6 million are on out-of-work benefits

TrevorsDen

3Q 2009?

Despite years of new labour and billions and billions of pounds - there is no discernible change in people not inemployment.

Am I right in thinking that the numbers of indigenous British in work have fallen by half a million (as opposed to immigrants).

logdon

Is it surprising?

http://www.telegraph.co.uk/news/newstopics/howaboutthat/6020355/Teenager-given-council-certificate-for-getting-on-bus-in-Greater-Manchester.html

* The full AQA certificate reads: Bobby McHale (date of birth 22.5.94) a student at Bury Youth Service has completed the following unit of work.

Using Public Transport (Unit 1)

In completing the unit the student has demonstrated the ability to:

1. Walk to the local bus stop.

2. Stand or sit at the bus stop and wait for the arrival of a public bus.

3. Enter the bus in a calm and safe manner.

4. Be directed to a downstairs seat by a member of staff

5. Sit on the bus and observe through the windows.

6. Wait until the bus has stopped, stand on request and exit the bus.

Ivan D

Goodness, a graph. Plotting this one probably took all the time you might otherwise have spent on the X & Y axes for your "Labour's Mercury Scam Kills Our Kids" gem. Remind me, are you planning to say sorry for that "Nelly" anytime soon, or are apologies just for "Brownies"?

logdon

* The DWP includes "carers" in its definition - technically you cannot be a full-time worker and be a carer.

What if you're an unemployed full-time couldn't care lesser?

Lola

Add to this about 3m or so state 'employees' in makework posts and my bet is that there about 10m 'workers' not doing anything productive or wealth creating at all.

whocares

While five million draw benefits, how many immigrants are there still in employment in Britain at the moment? Any stats?

WelfareWonk

Interesting analysis about an important policy issue.

Two issues - firstly, on the numbers. As you rightly point out, albeit at the end of your post, this figure includes those on carers benefits. But the figure also includes many who are bereavement benefit and disability living allowance, two benefits which have no relation to whether someone is in work or not. On that basis, to claim as the Policy exchange has done that there are almost six million are on the dole, is slightly disingenuous. If you strip these out to get a real reflection on the number of people who are on out of work benefits - Jobseekers Allowance (JSA), Incapacity benefit/Employment and Support Allowance (IB/ESA), Income Support (IS) - and therefore those who would be helped by interventionist labour market policy, the figure falls (just) below 5 million:

JSA - 1,582,700
ESA/IB - 2,630,000
IS - 710,000

Total - 4,922,000

Now, if we compare that to where we were in May 97 we see that its actually around quarter of a million higher than today:

JSA - 1,619,600
IB - 2,616,300
IS - 1,014,200

Total - 5,250,100

Now, more importantly, what do these figures (and indeed the trends highlighted in the attached charts) tell us about policy - both retrospectively and where government should be heading.

The first point to make is that the more radical path taken over the last three to four years to dealing with people on inactive benefits - to which we mean IB/ESA and IS - is starting to pay dividends. The far more active approach which applies the notion of 'conditionality' - you must do something in return for your benefit, other than just turn up and sign on - has meant that the numbers on sickness benefit have been falling since February 2004 after having risen incessantly since the 1970s.

This is an important point as it removes the politics and demonstrates the faults of governments of both sides. The Conservatives for allowing a massive increase on sickness benefits from 1979 to 1997 - in which time the overall number trebled - and Labour for failing to take action sooner (ultimately concentrating on unemployment in the narrowest sense, using the windfall on the utility companies to pay for the New Deal programme).

So - the route we are now on, belatedly, is the right one. The introduction of ESA, which will eventually replace IB and be the benefit for all those judged to sick to work at the present time, means that for the first people are judged on what they can do not what they cant. While the delivery of the welfare reform programme during James Purnell's tenure at the DWP, which has rightly been trumpeted by you in particular Fraser, has focussed the system on continuing to be more active in giving people the support they need to get off benefits and back into work.

Perhaps the more important question is where now?

Should Team Cameron come in next year there are three things to concentrate on - in ascending order of the political 'courage' required to drive through:

1) carrying on, and not rowing back, with the reforms in place - given the position of Lord Freud on the front bench that I think we can take as a given

2) pursuing the holy grail of a single working age benefit. Its no surprise that the welfare system is routinely castigated as complicated as a result of the myriad benefits available. For working age we should grip the bull by the horns and go for one benefit for all those who can work.

3) cut back on the benefits paid out to those who patently don’t need them - see Anthony Browne's excellent contribution to this debate in the most recent Sunday Times: http://www.timesonline.co.uk/tol/news/uk/article6797791.ece.
This is slightly moving away from the out of work benefits discussion set out above but is critical for both hard nosed economic reasons - how much we the taxpayer spend - and more importantly for driving cultural change. Let me explain. At present the raft of benefits and allowances from tax credits to winter fuel payments encourages a culture of claim and entitlement - or as Browne rightly notes "receiving benefits has come to be seen as a right". Or in short we pay more tax to then have some of it refunded to us as a benefit - lets cut out the middle man, allow us to keep a greater share of the fruits of our labour, and in turn allow us to take more responsibility for our own financial well being.

In summary the welfare system isn't broken - and the work being done to return it to being a safety net - what it was always designed to be - is moving in the right direction. But by being bold and taking the initiative government can and ultimately must do so much more.

PS - TrevorsDen - interestingly the employment rate for both British and non British workers has fallen over the last year.

Border Reiver

Lola's got a point. I'm unemployed and looking at the local job advertisments they are full of council based non-jobs. The council here in the Scottish Borders accounts for 35% of the economy, and another chunk is the NHS. Parts of Scotland are positively Soviet. There is a great swathe that is parasitic on both the top and bottom of society, ie taking money from the rich to go on trips to the Algarve to discuss what to do about the wretched 'schemies'. Reminds me of Rab C Nesbitt in the dole office, "If it wasn't for scum like us you woldnae hae a job'. One job I applied for with the council I was reliably informed has already been filled but by law they have to advertise. Like the BBC, the council seems a nepotistic organisation.

Ian C

Welfar wonk.

Interesting work. The main difference, if you are correct, is in the Income Support category which is not a direct employment related benefit. Any comment as to why this is?

Tom

Can someone with the figures add this 6m to the number of people employed by the state? What would that number - the total number of people relying on their income from the state - be? Truly massive I imagine.

Jonathan Cook

Welfare Wonk,

You seem to be well informed on this subject. Some questions for you:

1. What correlation is there between your figures and the number of full time students and number of public sector workers in both 1997 and 2009?

2. Given we have had a 12 year mega boom - why is the graph flat?

3. How do our figures compare with other countries over the same time period?

Lola

Ultimately all the benefits that seek to increase real market rates of wages are destructive. They do not really end up increasing the real purchasing power of the lower paid but they do destroy the wealth of the better off hence preventing them from spending it themselves and increasing real employment.

Similarly paying benefits to people in places where the economic reason to be has moved on will only sustain unemployment. Marginal firms will only locate there if given subsidies, which again constrains profitable businesses in areas where the economy is growing.

The figures in the table illustrate this point exactly.

Therefore to allieviate the unemployment in the black spots - which make up the majority of unemployment - people have to move to where the work is.

It makes sense then to pay relocation allowances to get people to move, or even emigrate.

Furthermore by basing benefits on relative poverty effectively prices workers out of global markets and destroys job opportunities and wealth creation.

I am not saying any of this is nice or easy to do, but unless some really hard decisions are taken and implemented the benefit overhead will strangle wealth creation.

Hysteria

Tom - same thought was going through my mind - add in Quango staff, local and central government civil service, fire, police, military, NHS - the list goes on.

At what point in a nation do the wheels come off?

Dean

Tom - are you suggesting that public sector employees have legitimate reason to fear an incoming Tory government, because they are somehow not involved in 'genuine'work?

This doesn't quite chime with the core messages of Cameron's modernisation project, does it?

In my more despairing moments, I sometimes think all the Labour Party needs to do to erode the Tories' poll lead at the next election is to quote selectively from Coffee House contributions to make the overall case that the Tories haven't really changed.

When are you going to get it into your ideologically deranged heads that some (though not all) state employees actually do useful work for the community, so tarring them all with the same brush isn't exactly clever politics?

Jupiter

Fraser, what do you think of one of the big supermarket's theory that the British population is at least 77 million?

http://www.independent.co.uk/news/business/comment/city-eye-facts-on-a-plate-our-population-is-at-least-77-million-395428.html

John Page

Very interesting comments, Welfare Wonk. But if that was an "excellent contribution from Anthony Browne", that debate is in deep trouble.

He writes that "there is a strong case to be made for cutting all welfare for higher-rate taxpayers" and then comments in brackets "(if the government thinks you can afford to give it 40% of your income, why is it giving you hand-outs?)". And that seems to be it. Part of the case is how much it would save and how that should be used. Silly certificates increasing the cost of administration are no part of any sensible answer to anything.

I'm not sure how you can say the welfare system isn't broken when it encourages welfare dependency, it's unaffordable, it's grown ludicrously complex, its marginal withdrawal rates are unjust, and fraud is at least £2bn a year.

I agree wholly that policy should aim to cut out the middle man, as you put it, and end the round tripping of people's money. We need a political strategy that moves away from meddler Brown's micro-management of people's priorities so that tax starts to be charged at a higher level, combined with much simpler benefits tapering transparently at reasonable marginal rates. This is high order stuff.

Your 2) and 3) are contributions to that strategy. But we can't now afford to throw money at it, so quantifying savings from any proposed changes is an important part of any debate.

As a footnote, we need to give notice that sanctions for benefit fraud are going to get a lot tougher - and the judiciary will have to deliver. We'd probably see a measurable drop in claims at virtually no financial or indeed political cost. Then we could dispense with this "we're closing in" tosh, when the sheer numbers make effective policing impossible.

On a broader note, if I was picking the five most important issues for an incoming government, welfare reform would be one of them. Sorting out the finances would have to be there, and so would energy sufficiency. Which only leaves two places. Genuine parental choice in education? Streamlining healthcare? Localism? OK, that's six.

And I haven't even mentioned getting so stroppy with the EU that they bribe us to leave, or scrapping the AGW superstition.

WelfareWonk

Ian, Jonathan - glad my post was of interest. Sorry I haven't been able to respond sooner.

Ian C - you're right about income support providing quite a large chunk of the difference between now and 97. IS is now predominantly (though not exclusively) for lone parents. And the figures I have used above demonstrate the succes in getting lone parents back to work. They were targeted far earlier with active labour market intervention policies (through programmes like New Deal for lone parents) which means that they benefited most from the combination of benign economic climate and concerted action to get them into work.

For the sake of clarity its worth pointing out that there's also a much smaller chunk of people who also claim IS but aren't lone parents. These overall numbers are also down since may 97:

May 97 - IS (others) - 256,200
Latest - IS (others) - 181,900

This is a peculiar mix of people who the government has been continually trying to move either into work or onto another benefit. This will continue as IS is effectively being phased out as more and more lone parents are moved onto JSA and an active jobseeking regime.

Jonathan (and others who raised the issue)- on the issue of the public/private split, interestingly the private sector accounts for around two thirds of the growth in employment since 1997. Although, somewhat unsurprisingly, private sector jobs have decreased in the last year as a result of the recession.

At present the rough split is still 80% private sector 20% public sector across the whole economy. Obviously while the vast majority of core public services are carried out by the state - health, education, policing etc - that's hardly surprising.

On the question of the mega boom and the graph being flat - this comes back to my criticism of the way the current government came late to the question of what to do with those on inactive benefits. The initial (understandable) concentration of effort on unemployment meant you had a steady decline in the numbers claiming JSA until late 2007 - with the overall number being effectively slashed in half - over 1.6m in May 97 to under 800,000 by start of 2008

Equally, as above on IS, the drive to get lone parents back into work helped cut the numbers there.

However, trying to tackle the real problem - the numbers on IB - has been relatively late. The economic boom coupled with the work done on unemployment meant that the numbers flowing on started to slow - as per the charts above, but didn't stop rising until 2004. Its only really been in the third term that proper intervention in the form of the Pathways to Work programme and then the roll out of ESA has started to impact on the overall numbers.

Take all this together and you get what has to be seen as something of a missed opportunity. If the flagship employment programmes of the first term had been coupled with equally radical reform in inactive benefits then potentially you could have seen a significant fall in that graph as opposed to it essentially reaching a plateau. As per my original post, what the government is doing now is right, but we needed it earlier.

Finally, on the international comparisons there's a really interesting piece of research that Middlesex University did for the DWP (no really, stick with me on this) that looks at how we stack up compared to others in terms of active labour market intervention -here's a link: http://research.dwp.gov.uk/asd/asd5/WP59.pdf

Hysteria

Dean - re your rebuttal to Tom and I guess my post - just to be clear

I make no comment about the *worth* of the different areas of the public sector - a similar debate here several weeks ago pointed out that many on the public purse can be considered as "value adding" - traffic police smooth the flow of trucks to take a trivial example.

No - my point is simply that regardless of the value, the cash to pay for it all ONLY comes from the private sector - this seems to me to be a self evident fact and - to take this too absurd limits - what happens if the entire economy is based on "state sector" employment"?

Oh - no - wait - someone tried that and - it does not work !!!

Verity

Dean asks: "When are you going to get it into your ideologically deranged heads that some (though not all) state employees actually do useful work for the community,.

As far as I'm concerned, never.

Absolutely everything should be privatised and run the way the citizens/owners decide. That includes police services, roads, airports, trains and the entire mammoth "benefits service". And the NHS. Privatise.

Roy

Since welfare beneficiaries do not have to worry about their earning ability, perhaps this has now been passed on to the country to do the worrying. The big question arises, when does the cash run out? And, is the country earning sufficient to do all it has willfully contracted to do?

Jim

I think you should have added the total cost of all these benefits, then compared it to the total tax take.
If you then added the fall in income tax from our rapidly declining oil fields, then looked at the new structural deficit that will appear in the next few years as we have to import oil, then you would be really scared.
We are about to witness the end of the welfare state and welcome 6 million scavengers, street hawkers and probably even gongfermors.
One growth industry will be fixing security screens to windows.

Moraymint

I'm with Hysteria on this issue of asking just how much cash is the state having to outlay every week to keep millions and millions of people in salaries, expenses, pensions and benefit payments? The figure must be heading towards "utterly horrendous". Perhaps "unsustainable" would be a better description.

Of course there are many jobs in the public sector that are valuable and worthwhile; but, hey, there are an awful lot that simply represent the denial/removal of resources that would otherwise be available to the wealth-creating, profit-generating, tax-paying private sector ... without which our ever-burgeoning and intrusive state cannot function ... unless it borrows vast sums of money ... and, er, look where that's left us. The irony is that Labour/socialists have never quite twigged these fundamental economic axioms.

Economics ain't that difficult really, but this Labour Government has demonstrated a truly stunning level of economic and administrative incompetence during its twelve (disastrous) years in power.

God only knows just how bad a mess the Tories will discover the morning after they form a government. I reckon the civil service probably has a good idea.

My guess is that the Tories are still seriously underestimating the scale of Gordon Brown's decade-of-disaster and, therefore, the severity of the measures that will be needed to prevent a socio-economic catastrophe in the next 3 - 5 years. Mark my words.

WelfareWonk

John Page - interesting comments, in particular you make a persuasive case for why you disagree with my view that the welfare state is fundamentally broken. In response I think there are two issues. Firstly what we do with those on out of work benefits, and secondly the development of the in work benefit culture

On the first point - which I think is the fundamental building block of the welfare state - then we're definitely, albeit it belatedly, moving in the right direction. By ensuring all benefits have an element of conditionality applied to them so you move away from a culture where people turn up, sign on, then disappear. Whether we like it not we have just under 5 million people claiming these benefits and we need to get them off and into employment. Some of these will be relatively easy, some will be very difficult, the key is to have a system which actively intervenes.

I think you're absolutely right about the importance of making good use of the savings made from reducing numbers on benefit. When you look at the three main working age benefits a serious reduction in numbers can have significant savings. Traditionally these savings simply funnel back into treasury coffers but one of the key points in Lord Freud's original paper on welfare reform (which he did for the government before he joined team Cameron) was that this money should be channelled back into employment programmes and used to incentivise private providers to go even further in helping people get back into work. Interesting to see how far he can push this if he makes it into office.

If government then looks to go down the path of a single working age benefit then the complexity of the system begins to get unpicked and the opportunities for fraud lessen. So, on this area I think the direction of travel is right.

The second issue is in work benefit culture. This is the area I find more troubling and am interested to know more about what Team Cameron will do here. As per my original post and your comments above its nonsensical to pay out in tax, then receive a rebate, when it would be easier to simply allow people more control of their own money in the first place. I have a suspicion that should they get in next year they will find it hugely difficult and politically unpopular to unpick this beast. But this is a definite first term priority.

Interestingly, I'd put education as an absolute priority for first term as well. One of the main problems for the welfare system is having to deal with people who have low skills and/or suffer from illiteracy and innumeracy. Too often the welfare system becomes the education provider by proxy - inefficient, ineffective and hugely expensive, both to do now but also because the state has already paid for these people to go through education once before.

What we really need to see is a more holistic approach which ensures that the kids being turned out of schools have the basic skills to compete in the jobs market which in turn means that when they can't find work the welfare system can concentrate on getting them back into a job rather than re-educating them.

PauL

Agreeing with Verity; all our government should really do is protect us from bad forms of government.

It's failed, hasn't it?

Moraymint

Roy - I'm of the view that the cash is running out and will complete its run out in the coming years. In other words, the state is heading rapidly towards insolvency.

It will be very interesting to see which state activities are turned off, and how quickly, in the coming 3 - 5 years as the awful truth dawns on our political elite that the country is indeed going bust.

The scary thing is that few politicians are prepared to address the looming crisis for what is, still less to shape realistic plans for managing the crisis.

My money is on socio-economic turmoil in the coming years; but, we're still sleepwalking right now.

The Moraymint household is rapidly developing and implementing its Self-Reliance Strategy, because we'd be daft to rely on our political class to see us through this one. The situation is unprecedented and will be getting much worse before it gets any better.

The root cause of all this: the end of mankind's era of cheap energy.