers National insurance, thats 23% in jobs tax gone, half to the individual half to the emplyyer.

Watch the jobs growtha nd the reduction in welfare, self fulfilling cycle.

Niles said...

And of course, those "40,000 soldiers, 300,000 nurses and 150,000 primary and nursery school teachers" should all have seen some significant benefit from the rising of the basic allowance in the last few years.

I haven't seen any figures that say what the net difference is after they receive the new tax allowance, but after they have some of their tax credits removed.

And part of the problem is that complexity.

Also weird he singles out "primary and nursery school teachers" when secondary school teachers are on the exact same pay scale.