Welfare that works

Pam, Merseyside

Fraser, what is the timescale to what Purnell has proposed. How long before it all comes into force?

JR

"If these new providers are simply less gullible than the government, i.e. if they demand to see the supposedly workless at times of the day that could not fit with black market work, then welfare rolls will drop dramatically."

The providers actually prefer not to sanction people you know (evidence from Employment Zones dealing with JSA claimants). They can't be arsed with the fuss and they know the people who don't turn up are the least likely to get back into work (and therefore make them money). Therefore perversly the private providers actually let more people not attend than Jobcentres. It's all about the incentives Fraser and private companies do tend to react to price signals in pays that are undesirable. However if you monitor the contracts too much then you need an army of people to do that - which is inefficient.

By the way Australia are actually doing away with some of their reforms - not because Labor got in but because the aforementioned monitoring costs of being 'tough' are so bloody huge.

The American system is a joke - their numbers on the equivilent benefit to Incapacity Benefit are sky rocketing upwards where as ours are falling. That also represents a larger % of the working age population on IB than us. They also don't require these claimants to do anything unlike the UK system (you remember that Pathways thing worth £1bn based on job outcome based contracts in 60% of the country with private providers).

'Workfare' is also hugely expensive and has pushed benefit spending up in the US. Providers will stiff anyone who asks them to deliver it because the programmes and the monitoring costs are gigantic and it isn't a deterrent to benefit receipt from the US evidence.

Liverpool and Glasgow - Pathways is delivered by the public sector in both areas by the way so thank that for the falls not private providers. The local money doled out to small providers is probably largely wasted because it's not linked with requirements to go to interviews (ironically the trouble is all those third sector guys are too squemish about placing requirements on customers)

Fraser in closing - you probably know I am as reform minded as anyone on this and there is a way forward but it is not nearly as simple as you or I would like it to be.

J H Holloway

When we wonder where all the money goes in this country, and why we can't pay for transport infrastructure or whatever, consider the figures released earlier this year.

ALL (and possible a bit more) of the Income Tax collected in the UK each year is spent on 'social support'. I think the figure is about £170bn.

Imagine what we could do for the military, for rail fares and for student finance with just a fraction of that....

Funny, really. I wonder why we spend that much when we have a record number of people in work?

JR

Pam - Labour has already let £1 billion of contracts for the sick (IB) customers. Providers get paid 70% of the contract value linked to getting people into work. If they don't get people into work they don't get paid. Similar contracts (with 80% of payments) are being introduced for jobseekers next year. And watch this space for further announcements.

darrel

"If these new providers are simply less gullible than the government, i.e. if they demand to see the supposedly workless at times of the day that could not fit with black market work, then welfare rolls will drop dramatically."

Or people will stop working to stay on benefits.

Verity

JR - You cannot talk about welfare costs in the United States as though it were all one federal entity. Each state has its own laws about unemployment benefits. In Texas, it's 13 weeks' unemployment benefit, then you learn how to smile asking "Do you want fries with that?"

I think it's Wisconsin that is even stricter, in that they want to see that you've worked (I think) four years in the state before you get a thin dime. And after you've claimed and used up whatever you're entitled to, you can't claim again for another set number of years.

For sure, no one gets to spend all day working on their scratch cards and drinking beer as they do in Britain.

Also, a large part of "benefit" comes in food stamps. And with food stamps, you can only buy one thing: food. No Cokes. No shampoo. No toothpaste. No household cleaners. Just food to keep you alive while you are LOOKING FOR WORK.

Wadi Amin

I agree with Verity in that it's time to get the hard word out.
Just such a pity that we have to go to the private sector in order to find people with the requisite backbone to get the job done.

JR

Verity - their disability benefits are federal.

Kiffa

I would like to see a plitiian touch enough to implement Charles Murray's theories. Stop ALL monetary transfers: and that includes the NHS. Especially, stop benefits that accompany babies. Then give. the. money. straight. to. the. people. To every British citizen over 21, for life, a monthly direct debit. Two compulsory rules: they have to buy health insurance, and they have to buy a pension plan. THEN LEAVE THEM ALONE.
As people always do what is best for them, they will rapidly conclude that jobs, putting off pregnancy and stable relationships are the best way forward.
Google him! Charles Murray, welfare reform

Frank Pulley

I think that this magazine has decided that James Purnell must succeed Gordon Brown. How much has this latest piece of puffery cost him?

Verity

JR - Yes. I know. But we are discussing the whole welfare panoply, and much of it in the US is in the purview of the 50 states, who have different rules and different requirements. Unemployment, as I noted, and which is a huge expenditure, is governed by the states.

Kiffa - a very interesting post.

First, I have been boring for Britain for years about privatisation of the NHS - same deduction, but the salary-earner (note that compound noun) would have the ability to direct his deductions to any health care company he chose. So the bracing breeze of competition in the marketplace.

OAPs would be presumed to have paid in for most of their adult lives,and could choose whichever hospital or clinic they wished to treat them.

Welfare recipients would go to welfare hospitals - the equivalent of "county hospitals" in the US. In other words, whatever remains of the NHS.

Like county hospitals in the US, NHS hospitals would be required to treat anyone, but they would bill the patients later. Most of them will be deadbeats - i.e., lifelong passengers on other people's tax monies.

But I like your idea better. It has some rough edges, as in what to do about dead-beats and why they should be entitled to any money from taxpayers at all.

Perhaps you could expand on this. I love the idea of no bureaucracies "administering" - shuffling around - money. How would the taxpayer, the one creating the wealth, be protected from the parasite class? Among them, parasites from other countries.

So how would you treat the non-contributors (other than OAPs and people under the age of, say, 21)?

And what would you do about the people who'd already spent their credit on lottery tickets, beer, renting DVDs, etc. (My personal answer would be "nothing". We're all responsible for ourselves, no matter how the socialist state tries to engineer control through dependency.)

I look forward to an intersting response!

I feel this idea has legs.

But

Elizabeth

So we now privatise the benefits system.
Not only will we pay benefits we will continue to pay for the bloated civil service, pensions and all but now have to pay an income and profit to a private agency to do the work as well, or are they going to co-opt the civil servants and actually expect them to do a job of work.
One only has to look at the level of competence of those who have found jobs in government and local government to see half the problem.
Some can barely speak the language.
So its a good thing is it. I think not.
Privatisation of the railways - shocking. Privatisation of the utilities - security wise stupid - and administratively not so hot. Why have we no storage capacity worth a farthing - because the companies want to profit from us and do so- handsomely.
A shake up of management, not selling them off, was all that was needed. Decent ministerial action but as our MP's are almost all worthless and self seeking and have been going that way for some decades culminating in the collective dross we see at present, why are we surprised.
Failure means nothing.
Group 4 doesn't inspire me and the thought that we are allowing private companies to have control and access to all our personal details is appalling.
As the work will be let out to the lowest possible costing workforce to maximise profit - it means India or some such Eastern nation doing all the computerwork.
Our private details will be globally accessible in six months - if we are lucky.
This scheme has absolutely nothing to recommend it. A shallow gimmick from exactly the sort of shallow gimmickers that lead the Tories.
It is a security nightmare, an invasion of privacy for profit and will end up as usual bleeding the taxpayer.

Fergus Pickering

Kiffa. As people always do what is best for them? Is that an irony that I have missed.

David C

I agree entirely with Elizabeth. Governments have failed to understand strategic necessities (and I include the Thatcher and Major administrations)
The idea was to let the state do what people couldn't do for themselves (couldn't, not wouldn't).
This is nuLabour playing with the corporate state again.

Arthur

This is all very interesting but I am afraid it misses the point and merely provides a managerial response to a cultural problem.

The bill for unemployment welfare is so high because the state pays people to be out of work, period.

The proposed solution might improve things slightly but it will only ever provide a slight improvement because the managerial response does not change the culture of welfare dependency.

Yes, performance paid companies will be better than the unquestioning state at getting people back to work but the real issue lies in the recipients, not the providers. Recipients will still be given money for not working, thus corrupting the labour market and their own sense of worth.

The solution is draconian and probably politically unacceptable but is nevertheless necessary if we are to do anything other than scratch at this problem.

We must stop all unemployment payments from the state and channel some of the savings into better employment offices that show people where to find jobs. Any people that fall between the cracks will be picked up by voluntary groups but the overwhelming majority will realise that only they can improve their economic situation, not the state.

elizabeth

The bill for unemployment welfare is so high because the state pays people to be out of work, period.

How very true.
If it were not for free trade and rampant capitalist globalization there would be worthwhile jobs for the working class. They wouldn't need to be the parasites on the taxpayer they are perceived to be.
Would you get out of bed each day for a job in McDonalds and no prospects.
There is a deliberate policy of all three main parties to actually encourage state dependency.
It is cheaper to pay some poor bloke 50 quid a week than employ him on even half decent survival level pay.
Such people are no longer profitable. The Chinese etc have their jobs.
Bringing in the private sector will do no more than possibly make these unfortunate's life harder and more rotten and cost the taxpayer a premium for doing so.
Sorry to harp on this but we need to go back to protectionism and recreate our industrial base and get out of Europe asap.
At the same time we clean up our schools, stop youth crime by meaning it - 2 years min for even carrying a knife and recreate an environment where kids can be taught and learn.
Oh by the way a few extra grammar schools would be good - Tories!!!- the way to upward mobility and some hope away from sink estates.
And how are working class kids ever going to become employable? Being schooled where 100 languages are spoken.
Let the upper crust see how well little Edward or Zara do when faced with the same almost insurmountable barriers to a better life.
Privatisation of the benefit system would be a disaster.
Personal details around the globe and even worse peoples banking details - open season!!
Even a security threat. Hackers could divert billions into random bank accounts overnight and turn the system into chaos.
As with the railways, utilities and prisons - to name a few - better management is the answer not selling off yet more of the people's assets for the benefit of the few.

Arthur

Elizabeth,

Thank you for your initial approval but reading the rest of your post makes me think you are a little confused.

You seem to think that free trade and globalization cause unemployment when in fact they do the opposite. Without free trade, who do we export to and import from? True, an economy closed off from the rest of the world will reach a sort of equilibrium but we and the world would be a lot poorer for it.

And I think you will find quite a few people "get out of bed each day for a job in McDonalds" today. The rest will soon follow if the alternative is no money.

And to think protectionism is a panacea is plain lunacy. Protectionism is inefficient, raises prices and reduces prosperity.

I also think you will find the so called "upper crust" are a lot more doubtful of the benefits of mass immigration than the middle class metropolitan elite that are responsible.

Elizabeth

Arthur

As Sir James Goldsmith pointed out free trade is fine when there is some equality of wage rates.
Todays free trade is completely unequal. It has been the use of cheap labour to undercut western wages that has consequently put western workers either out of work or forced down their wages to subsistence level.
As for free trade I suggest you look a little closer at the picture you are painting. We don't trade with much of the world. We buy. Worse we buy with money we don't actually have and in buying all the Chinese and other 'goodies' we have created massive trade deficits.
One of the reason our econmics are threatening meltdown.
You think we should buy foreign and not British because of price I guess.
The price is a fallacy. you are paying more for your Chinese 'tat' than you would British by the time you take the cost of keeping British workers unemployed and have bought your petrol at the pump.
You go take a thankless job at McDonalds, I would imagine one of our prisons offer a better lifestyle.
I am quite disgusted at the affluent who look at the BRITISH working class and see a bunch of layabouts.
The British were very hard workers, look at the industrial revolution and the empire. Britain was a power house. powered by the labour of the working classes. They are not lazy - or weren't.
The trouble is they are not stupid either.
What is the point of working your butt off to earn the price of 4 packets of cigarettes. Its better on the benefit system because the gap in wages between the top and bottom has ratcheted up out of any semblance of fairness or social justice.
You have to stop the richer getting richer and the poor poorer if for no better reason than you need the poor to have some purchasing power to buy goods, Chinese or whatever.
All the economic chickens are coming home to roost with a vengeance.
Up until now it has been the poor who have lost their jobs and self respect. The poor who have suffered the negative impact of mass immigration and the forcing down of basic pay.
Well its going to impact a few more soon, up the pecking order. Where is all the social housing needed to house those who are going to lose their homes.
Sorry Sir, Thats occupied by half the planet, reserved for asylum seekers or eastern Europeans with six kids and no roof.
Things are going to get very interesting if things turn out to be half as bad as is predicted.
Hopefully unbridled global capitalist greed will be one thing no longer tolerated. The 'let them eat cake' of the 21st century. Capitalism is out of control and making a mockery of democracy. The USA has become a four yearly auction of power with the added dimension that if you lose you cheat.
Britain is no better. Its system described by a judge as something out of a banana republic.
Corporate fascism is imposing itself more and more. We shake it off or we and our children face corporate serfdom reinforced by a police force many of us no longer feel they know or trust.